Property tax rates for St. Petersburg residents will drop slightly next year, but tax bills are still likely to rise because of higher home values.
Facing a tough re-election battle this year, Mayor Bill Foster on Monday unveiled his proposed budget for the 2014 fiscal year, which starts Oct. 1. Foster's proposed budget includes a cut in the property tax rate of 0.1 percent - which many may see as largely symbolic - along with a 2-percent pay raise for city employees and the hiring of five new police officers.
Homeowners would pay $6.77 for every $1,000 of taxable value on their homes in city taxes under the proposed budget. Nonetheless, in a memo to City Council, Foster said cutting the tax rate would be the "new normal" for the city, which will not routinely collect more taxes every year "just because property values increase."
Yet, with home values in the city rising by an average of about 4 percent, city officials estimate homeowners will fork out an extra $3.1 million more in ad valorem taxes to the city compared to the 2013 fiscal year.
Further tax rate cuts would be made if home values continue to rise, said Budget Director Tom Greene.
"We're going to slowly ratchet that down so we are not collecting the maximum amount we can every year," Greene said.
Foster's proposed $211-million operating budget includes $2.7 million to pay for a "modest" pay raise of about 2 percent for the city's roughly 3,000 workers, many of whom have not had a pay raise in five years.
City officials are still in bargaining talks with unions representing police officers, firefighters and other city workers. Rick Smith, chief of staff for Florida Public Service Union, said his union is working to reinstate annual pay raises based on years of service
"We're working very hard to keep that," he said. "There has to be a way to reach that level of equal pay for equal work."
Foster pledged to keep funding for the city's fire service at existing levels and not to cut funding for arts or social services. No cuts are proposed to parks, pools, recreation centers and city library services.
Residents likely will have to pay more for water, sewer and reclaimed water, though. The budget proposes a 4.25-percent hike for water and sewer service, though the city is conducting a rate study to compare charges to other cities, and that could result in a smaller increase. City Council members are expected to review the study in September.
Sanitation and storm-water fees would remain unchanged under Foster's proposed budget.
Foster's budget also allocates roughly $237,000 to hire and equip five new police officers, increasing the number of sworn police officers in the city to 550. That would be dependent upon the police department successfully winning a grant from the U.S. Department of Justice that would pay about 57 percent of the new officers' salaries and benefits over the next three years.
One full-time position and 10 part-time positions will be eliminated to save money. Almost all of the positions being eliminated are vacant, said Greene. They include a mayor's aide, a full-time crime analyst in the police department and four full-time landscapers from the Parks and Recreation department, which has contracted out maintenance of city lands alongside the interstate.
While income from ad-valorem taxes is estimated to go up for the first time in five years, other sources of city revenue are in decline. With fewer homeowners paying for land-line telephones, city officials are budgeting for Communications Services Tax revenues to drop by $1.3 million to $11.5 million.
The city's 75-percent share of health insurance premiums for its employees is budgeted to rise by 16.5 percent. City officials are hoping that opening a health clinic for employees will lower health care costs.
"Although our city economy is improving, we must still be cautious in the expenditure of our limited resources," Foster wrote in his budget summary.
The City Council must agree a tentative millage rate by July 25. Two public hearings on the budget are scheduled for Sept. 12 and Sept. 26.