The City’s Financial Future

Going door-to-door this year, the vast majority understood we must now fix our critical infrastructure problems: waste water, storm water, and hurricane damage.

Some did not realize the single waste water pipe passing our sewage underwater to Saint Petersburg, called Force Main 1 (FM1) could fail any day — inspection showed significant deterioration in 2011 and recommended a followup inspection within ten years. We have not yet reinspected the underwater section of FM1 now after 15 years. We are in the construction phase of the FM1 pump station, and we are in the procurement stage for the FM1 pipe, but the pipe replacement is currently UNFUNDED and estimated to cost $33M. Let me emphasize the user fees recommended by the new user fee study with a three year phase in is key to funding this project.

Another waste water problem we have identified is neighborhood distribution, Residential sewer pipes throughout the city have reached the end of service life (75 years old). Inspection shows that many pipes are disconnected, causing sink holes, and many have little pipe wall thickness. We expect a repair/replacement estimate from our inspection contractor this fall. Repairs and replacements can only be paid through user fees.

Thirdly, the tidal check valves we installed throughout the city have failed. Some will be replaced this year, and we have also funded a redesign with construction to begin as early as next year. Many of our storm drains are now 80 years old, with clogs and cracks, and also causing flooding and sink holes. Repairs and replacements can only be paid by user fees.

As I told everyone during the campaign, our estimate to recover the city is upwards of $200M. There is no way to kick the can down the road any longer. Our situation actually is dire and on the brink of disaster—still not recovered from the double hurricanes of 2024. Is there no doubt we must raise fees.

We have proven that our funds for waste water, storm water, and reclaimed water are operating at a loss. The user fees to suport these funds have not been raised in years, while, at the same time, we have experienced double digit inflation of repair and replacement costs. Our infrastructure is critically underfunded.

What about our tax rate? St Pete Beach has among the lowest property tax rate in the county (less than half of what many cities in Pinellas County pay—see the budget blog on taxes to see where your tax dollars go). Property taxes are used to pay operating expenses, which have risen double digit for years, and to repair our parks, sidewalks, and hurricane damage. Some have suggested one-time assessments as an alternative to raising our tax rate as a solution to repairs. There is one downside to assessments, and I believe the basis for desiring a one-time assessment is flawed. Let me explain.

First, let’s discuss the fear—we are afraid that if we raise taxes, they will never come back down. But look at the fact that we have reduced our tax rate two years in a row, and now we have half the tax rate of Clearwater and Saint Petersburg. It would be great if we didn’t want to repair our parks, and could somehow cut staff and magically turn back healthcare costs. Property values have not increased as the same pace as costs, so the property tax we receive now is NOT ENOUGH.

Secondly, here’s the fallacy of one-time assessments: the current resident pays for ALL the COST for an asset that may last for another 70 years. It is only fair to spread the cost into the future.

We must increase user fees because of failing infrastructure. We must increase our tax rate if we want our parks, sidewalks, and other hurricane damage to be repaired. Otherwise, we would be looking at cutting staff (we are already a super lean city) or closing current services that might be less of a priority to residents.