Budget 2027 Workshop 2

To think about problems and practical solutions, I’ll use round, approximate estimates to highlight issues and how to structure the budget next year. Everything you read in this newsletter is my own opinion and current thinking.

Relative to the 2027 budget, the District 3 top priorities are wastewater and stormwater. These priorities are logical, but also based upon the door to door feedback during the election campaign.

District 3 Priorities: Based on door to door feedback:

1. Wastewater (sewage) pipes in most neighborhoods are 70 years old, and the single underwater pipe that transfers all the sewage to the processing plant in Saint Petersburg is nearing service life. What’s the plan?

2. Stormwater (street drainage) systems are not functional in portions of the three largest neighborhoods in District 3. A foot of salt water (or rainwater) is not acceptable in today’s world of computerized vehicles. Why can’t we keep this water off our streets?

Funding: Restoration or replacement costs exceed current property tax and fees. (This is why our city has always struggled with funding infrastructure.) Now we have deferred maintenance. We’ll discuss key issues:

1. Why are we talking about increasing fees?

2. Where do the high taxes I already pay go?

3. How do other cities solve this problem?

Details:

So, beginning with PRIORITY ONE, wastewater (sewage), do we have a smart maintenance plan? Though we have not formed a viable, funded, 10 year plan, we have started in the right direction.

—We are currently rebuilding the main pump station that pumps all our sewage to Saint Petersburg.

—After the main pump station is done, then we must replace the underwater pipe to Saint Petersburg (unfunded, and 5x more expensive than the main pump station).

—We are running cameras through all the wastewater lines in neighborhoods. The video process is almost complete, and a report is expected in late August. This will show us the breaks in our sewage lines. (We know there are breaks because the sewage treatment facility says we have too much salt water in our sewage and our pump stations fill up with sand — very alarming, because this sand is coming from under our streets creating voids that will become sink holes if not repaired.) Once we have identified where the problems are, then we can hire contractors (and then know how much funding we need to fix neighborhood pipes). 

Now on to PRIORITY TWO, stormwater (drainage): Let’s begin with the plan — we don’t have a funded plan. As with wastewater, these projects can take 10 years to repair and replace city wide as required. To agree on a 10 year plan we must correctly understand the problems.

Problem: Most simply, our lowest elevations are too low for gravity to provide continuous drainage. Any solution that uses gravity will not provide adequate service in these areas (monthly and sometimes daily salt or fresh water over one foot in depth on the public streets).

Solution: We have paid for more than 20 studies since the first study in 1993 which recognized that gravity alone would not serve these lowest streets, and the most effective solution has always been expensive sump pumps.

Sump pumps require less maintenance than valves because daily yard debris like mulch or grass or leaves will not clog a heavy duty pump. Also, because the sump pump system pumps water over the seawall instead of through the seawall, salt water exposure to components and marine growth is minimized. Finally, sump pumps are electric, quiet, and hidden underground.

(What about the Tidal Flex Valves that were installed as a cheaper solution? They only work at lowest tides. Their design calls for direct contact with salt water and, in our city, valves are observed to suffer marine growth such as oysters, barnacles, and algae within days, not months. Also, any neighborhood debris like mulch, sticks, palm berries, etc. can lodge in the valve causing it to leak salt water — also documented in our city. Hence, to maintain the 40 valves now installed would require continuous maintenance - not practical and only partially effective (only works at low tide). Another key failure with tidal valves not often mentioned is that all the water is never able to be removed from the pipes and collection points. Why? Because the value only opens when the water on the street is high enough to exert the force required to open the valve. As the water drains to a certain level, the valve closes and water remains. Think mosquitos. Flex values are well marketed, and initially present as a great alternative to pumps, but deeper research and asking hard questions shows that tidal valves are a cheap alternative to sump pumps and cannot deliver the same level of service.)

We live in the best town in the world. Demand continues to rise for our real estate, and supply is limited — our comprehensive plan caps our resort and residential height. The area of our city is only 2 square miles! We live in a small town with 7000 residential properties and 3000 transient units. Any money we spend on infrastructure will pay off. This brings us to the focal point, funding.

Funding, the big picture:

1. Why do we struggle with funding when we pay so much in taxes? Hold on! In fact, our city property tax rate is half of Saint Petersburg and Belleair.

•  St. Pete Beach: 3.0913 mills (unchanged for FY 2025/2026). 

•  Belleair Shore: 0.5345 mills (very low).

•  North Redington Beach: 1.5000 mills.

•  Redington Shores: 1.6896 mills (confirmed for 2026). 

•  Indian Rocks Beach: 1.7300 mills.

•  Indian Shores: 1.8700 mills.

•  Redington Beach: 1.8149 mills.

•  Treasure Island: 3.8129 mills.

•  Safety Harbor: 3.9500 mills (stable for years). 

•  Dunedin: 4.1345 mills.

•  Gulfport: 4.0258 mills.

•  Oldsmar: 4.0500 mills.

•  Clearwater: 5.8850 mills (higher in some downtown/dev areas).

•  Largo: 5.5200 mills.

•  Pinellas Park: 5.6500 mills.

•  Kenneth City: 5.4373 mills.

•  Tarpon Springs: 5.3700 mills.

•  South Pasadena: 5.1750 mills.

•  St. Petersburg: 6.4525 mills (stable). 

•  Belleair: 6.9777 mills

The reason we struggle: our city only keeps 20% of the property tax but we have extremely high repair and replacement costs at this time.

Here’s a rough itemization of your tax:

County government: county admin, roads, libraries, parks, EMS: 30%

County-wide schools: 40%

County-wide other special tax districts: 10%

City of St Pete Beach: city admin, roads, libraries, parks, EMS: 20%

Where our tax goes in dollars $52M paid to the county and city (the St Pete Beach average home value is $770K with a average tax bill of $7400 per year x 7000 residences, so we are looking at only the residential portion):

County government: $16M

County-wide schools: $21M

County-wide other special tax districts: $5M

City of St Pete Beach: $10M from residential zoning

Thus, the city receives an average of $1,400 property tax per year per residence.

The key point: only 20% of your tax stays in the city. The biggest part of your tax bill goes to county-wide items as listed above. (For example, we pay county schools twice as much as we pay to our own city). ALL THE FEES WE PAY STAY IN OUR CITY. Thus, any additional expenses we need to pay for should be paid by fees rather than by raising property taxes. 

 (ADDENDUM 7/27/2026: as we raise millage, increases beyond the required county assessment do stay in the city, effectively increasing the percentage of dollars that stay in the city.)

Residential and Commercial Properties pay $15M in property tax to THE CITY. Why does the city budget revenue show $49M, and where does all this go?

Total Revenues we pay into CITY FUNDS: $44M about $4500 per household 

General: 65% ($29M) Taxes and Fees about $2900 per household

Capital: 4% ($2M) Taxes and Fees about $200 per household

Wastewater: 22% ($10M) Fees about $1000 per household

Resiliency: 0% ($0M) 

Stormwater: 1% ($.5M) Fees about $50 per household

Parking: 0% ($0M)

Building Fund: 4% ($2M) Taxes and Fees about $200 per household

Reclaimed Water Fund: 3% ($1M) Fees about $100 per household

Multimodal Fund: 1% ($.5M) Taxes and fees about $50 per household

Fleet Fund: 0% ($.1M) Taxes about $10 per household

The difference between the $49M budget revenue and the $44M we pay in property tax and fees is the $5M from grants, appropriations, and the Penny for Pinellas sales tax refund (of course we pay sales tax too, but that goes to the state, and we are refunded about $70 per household per year). And, remember, the numbers about are how much you pay our CITY and does not include taxes you pay to the county and state. The average total tax and fees paid per household to the city is $4500 per year.  The city receives an average of $3100 in fees per year per unit (household and hotel rooms).

Let me highlight again, I’m thinking in rough estimates for comparisons and understanding the relative sizes. The city will have an exact FEE STUDY this summer as part of the 2027 budget process.

Funding alternatives for critical infrastructure:

The 2023 estimated cost to replace the underwater sewage line to the treatment plant was $30M, and 20 drainage pump stations for Districts 1, 2, and 3 will cost $60M. That’s a total cost we need of at least $90M in additional revenues for wastewater and stormwater over 10 years — that’s $9M per year in addition to our current expense. This would be $900 per year increase per household.

With a 30 year bond, the annual payment would be $5.5M, about $550 per year increase per household.

(Addendum 7/27/2026: obviously this would be phased in if projects are sequenced, and less expensive if projects can be scaled down. Our initial meeting with the contractor is 7/30/2026 at the Community Center at 6pm.)

A bond allows 60% less in fees per year. Remember that not only are these estimates, but also we have only included wastewater and stormwater.

The cost to renew our infrastructure service life is very large, but cannot be pushed out any further. Cities choose municipal bonds for end of service life projects — to spread the cost over 30 years instead of 10 years. Since the service life of these systems is in excess of 50 years, it’s logical to spread the cost over more of the usage time and allow future users to share the cost.