Steve Kornell says small fix can help St. Pete's sewage problems

ST. PETERSBURG— Steve Kornell knows his idea won't put much of a dent in the $326 million bill the city must pay over the next five years to fix its inadequate and outdated sewer system.

PREVIOUS COVERAGE: Rick Kriseman's administration lashed in St. Pete sewage report

But that hasn't stopped him from urging his fellow City Council members to adopt his idea of next year sending $2 million from the city's operating budget back to the Water Resources Department to help pay for repairing aging pipes, manhole covers and sewer plants.

Every little bit helps, he said.

"I don't think this is a radical proposal," Kornell said. "I think we have chance to do something here that is hard, that is not easy, but down the road puts us in better shape for generations."

The department has operated as an enterprise fund since the 1980s. That means it is expected to fund its operations off the utility fees charged to residential and wholesale customers. As an enterprise fund, the department sent more than $11.4 million to the city's general fund last year.

That money was transferred because the city treats the Water Resources Department almost like an independent business and charges it "payment in lieu of taxes" or PILOT and "payment in lieu of fees" or PILOF.

Kornell wants to take $2 million of that annual transfer and send it back to the department so it can be spent on fixing the sewage system. He thinks the City Council should vote on the transfer every year, so they can retain flexibility during recessions or emergencies.

PREVIOUS COVERAGE: St. Pete sewage crisis ends with no charges, $326 million bill

As a city-owned enterprise, Water Resources is exempt from taxes and franchise fees. State law allows the city to capture some of that lost revenue by collecting PILOT and PILOF from its enterprise funds.

Sometimes the money flows the other way with the city's general fund propping up enterprise funds that don't raise enough revenue on their own to make ends meet. Examples include Sunken Gardes and the Coliseum.

Water Resources has sent more than $100 million back to the city over the last decade — money that could have been used to fix St. Petersburg's sewers.

Kornell proposed sending $2 million of PILOT and PILOF funds back to Water Resources for sewer aid. Next year's budget is nearly in place and poised to be adopted by the City Council next month. So Kornell asked his fellow council members of the Budget, Finance and Taxation Committee on Aug. 17 to approve a resolution pledging to make the transfer next year.

While praising his research and creativity, council members said there was too much budget uncertainty to commit to making such a significant cut in the city's estimated $250 million operating budget.

An upcoming November vote to renew the Penny for Pinellas sales tax means $25 million dollars per year in capital projects between 2020-30 are on the table. And a November 2018 statewide referendum on expanding the personal homestead exemption from $50,000 to $75,000 could cost the city another $4.5 million out of the operating budget, said City Administrator Gary Cornwell.

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Those votes — and their potential to decimate the city's budgets— were cited by several members as reasons to put Kornell's idea on the slow track.

"I think it's premature," said Council chairwoman Darden Rice. "I think we need to preserve our flexibility."

Other council members agreed. Although taking $2 million out of the general fund to send back to Water Resources is less than 1 percent of the operating budget, it would still likely mean cuts to police, fire and parks and recreation, city budget officials said.

"Those are the places we would look for expenditure reductions. There are consequences for this action," said Budget Director Tom Greene.

The committee voted 3-1 to ask the Kriseman administration to prepare "alternate budgets" next year, showing funding for general fund programs with and without the $2 million.

Council member Jim Kennedy voted against the compromise measure, suggested by council member Charlie Gerdes.

Contact Charlie Frago at cfrago@tampabay.com or (727)893-8459. Follow@CharlieFrago.