ST. PETERSBURG — Instead of raising millage rates to plug a $10 million deficit, Mayor Bill Foster is advocating a new fee that will save the city's biggest landholders hundreds of thousands of dollars in property taxes.
Critics say Foster is catering to the wealthy by creating a new fire readiness fee instead of simply raising the millage rate.
For example, owners of the 20 priciest properties in St. Petersburg collectively would pay about $46,000 for the fire fee. Conversely, a one-point increase in the millage rate would cost them $605,000.
The savings: $560,000.
"It benefits the rich and big business," said Vince Cocks, vice president of Faith House, a halfway house in St. Petersburg. "The relationships that this mayor has with the wealthy is bothersome to me."
Consider the $115 million value of Tyrone Square Mall, the city's most expensive parcel. DeBartolo Capital Partnership would pay an additional $115,500 with a millage increase. The fire fee will cost the group $2,375.
Foster makes no apologies for his business-friendly tax.
"We do want to be very pro-business," Foster said Tuesday. "It's these businesses that are creating an employment base."
Businesses, he said, already pay a disproportionate share of taxes for the same services used by thousands of residents. The tax savings, he said, could be used to hire additional workers.
A one-point millage increase would raise roughly $11.3 million in property taxes. The city has gone at least 22 years without raising the current rate (5.9125 per $1,000 of taxable value).
The fire fee will generate roughly $10 million and Foster is moving forward with it, despite opposition from some residents and three council members.
Council member Wengay Newton said Foster needs to raise the millage rate, not further burden struggling homeowners.
"This is a tax on the poor," Newton said. "They live off food pantries. Where are these people going to get this money?"
The St. Petersburg Area Chamber of Commerce has not yet adopted a formal stance on the fire fee although Foster did make a formal presentation to the group.
Chris Steinocher, president and CEO, wonders whether Foster has trimmed all excesses like businesses did to survive the Great Recession. Time is running out to cut spending before the city's budget is adopted this fall, he said.
"Should we be discussing this tool or looking at other concepts on how revenues can be spent?" he said.
Either way, a fire fee or higher millage rates will cost businesses.
"I don't think you'll find any business who wants more taxes and fees," Steinocher said.
The fire fee would stave off more cuts, which have trimmed 300 jobs, reduced hours for pools and libraries and cut park maintenance over the past several years.
St. Petersburg's desire to raise revenues isn't unprecedented in the Tampa Bay area. As cities and counties across the region face another year of budget shortfalls, many are beginning to find that the risk of cutting deeper into budgets and services is too great.
In a two-tiered approach, St. Petersburg property owners would be charged a flat fee of $75 for each lot and 23 cents per $1,000 of a lot's appraised structural value.
Of the 106,000 parcels, fewer than half have a value greater than $125,000. Another 69 are valued at $10 million or more. The formula caps property values at $10 million for each parcel.
The second highest parcel, valued at $55 million, is part of the Raymond James campus on Carillon Parkway. A one-point millage hike would cost Raymond James $55,000 in additional property taxes.
Times Publishing Co., parent of the Tampa Bay Times, also would save.
The fire fee for its downtown headquarters and part of a printing plant on 34th Street N would total $2,899. A one-mill increase would trigger $14,200 in higher property taxes.
Foster contends the fire fee is more equitable and forces all landholders to pay a share.
"Everybody would pay a little bit," he said. "We are trying to expand the base of those using city services and not paying for them."
Residents will have two chances to support or oppose the fee at public hearings Sept. 13 and 27. The council could choose not to implement the fee after that.
Excluding government buildings, all of the city's 106,000 parcels would be charged the fee, including charities and churches. Of those parcels, 6,984 currently don't pay any municipal taxes.
After voicing opposition to the fee at Thursday's council meeting, Cocks, the vice president of Faith House, sent Foster a text message to express more displeasure.
Foster replied: "I'm prepared to offer an exemption to charities, but I wanted to see where the votes were yesterday. Plus, I'm still working on the budget..."
Foster said Tuesday that it should be no surprise to anyone that he'd consider the exemption since the council already asked for an exemption for low-income residents.
Exempting charities would cost less than $500,000, Foster said, adding: "I have some wiggle room."
It is not clear on exactly what threshold would be used to determine low-income waivers.
St. Petersburg's property tax rate has been the same since 2007 despite an economic downturn that continues to drain city coffers. Property tax revenue has fallen a total of $100 million during that time, causing the tax to bring in $30 million less per year than it did in 2007.
The city has handled the shortfall mostly with cuts and limited fee increases and fines.
The fire fee would eventually be added to property tax bills.
In order to collect the fee this year, the city would hire temporary staff, according to Foster's budget proposal. After this year, the Pinellas County Tax Collector would include the fee on property tax bills.
Foster said Tuesday he doesn't plan to hire new staff, instead he will shuffle people between city departments for the work.
"You don't want to create a system where it costs you one dollar to collect two."
Mark Puente can be reached at [email protected] or (727) 893-8459.