Impact
Can property taxes ease St. Pete’s utility hikes?
“I want us to look at property tax and utility rates as one big bill from the city.”
Last week, City Council decided to increase utility rates, with the final vote slated for Aug. 27. During those discussions, Vice Chair Richie Floyd proposed a solution that he contends would unburden St. Pete residents of excessive utility rate increases: freeze millage rates and decrease the transfer of utility revenue into the city’s general fund.
Floyd’s argument challenges the way the city fundamentally allocates revenue for its general fund. As far as St. Pete’s utilities go, water and wastewater operate as enterprise funds, meaning customers pay rates for the services they use, and that revenue supports the systems’ operations, maintenance and capital needs.
Those funds also make payments into the city’s general fund through Payment in Lieu of Taxes, commonly called PILOT. The payments are intended to function similarly to the property taxes a privately owned utility or business would otherwise pay.
Instead, Floyd is arguing to reduce those transfers in future budgets, leaving more money collected through utility bills within the utility system itself.
To offset the resulting loss to the general fund, the city could consider keeping its property tax rate, or millage rate, from declining as property values rise. In theory, if enacted, utility bills could remain lower for renters while a greater share of the city’s revenue comes from property owners.
The potential shift matters because the two revenue sources do not necessarily fall on the same people. Utility bills are paid by customers using the system, including renters. Property taxes are collected from property owners, including investors and others who own property in St. Petersburg but live elsewhere.
In a previous conversation with the Catalyst, Floyd said his solution “could make things a little more equitable in St. Pete.”
Local developer and Feldman Equities CEO Mack Feldman said Floyd’s idea has merit.
“This boils down to how we’re allocating the burden of keeping our utility system solvent. Shifting more of the burden to property taxes is fairer than increasing utility fees,” said Feldman.
“For example,” he continued, “the owner of a vacant parcel that is not paying utility fees still benefits from the increased investment in our utility system because the development potential of the parcel is improved. This principle depends on taxes being broadly applied and proportional to actual value, which they are not in practice due to homestead exemptions.”
The idea Feldman is orbiting is that Homestead Exemption complicates Floyd’s “fairness” argument because property taxes in Florida are not necessarily proportional to a property’s current market value. To wit: a homesteaded owner generally receives exemptions from taxable value, and Florida’s Save Our Homes rules limit how quickly the assessed value of a homesteaded property can increase. That means two houses with the same market value can have substantially different taxable values depending on how long their owners have lived there and other circumstances.
The more immediate problem facing Floyd’s proposition, however, isn’t the unevenness of Florida’s property tax system, but state law.
Setting millage rates every year is one of the most important tasks City Council handles. Under Florida’s Truth in Millage, or TRIM, process, local governments determine their millage rates annually. That raises the question of what instrument or legal precedent could be used to freeze the millage rate in advance of future City Councils?
Clarifying this issue, Floyd said that by “freeze,” he means on a year-by-year basis to “prioritize utility rate decreases over millage rate decreases.”
“The utility rate is impacting our residents more than the property taxes are,” Floyd said.
“I want us to look at property tax and utility rates as one big bill from the city,” he added. “We need to figure out holistically how to lower that cost burden, and I believe it will be most effective for most residents to focus on utility rates: lowering or slowing the cost of increase.”
Even on a year-by-year basis, Floyd’s argument is sound to the extent that property values either increase or remain static. At the moment, however, their growth has slowed, and in an unforeseen economic collapse, values could reverse significantly.
Feldman conceded that caveat, too, but asserted that “Floyd’s principle is worthwhile over the long run,” because, he said, “it’s a safe bet that values will grow, but I suspect property taxes are more volatile than utility fees.”
Hence Floyd’s insistence that this is a long-term solution, not an immediate fix.
Floyd reasserted that while the decision would be discussed annually, this is something whose benefits could be felt over decades. The rationale follows the same logic Feldman proffered: property values may not rise every year, but over the long run, Floyd is betting they will.
JoAnn McCall
August 18, 2026at6:31 am
I am an 85-year-old homeowner living on an income that does not rise at the same pace as my utility bills. Each increase places a greater burden on seniors and other residents with limited or fixed incomes.
For several years, I have believed the City should consider funding more of its water-system repairs and improvements through the property-tax millage rate rather than placing so much of the cost into monthly utility charges based on daily usage. Property owners benefit from a reliable, well-maintained water system and from the increased value that public infrastructure improvements can bring to their properties. It seems fair to consider whether those costs should be shared more broadly according to a property’s appraised value.
St. Petersburg has seen substantial condominium and other new development. The City should carefully examine whether the growing taxable value of these properties could provide additional revenue for infrastructure needs, reducing the need to rely so heavily on monthly utility bills.
Property taxes are generally paid annually, which gives homeowners more time to plan and, if necessary, seek assistance or financing. A high monthly water bill is different. For lower-income residents, particularly seniors, there may be no time or resources to recover before service is shut off. Losing water service is not a minor inconvenience; it affects health, sanitation, safety, and the ability to remain in one’s home with dignity.
AI reviewed my statement for more clairty.
Jason Scott
August 17, 2026at10:23 pm
Richie has the answers and always has creative solutions for residents. I hope the city follow through with his idea!
JAMES GILLESPIE
August 17, 2026at8:27 pm
mr herrmann i suspect speaks for many residents on the tax matter. i agree with his points and hope council member floyd can score/force some improvements in costly service areas. cito should be able to explian his point about the pilot program.
bill herrmann
August 17, 2026at5:20 pm
Your title is rather misleading! A better title is “Can the utility fund stop subsidizing property taxes!”
Every well run city operates their utility as an ‘enterprise fund’. This means it is a stand-alone financial entity. Enterprise funds may pay the General Fund (where property was revenue goes to) fees for computers, purchasing services, etcetera. Enterprise Funds may even pay a REASONABLE fee for taxes, commonly called a Payment in Lieu of Taxes or PILOT.
The City of St. Petersburg treats the utility funds (our water/sewer/reuse/stormwater/solidwaste) as an ATM. For 6 months I have been asking about the PILOT. AND then add a PILOFF or Payment in Lieu of Franchise Fee, something that is irregular.
In an effort to understand how the PILOT was being determined, on March 23 I asked : “Please provide a copy of the schedule of the properties that paid PILOT and the basis for the PILOT assessment.” When that did not get a straight answer, on June 11 I asked for: “The schedule or listing of parcels or accounts included in PILOT revenues, including amounts assessed and paid per parcel/account, if maintained.”
On June 16 I was told, “We do not have the schedule or listing as described.”.
I then confirmed this by asking “Your response appears to state that the official position is that The City of St Petersburg does not have a schedule of parcels it charges the various enterprise funds a PILOT.”
Simply stated, the city either could not say how the PILOT was calculated, or refused to provide it (a misdemeanor)
Staff, council, and the current mayor may speak affordability- it is great to see CM Floyd stepping up and doing the hard job of pushing this matter forward. Hopefully other councilmembers will see the merit in lowering the PILOT.