Here are 4 things to watch as Pinellas’ challenging budget season starts

It’s budget season in Pinellas County.

Over the next 2½ weeks, county commissioners will spend six mornings listening to officials and department directors, from the supervisor of elections to the parks department, detail their monetary needs and wants for the coming years. In July, the County Commission will get its first look at a budget, and it’ll need to approve one by the time the new fiscal year starts on Oct. 1.

In each of the past two years, Pinellas has reduced its property tax rate while still pulling in more tax money, thanks to climbing property values. Putting together this year’s budget will likely be a challenge, though, as the county faces many of the same financial pressures weighing on local governments around the state. They include inflated material and labor costs, an expensive change to the Florida Retirement System and a need to keep employee salaries and benefits competitive.

“This year’s not a time to be adding,” County Administrator Barry Burton said. “We’re just trying to keep our head above water.”

Here are four storylines to watch as Pinellas’ 2023-24 budget comes together.

Property values and tax rates

First, property values kept growing over the past year. According to estimates by Pinellas County property appraiser Mike Twitty, the countywide taxable property value is up by about $13 billion, about a 12% increase from 2022.

That gives county commissioners a deeper tax pool to work with this year. The question is how much they’ll actually want property owners to pay. County leaders have touted a two-year string of tax rate reductions, just the second time that’s happened in the past 35 years. Last year, the millage — the amount an owner pays per $1,000 of taxable property — dropped from $5.13 to about $4.74.

But some officials, including Commissioner Dave Eggers, pointed out that the drop in the rate didn’t offset the increase in property values, meaning property owners still paid more in taxes than in the previous year. That was a sticking point for Eggers, the lone no vote on the final budget approval. He’ll pursue the same goal this year, he said, but “it’s going to be that much tougher to make that happen.”

Brian Scott, who was elected to the commission last fall, said he also expects the commission to face a challenge in getting tax rates as low as some commissioners want.

“I want to do everything I can to ease the tax burden on the residents,” he said, “but there are a lot of inflationary pressures.”

Climbing costs

Burton said the county is still “trying to get a handle on how hyperinflation has hit us.” Road construction costs are up 30 to 40%, he said. Costs for chemicals used by utility departments are up even more. Contracts are more expensive. Burton said he’s told department directors to “be creative to reduce their costs.”

“I didn’t give my departments an automatic inflation adjustment,” he said. “I said, ‘No, figure it out.’ But that’s a reason that over the next month and a half, two months, it’s going to be real crunch time.”

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Another reason: The state Legislature this year expanded the Florida Retirement System, the state’s pension plan. The county projects that the changes, which include a reduction in the age or service time first responders must reach in order to collect a pension, will cost the county about $15 million this year, Burton said.

Other costs are proving more mysterious. Employee health care costs are up 20% over the past year, Burton said. He’s not yet sure whether it’s a one-time spike, perhaps caused by employees seeking elective surgeries or other procedures they put off during the pandemic, or if it’s a continuing cost the county will have to account for.

Keeping employees

The changes to the retirement system will cost the county money that “doesn’t go in employees’ pockets today, but it goes in employees’ pockets in the future,” Scott said. Still, he said, “people need to be paid what they’re worth.”

Last year’s budget included raises and salary-range adjustments for county employees. County commissioners said they recognize that inflation is hitting employees hard, too, and that they have competition in both the public and private spheres. Burton noted that, in the past year, the county had to give unplanned raises to 911 operators as their ranks dwindled, with some leaving for higher pay in St. Petersburg or Tampa.

In the past, financial pressures have led the county to trim staff hours and cut positions, and Commissioner Charlie Justice said he doesn’t want the county to resort to those measures this time.

“In ‘08, ‘09, when we had the recession, the county really cut hundreds and hundreds of positions, and we’ve built back some of that,” he said. “We’re not fully back to the staffing levels that we were pre-recession.”

A new commission dynamic

In seeking to address this year’s financial pressures, Scott and Eggers suggested the county look to its own reserves. Last year’s budget included $156 million in reserves, 21% of its total revenue. County policy holds that the reserves be at least 15%.

Reserves have grown in recent years, Eggers said, in part because the county put away money during the pandemic to prepare for a possible recession. A recession hasn’t come, and he said the county should pull from that well to reduce the burden on taxpayers.

“It sends a signal that your government that represents the people is cognizant of the predicament that many people are in,” facing high costs of living, he said.

How the commission addresses the reserves may be indicative of its new political dynamic. Wins by Scott and Chris Latvala last fall gave Republicans a majority on the board for the first time in nearly a decade.

“I think there might be a fiscally conservative oriented commission now,” Eggers, a Republican, said, “but we’ll see.”

Justice, a Democrat, noted that recent Democrat-led commissions have increased public safety spending and reduced taxes, and he expects commissioners to work well across party lines.

“We haven’t operated the commission in a real partisan way,” he said. “We try to get the work done.”