Big projects like roads, parks and storm-water drainage will be stalled for years in Hillsborough County unless the county finds new sources of money.
County commissioners learned Wednesday that $129 million worth of capital projects approved in past years are sitting on the table because no money is available. And the capital improvement tax – a half penny sales tax used for building parks, schools and roads – has been depleted by five years of recession so nothing is left for new projects.
“We cannot add any projects where the CIT is the funding source,” Tom Fesler, the county budget director, told commissioners.
County Administrator Mike Merrill, while admitting the capital project situation is a “little bit dire,” said there are solutions, though some are likely unacceptable to commissioners, some of whom face election challenges next year.
For instance, Merrill’s team offered up six potential funding sources restricted for roads, bridges, buses and other transit. Commissioners have labeled transportation a priority because of its role in economic development.
The largest potential moneymaker would be a 1 percent sales tax increase to raise an estimated $198 million a year. Voters rejected such a tax in 2010 and passing a new one would be a tough sell, though some recent polls and focus groups have shown support depending on what the proceeds are used for.
Commissioners also have the option under state law to increase the gasoline tax by an additional 5 cents per gallon. But that would only raise $18 million annually.
Other transportation options include toll roads and mobility fees, which would replace the current impact fees developers pay to cover transportation impacts of their building projects. The amount of money either of those choices would generate is not yet known.
Merrill’s team also presented “flexible” funding ideas for transportation or other building projects. These include slight increases in property taxes to raise $10 million a year, a public service tax on utility bills generating $60 million, and increasing the communications services tax to the state maximum for an added $7 million a year.
Merrill also suggested major transportation projects, such as toll roads or a rail line, built and operated through public-private partnerships. In return for a concession payment by the government, a company or consortium would build, operate and maintain the project.
Companies are more likely to take on such projects in areas that are already economically developed, rather than depressed areas, Merrill said.
The grim financial report seemed to stun commissioners, who mostly greeted it with silence. Commission Chairman Ken Hagan questioned why a recovering economy wouldn’t generate enough growth in the Community Investment Tax to add new projects.
“I was always told when revenues went up, our bonding capacity would increase, thus allowing us to bring in more projects,” Hagan said. “We’ve had a couple of years now where things are up. How is it that we’re at zero capacity?”
Fesler told Hagan the county had historically projected 6 percent annual growth in the CIT. But the recession hit the local economy hard so sales tax revenues fell, causing an annual average rate of return at just 1.8 percent over the past 10 years.
The tax expires in 2026. Fesler said that’s not enough time for CIT growth to rise to a 6 percent annual average.
Commissioner Al Higginbotham was upbeat, saying there are enough bright signs in the economy to indicate a much quicker recovery than the report projects.
“I’m very optimistic that growth is going to come sooner than we expected,” he said.