PINELLAS PARK — The agency that runs the countywide bus system charged the federal government too much for some insurance costs and now has to return $1.2 million to Washington.
The discovery that the Pinellas Suncoast Transit Authority had been wrongfully billing the federal government since late 2009 came as a shock to board members. They found out when PSTA chief executive officer Brad Miller told them about it in an e-mail Thursday night.
"I don't think any of us had any knowledge of that until Brad sent the e-mail out," board member and Pinellas County Commissioner Ken Welch said Friday.
Welch said he did not understand what happened.
"I'm looking forward to the explanation," Welch said. "I'm sure that will be part of our agenda" during a Monday budget workshop.
Miller, who has worked for the PSTA only since Monday, said the glitch began when the bus agency received a grant from the Federal Transit Authority in 2009. The grant provided for the reimbursement of maintenance-related expenses. One of those is the cost of workers compensation insurance benefits for PSTA maintenance workers only.
"The PSTA had been requesting reimbursement for all (500-plus) employees (not just) the maintenance staff. That was the problem," Miller said.
A PSTA accountant discovered the problem Thursday when questioning a higher-than-usual bill for workers' compensation benefits.
"I'm very happy that it was discovered now and we were able to identify that no, this was not right," Miller said.
Miller said he and the accounting staff met Friday to put controls in place that would prevent a repeat of the situation. Among the measures is increased training for all accounting staff employees, not just the head of the department.
The PSTA also contacted the FTA to let federal officials know what happened and to offer to pay the money back. Miller said the FTA has accepted the PSTA's explanation and offer. The situation will not adversely affect any future dealings between the two agencies, he said.
But the real problem comes with the money. The PSTA has arranged to pay about $481,000 of the debt, but about $729,000 remains.
At a quick glance, it would seem the PSTA could easily come up with that from its $15 million in reserves. But most of that money can't be touched because it's earmarked for other things — such as two months' operating expenses in case of a hurricane strike or other emergency. That leaves the PSTA with only about $2.5 million in reserves it can tap to reimburse the federal government.
PSTA board members are already struggling with the budget for the upcoming fiscal year, Welch said.
They raided the PSTA's savings account the past couple of years to keep from raising taxes or from cutting services. The hope was that the savings would last long enough for the PSTA to hold a referendum to ask voters to approve a sales tax to pay for the bus system rather than using property taxes.
"We've been on this downward path for a couple of years now," Welch said.
Board members, he said, are already considering a 28.6 percent increase in the property tax rate from $0.5601 per thousand dollars of taxable assessed property value to $0.72 per thousand dollars of assessed property value. A house assessed at $150,000 with a $50,000 homestead exemption currently pays about $56.01 in property taxes for PSTA alone. If that increase goes through, that homeowner would pay $72 a year.
The increase in taxes would offset the need to lay off employees or cut services by as much as one-third, Miller said.
Reach Anne Lindberg at [email protected] or (727) 893-8450.