Fiscal times are good in St. Pete as budget talks revolve around raises, possible tax cut

ST. PETERSBURG — Climb into a time machine and set the way-back button to four years ago: Destination? City Hall.

St. Petersburg City Council members battled then-Mayor Bill Foster over an eviscerated budget with a $10 million fiscal hole to plug, the result of several years of fiscal havoc brought on by the Great Recession. The council reluctantly raised property taxes to cover the gap.

Zip back to the present and behold the change. Next year, city revenues are projected to be $23 million higher than that bleak year.

The city's pension funds are flush, and its debt well within limits desired by ratings agencies.

The state of the city's economy?

"Great," said Deputy Mayor Kanika Tomalin. "And moving in the right direction."

City budget officials did project a $2.8 million temporary deficit recently. But if past years are any indication, that shortfall will vanish by late September when the City Council approves next year's budget.

Budget officials explained that shortfall as a combination of seasonal swings in tax revenue and an early uptick in police overtime costs. Police administrators halted most overtime in March and have stepped up hiring of full-time officers to further reduce overtime costs.

Still, worries over that deficit — larger than recent years — concerned council members enough that they delayed fully funding a tree-planting program last week.

Yet a small, probably ephemeral, shortfall shouldn't obscure a larger portrait of plenty.

Prior year surpluses have swelled city reserves to a robust $48 million, bolstered by a bullish stock market and $1.5 million in revenues that Mayor Rick Kriseman stashed away in reserve funds during his first two years in office. The mayor has pledged another $500,000 to bolster reserves this year.

Fat times, it seems, have come to the Sunshine City. But if more money is coming in, what's it being spent on?

Short answer: a lot of different things.

A partial list of Kriseman's plans include increased investments in street median maintenance ($558,567); intervention efforts for at-risk youth ($750,000); raises for city employees (at least $4.6 million); police overtime pay (nearly $2 million); and $375,000 to replace fire equipment.

Some council members have started to openly wonder if some of that money should be given back to taxpayers.

Council member Jim Kennedy voted for last year's budget with an expectation that the city's tax rate of $6.77 for every $1,000 in taxable property value would be cut next time around. But Tomalin told council members earlier this month that any cut would be premature.

The council, after a miniscule, largely symbolic cut in 2013, hasn't touched the property tax rate. But in a city that's on track to have collected more than $266 million in property taxes since then, rising property values translate into higher property tax bills.

Earlier this year, five council members — a majority — indicated that they were willing to consider a property tax cut.

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If tax cuts may be on the table, so are labor costs.

A second year of rising wage costs worries council member Karl Nurse. Hiring 12 police officers and 18 firefighters last year helped drive a 9 percent increase citywide in salaries and wages. This year, labor costs are projected to rise at least another 3.5 percent to $114.5 million — the largest slice of the city's general fund, which pays for day-to-day operations.

This year, the general fund is projected to need between $231 million and $236 million. The overall estimated budget, including water and other enterprise funds, comes to $507 million. By city charter, Kriseman must submit a balanced budget by July 15. Final council approval is scheduled for Sept. 22.

If city workers get a 3 percent raise as they did last year, costs rise even more, he said.

Nurse expressed surprise earlier this month in a budget workshop when it was mistakenly stated that the city's labor costs were rising another 9 percent this year. That increase was later downsized, but even the budgeted increase of 3.5 percent is unsustainable, Nurse said.

"You can't do this thing year after year," he said.

In the private sector, Nurse said, raises are paid for with increased productivity. He'd like to see more technologically-driven savings, greater energy efficiency or other cost-saving measures.

But he hasn't seen much of that kind of thing yet.

"One of the downsides of having more money is that pressure lessens," Nurse said.

All three city unions — police, fire and city workers — will negotiate new contracts. In recent years, those negotiations have often dragged past the budget approvals. And Rick Smith, chief of staff for the Florida Public Service Union, which counts 1,600 members among city workers, says that the 300 professionals represented by the union went five years without raises during the lean years. Blue-collar workers went two years, he said.

Raises would "partially catch-up" for those lost years, but also would help city workers cope with rapidly rising rents in the city, he said.

And the city can afford it, Smith said.

"It's totally normal and manageable for the city budget," he said.

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