Property tax rates to decline amid soaring values

St. Petersburg property owners now hold $35.26 billion in taxable value. That will ensure a 10.43% increase in ad valorem revenue despite a fourth consecutive rate cut.

A historic vote allowing the Tampa Bay Rays and Hines to oversee a $6.7 billion mega-project was not the only item on Thursday’s city council agenda. Mayor Ken Welch’s administration also proposed a 6.45% millage rate – the percentage used to calculate property taxes – in fiscal year 2025.

The city will still accrue $218.42 million in FY 2025, which begins Oct. 1, with the .015% reduction. Municipal tax coffers gained $197.79 million in ad valorem revenue this year.

“Based on state law, we only have a few ways to lower the cost of living in broad strokes across the city,” said Councilmember Richie Floyd. “Lowering the millage rate is one of those ways, but it is not the only way.

“Lowering the millage rate while raising utility rates disproportionately puts the impact of funding city services on our residents and working people.”

A graphic showing St. Petersburg’s decreasing millage rates. Screengrab, city documents.

Welch presented his recommended budget to the council July 11. While rates could change between now and public hearings in September, municipal utility customers will feel a financial pinch.

If approved, customers with reclaimed water would see a 9.21% rate hike. Those without can expect an 8.29% monthly increase.

Citing the oft-repeated “Stewart Principle” (named after former City Councilmember Bob Stewart), Welch stated that “our needs are infinite, while our resources are finite” at the July 11 presentation. “So, we work to balance our fiscal resources with our diverse community needs in a way that is equitable, sustainable and impactful.”

Floyd believes millage rate cuts inequitably favor property investment and development firms often based in other areas. He called those reductions “regressive” and favored providing utility relief.

St. Petersburg’s expenses continue increasing alongside ad valorem revenue. City officials must keep $393.34 million in the general fund to meet planned expenditures, an additional $28.8 million over FY 2024. The overall operating budget is $900.51 million.

St. Petersburg’s $900.51 million operating budget represents a 9.4% increase over Fiscal Year 2024. Screengrab, city documents.

The municipal millage rate peaked at 6.77% from 2014 through 2016. It decreased substantially from 2022 through 2024 as property values soared by double digits.

Councilmember Ed Montanari noted that he annually requests property tax reductions. Typically, “a lot larger than the ones we adopt … especially as we continue to grow as a city.”

However, Councilmember John Muhammad agreed with Floyd. He hoped the administration would prioritize a “balanced approach” that adequately funds essential services while reducing the average resident’s financial burden.

“Considering the impact of the (utility) rate increases … I think it’s contradictory and sends a mixed message for us to do it the way we have been,” Muhammad said. “I was hopeful after our last conversation last year about this as a strategy – we would see that in a more material and substantive way.”

The issue is not new. In FY 2024, monthly municipal utility bills increased by 4% to 8.5% due to aging infrastructure and inflationary pressure. Stormwater rates spiked 15% in 2023.

Residents must also navigate soaring food, electricity and other living costs. Many must choose what bills they can afford in any given month, which led the city to launch a Renter Utility Relief program in March.

Councilmember Gina Driscoll elaborated on Montanari’s sentiment. She noted that the millage rate reduction would benefit all residents as tax coffers would still increase due to elevated property values. “That’s actually a sign of a healthy city,” she said.

“We, in turn, use that to increase services and quality of life in our city,” Driscoll added. “There is a good point to be made about the utility rates.”

She noted that the city needs utility funding to continue improving infrastructure. However, Driscoll supports expanding relief programs for those “most impacted” by steadily increasing water, sewer and trash removal costs.

Thursday’s discussion intrinsically intertwined with the Historic Gas Plant’s $6.7 billion redevelopment – and not because council members debated time limits for speaking on the matter before approving the proposed millage rate.

The city will dedicate $142 million to upgrading site infrastructure and $287.5 million to offset construction costs for a new $1.37 billion Tampa Bay Rays ballpark. Officials will finance most of its contribution through tax-exempt bond issuances paid back by rising property values.

They believe ad valorem revenue will increase, on average, by 7% annually through 2042. Administrators have called that a conservative estimate in redevelopment workshops.

“We feel comfortable and confident that 7% is achievable … based on historical performance,” said budget director Anne Fritz in May.

The city council voted 6-2 in favor of the proposed millage rate. Floyd and Muhammad opposed the reduction. Later that afternoon, they joined Councilmember Lisset Hanewicz in voting against the Gas Plant proposal.