All across America, local governments are dealing with budgets that are wildly out of balance. It's even worse in Florida. Under spending proposals now being floated in the Tampa Bay area, employees would be laid off, library hours trimmed, parks closed for part of the week, and stray dogs and cats left to roam the streets together. It's all in response to sharply falling property tax revenues. But what is seldom talked about is this: The problems didn't start when the economy turned sour. Spending went up too far, too fast in real estate boom times, and government created programs and policies that are no longer sustainable. In other words, our current woes have their roots as much in the good times of the housing bubble as in the current bad ones. "County government as we have known it will be changed forever," Hillsborough County Administrator Pat Bean said rather dramatically last month while unveiling her budget for next year. When times were good, governments spent far more than what was needed simply to maintain a steady state, as the charts on the front page show. In fact, many local governments went on a fantastic spending bender during the past decade. As property values crested, they rode the wave of soaring tax revenues, building new parks and fire stations at a furious clip. And they raised pay for their employees. After all, the cash was coming in. Like many in the public, government officials gambled that property values could only go up. They were wrong. Now the hangover has set in.
Spending beyond inflation
We reviewed the financial ledgers of six regional governments — Pinellas, Pasco and Hillsborough counties, and the cities of St. Petersburg, Clearwater and Tampa — the main governments of Florida's bellwether region. The numbers paint a sobering picture. They show that from 2000 to 2007, the years of the real estate boom, local governments went on a shopping spree.
With the exception of Pasco, records show these governments used up tax dollars at rates that far outpaced growth and inflation combined. Pasco largely tracked both measures as its commission aggressively rolled back tax rates to offset swelling property values.
Hillsborough, whose commissioners regularly crow about their fiscal conservatism, grew at twice the rate of population and inflation. Year after year, they increased spending by double-digit percentages.
Leaders of the governments that spent the most will tell you they have simply responded to their residents' wants and needs. There's some truth to this.
For years, low taxes that lured retirees from other states also resulted in massive backlogs in road building and other infrastructure. Local governments were doing some catching up as Florida's real estate market caught fire.
Pinellas and Hillsborough both have a sales tax, shared with its cities, that voters approved years ago to build things like new parks, libraries, jails, fire stations and roads.
In Hillsborough, commissioners have committed much of the sales taxes they will collect through 2026 toward debt payments to build stuff now. The result has been a government building bonanza.
Except for roads, each requires people to run them. Property taxes pay their wages.
All those new hires accounted for a good chunk of the spending spike. And when the good times ended, there wasn't enough revenue to pay them all anymore.
A 2007 St. Petersburg Times examination also showed that local governments spent the early part of the decade taking care of their own. Salaries, by and large, ballooned at clips of 7 percent annually in some cases. Benefits were enhanced.
That examination, which didn't include Pasco, showed St. Petersburg as the relative cheapskate. Its payroll climbed just 40 percent from 2000 to 2005, despite a significant effort to hire more police officers.
"We've been trying to control staffing because that's the largest part of our budget, salaries," said Tish Elston, first deputy mayor.
More recently, local government employees got much more modest increases if they've received raises at all.
Many are staring at pay freezes and furloughs in 2010. However, there has been significant pressure from some police and firefighters to keep the spigot flowing.
Just saying no
Last year, with the downturn in full swing, Tampa firefighters pressured the City Council to approve average raises of 9 percent, plus bonuses. It did.
Clearwater City Council member John Doran, who spent more than a decade as an observer of that board before getting elected in 2005, has seen good times and now bad.
Yes, his government increased spending during the peak years by double-digit percentages. It also added two fire stations at more than $2 million apiece in annual operating costs, and replaced and expanded two rec centers and the main library.
"The discussion for me is, did elected officials decide to do this out of the blue?" Doran said. "The answer is no. I sat through the meetings where people said, 'We want this and we need that.'
"It's hard as an elected official right now because you have to say, 'no,' " he added. "The interesting part is, when it turns around, and it will turn around, will we be able to say no again?"
Yes, elected officials will need to learn how to say no when the economy recovers. For Florida has a history of boom and bust cycles.
But government leaders also should be asking big-picture questions about what they do and how they do it. It's a good time for introspection.
Instead, many are taking a narrow approach to shoring up their budgets.
In Pinellas, that means getting rid of many programs added during the boom years or tacking on fees to cover them.
In Hillsborough, it's virtually gutting entire departments such as code enforcement that once, presumably, were a priority.
A not-too-cynical view would suggest that officials are proposing to lop popular programs to rally the public to save them.
"Their budgets have grown so big that they can't bear it when they lose money," said Dr. David McKalip, of St. Petersburg, chairman of the tax reform advocacy group Florida Taxpayers Union. "So they try to make visible cuts people don't like to try to pressure people into agreeing to pay more taxes."
Pay's where the money is
A good place to start might be a wholesale examination of pay and benefits for employees, since they represent governments' biggest expense.
It used to be that people entered the government workforce as a form of service, knowing they would get paid less than they could in the private sector. In return, they enjoyed job security and great health and retirement benefits.
Today, government salaries are often competitive with private business. And workers still get close to free health insurance and guaranteed pensions, rarities in the business world.
Local leaders also should get a better fix on the cost of specific government services. Astoundingly, many local agencies cannot tell you what it actually costs them to provide someone with a rabies tag for your pet, or a building permit.
So they have no idea how salaries affect the bottom line and no means of measuring efficiency.
At best, they compare their charges — and salaries — to those of other governments. The comparison is almost always used to justify salary and fee increases, rather than decreases.
Police and firefighters are particularly aggressive at comparing compensation packages. A new perk for rescue workers in St. Petersburg one year quickly sets the bar for union negotiations in Tampa the next.
Even supporters of smaller government tend to be wary of suggesting cutbacks in police and fire departments. But they represent more than half of local government spending and were among the biggest beneficiaries in the good years. They, too, deserve scrutiny.
With the exception of the Pinellas County, where Sheriff Jim Coats is proposing to eliminate some 263 jobs, public safety workers are largely left harmless in the current round of budget cuts.
Finally, elected officials should also use this time to get serious about ending other forms of wasteful spending. Why should multiple agencies within one government have their own billing departments, spokespeople and computer specialists? Many do.
Why shouldn't neighboring governments share what should be non-political tasks, such as purchasing equipment? Tampa and Hillsborough are in talks.
Particularly right now, political leaders should take a clear-eyed look at the money they dole out to lure new businesses with subsidies.
Tax them and spend on us
There is, perhaps, a bigger challenge: Florida's property tax system.
University of Florida economics professor David Denslow and two of his colleagues are studying the run-up in government spending during much of this decade. The Tampa Bay region governments have plenty of company.
Blame the building boom or exploding pensions, if you like. Even government waste.
Denslow's study will likely credit another, seemingly unlikely culprit: Save Our Homes.
That 1992 constitutional amendment capped annual property tax rises at no more than 3 percent for primary residences. The measure was passed by voters after another run-up in property taxes left many long-time residents struggling to hold on to their homes.
Save Our Homes sheltered them. The longer you live in your home, the bigger the shelter.
But it left renters, commercial building owners, snowbirds and newcomers unprotected and having to pay an unfair share of taxes.
The old homesteaders are much more likely to vote than, say, renters or new arrivals to a community.
They also are more likely to engage their government to build a new park, Denslow said. But they were largely immune to the spike in property taxes.
"The irony there is beautiful," Denslow said. "When you distort taxes, you do bad things."
Times news researcher John Martin contributed to this report. Bill Varian can be reached at (813) 226-3387 or [email protected]