Monday, March 26, 2012

Setting Up the St. Pete Property Tax Increase

You tee up the golf ball, you serve the tennis ball and, the Mayor Foster's favorite, you pitch the baseball. Well, that's what happened Thursday at the Budget Finance and Tax Committee meeting.

A while back the budget shortfall was $10 million, then $12 million, then $18 million and before the meeting was over a whopping $22 million was mentioned.

Where did all that come from? Reduced property taxes, falling sales tax revenue on and on. Costs are up, pensions are up - the perfect storm.

You have probably had this experience. You go into a store looking for the advertised item, the sales person immediately walks you the most expensive model, and before you know it you buy something in the middle. They call that trading up, by trading down. Or if you prefer, bait and switch. You did not buy the advertised model, you spent a few dollars more.

Foster is teeing up, serving or pitching, pick your metaphor, the high end number to set up City Council for a property tax increase. Go for the big number and work backwards.

Faced with these staggering numbers and no other place to go is it time to look at the millage rate?

Why the problem, as it seems things are getting better?

In local government, revenue flow usually trails the economy by 18 to 24 months. What that means is, when things get worse, it takes government that long to feel it so they keep spending, and when things get better it takes and equal amount of time for local government revenue flow to catch up so they are in crisis mode longer. It's mostly due to the way tax levels are set and actual taxes are collected.

Smarter people than me predict that 2013 will be down year for local government revenue, 2014 will be slightly down to flat, and in 2015 revenue flow should begin to slowly grow.

While the public may not like it, a revenue neutral millage rate increase for St. Pete might not be a bad idea, if it includes a sunset clause. That would mean the tax rate (millage) would go up, but you would pay no more St. Pete property tax that paid last year, and the millage increase would go away in a specific time period say two years.

But before we even go there, the City needs to look at the survey results from The Peoples Budget Review, and take another hard look at the top end organizational structure, administrators, directors and assistant directors and managers giving carefully consideration to options like moving the Police Department Communications Center responsibilities to the County. There are still a lot of opportunities to fine tune City operations to save significant amounts of money while delivering quality public service and public safety.

City Council should not be overwhelmed by the numbers, they should get the facts, listen to the public input and make sound decisions. Most all don't buy the bait and switch or in this case entice and tax.

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