ST. PETERSBURG — The City Council finally decided how to cover a $10 million budget deficit.
They raised the property tax rate for the first time in 22 years.
During a budget hearing Thursday night, the council voted 7-1 to set the millage at $6.7742 per $1,000 of a property's taxable value, up from the current $5.9125.
The council acknowledged the difficulty that some residents might face by paying higher taxes. Most members did not want to raid reserves to plug the budget hole.
"It's painful," said council member Charlie Gerdes. "We have a city to run. I don't like raising $10 million in property taxes."
Council member Jim Kennedy was the lone dissenter. He felt raising the tax rate would chill house sales in St. Petersburg when buyers compared rates from different cities.
The 2013 budget had to be set by Oct. 1.
With the higher property tax rate, the owner of a home assessed at $75,000 would pay about $20 more in property taxes a year. A $150,000 home would incur $80 more in taxes. And the owner of a $300,000 home would pay another $200.
In a recent poll of city voters, the majority of respondents preferred a property tax hike or tapping reserves to close the budget gap, instead of more cuts, especially to libraries, parks and pools. The poll also revealed that residents did not like Mayor Bill Foster's proposed fire fee, which called for charging each property owner $50 a year.
Critics argued that the fire fee unfairly taxed the poor, while saving money for the city's wealthier landowners. Kennedy, the council member, introduced the fire fee again at Thursday's meeting, but his fellow council members didn't support him.
Even with a higher tax rate, Foster said he will pay less in property taxes than he did in 2006, like many St. Petersburg homeowners. In 2006, he paid $981 in city property taxes when his Shore Acres' home was assessed at $317,500. With an assessed value of $212,000 in 2011, Foster paid $835, records show.
Foster says he is still looking for ways to save the city money.
"We are not finished," he said. "It's a year-to-year work in progress."
The budget hearing drew fewer residents than the first budget hearing two weeks ago. Tom Tito, a member of the Bartlett Park Neighborhood Association, urged the council to shift money from reserves since the economy appears to be improving and property values could rise.
He disagreed about how the group doles out money for big-ticket projects like building a new pier.
"High taxes come from high spending," he said. "This money has to come from taxpayers."
The city's money woes aren't over. In recent weeks, Foster disclosed an estimated $5.2 million deficit for fiscal year 2012, which ends Sunday. The city must cover the shortfall with money from reserves. It can't carry it over into the 2013 budget.
Part of that deficit, $580,000, was used to prepare, secure and clean up the city before and after the Republican National Convention hosted a welcome party on Aug. 26 at Tropicana Field. Foster has refused to disclose the actual costs until the city submits a final bill to Tampa by Monday. Tampa agreed to reimburse St. Petersburg $1 million from a $50 million federal grant.
During the meeting Thursday, tension grew among the eight council members after some of them tried shifting money to pet projects.
Wengay Newton tried dedicating money for youth jobs, and Karl Nurse tried shifting money to a housing program.
Council chair Leslie Curran said she is tired of eleventh hour actions. She then criticized Foster for not fulfilling a request to provide records for the police costs for the RNC activities.
She added: "There's a huge transparency issue."
After agreeing on the property tax rate, they began discussing several budget amendments. Turmoil quickly followed.
The group deadlocked 4-4 on a motion to reject the entire budget. Kennedy, Curran, Newton and Jeff Danner dissented.
Danner criticized Foster's administration for leaving unanswered questions on housing programs, economic development and community services.
"We're being asked to adopt a budget, but we'll get the details later," Danner said.
City Administrator Tish Elston disagreed, saying: "Nothing we do is going to satisfy all of you. It's time to move forward guys."
Foster then lashed out at the group. Seven of the members, he pointed out, had met with him and his staff on Tuesday to learn all the budget details. They knew what was coming. He urged them to move forward.
The meeting ended after the group voted 5-3 to pass the entire budget. Kennedy, Danner and Curran voted no.