St. Petersburg city officials are weighing a new approach to the rising cost of water and wastewater services. At a recent council meeting, Vice Chair Richie Floyd urged colleagues to treat property taxes and utility fees as a single bill for residents. His proposal calls for freezing the city’s millage rate and curbing the transfer of utility revenue—known as Payment in Lieu of Taxes (PILOT)—to the general fund.
How the proposal would work
Currently, St. Petersburg’s water and wastewater systems operate as enterprise funds. Customers pay rates that cover operations, maintenance, and capital projects, and a portion of that revenue is sent to the general fund through PILOT, mimicking the property‑tax contribution a private utility would make. Floyd argues that by reducing these transfers, more money would stay within the utility system, potentially limiting future rate hikes.
To make up for the shortfall in the general fund, the city could keep the millage rate from declining even as property values rise. In theory, this would shift a larger share of revenue collection to property owners while keeping utility bills lower for renters and other users.
Support and concerns
Local developer Mack Feldman, CEO of Feldman Equities, backed the idea, saying it would distribute the cost of maintaining the utility infrastructure more fairly. Feldman noted that owners of vacant parcels benefit from improved utility services without paying utility fees, and that a broader tax base could better reflect the true value of property.
However, Florida’s homestead exemption and Save Our Homes provisions complicate the fairness argument. Homesteaded owners receive exemptions that lower their taxable value, and assessment caps limit how quickly their taxable value can increase. As a result, two homes with identical market values may face different tax bills, depending on how long the owners have lived there.
Legal and practical hurdles
Floyd’s plan also runs into state law. Florida’s Truth in Millage (TRIM) process requires local governments to set millage rates annually. Freezing a rate would need a legal mechanism or precedent that allows a council to lock in a millage for future years while still complying with TRIM requirements.
Floyd clarified that his “freeze” would be evaluated each year, prioritizing utility‑rate reductions over millage‑rate cuts. He emphasized that utility costs are currently the larger burden for residents.
Economic outlook
The proposal assumes that property values will continue to rise over the long term, providing a stable tax base. While recent data show slowed growth and the possibility of a market downturn, both Floyd and Feldman view the strategy as a long‑term solution rather than an immediate fix.
Feldman admitted that a sudden economic collapse could reverse property‑value trends, but he maintained that property taxes are more volatile than utility fees, making the latter a more predictable revenue source for the city’s infrastructure needs.
Next steps
The council will revisit the idea during its August 27 vote on utility rates. If adopted, the approach could reshape how St. Petersburg funds its essential services, balancing the tax burden between property owners and utility users for years to come.
Original reporting: St. Pete Catalyst — read the source article.
