South Pasadena approves double-digit property tax rate hike
- Commissioners say higher rate is needed to protect reserves as city's tax base shrinks
SOUTH PASADENA — City commissioners approved a double-digit property tax rate increase Sept. 16 after Vice Mayor Thomas B. Reid abandoned plans to propose a lower rate, saying the finance department had convinced him the higher levy was necessary.
The commission unanimously adopted a 5.8106-mill tax rate and a nearly $16 million budget for the fiscal year that begins Oct. 1. The meeting lasted all of 13 minutes, with no residents speaking during either final public hearing despite the steep millage increase.
The new rate is 10% above the rollback rate of 5.2824 mills — and 12.3% higher than the city's current rate of 5.175 mills. The rollback rate brings in the same property tax revenue as the previous year, minus new construction.
For a homesteaded property with a $300,000 assessed value and $250,000 taxable value, the new rate would increase the annual city tax bill by about $159, to $1,452.65, city figures show. For a $400,000 property with a $350,000 taxable value, the increase would be about $222, bringing the city tax bill to $2,033.71.
Even with the tax hike, the city expects to use $532,670 in general fund reserves to balance the budget.
A change of mind
Reid said he had arrived at the meeting prepared to propose a lower tax rate but changed his mind after reviewing the numbers with city staff.
“I came up here with numbers written down all over the place to make a motion for a lower rate than what you suggested, but I'm not going to do that,” he said.
Reid thanked Finance Director Heather Guadagnoli and her staff, saying they had convinced him that the proposed rate was necessary.
“You've done your homework and you've proven to me that you've done your homework,” he said. “So you got me at the finish line.”
Other commissioners also defended the increase, pointing to rising expenses, declining property values and uncertainty over the proposed property tax measure on November's ballot.
Commissioner Gail Neidinger said the city had scrutinized departmental budgets and deferred nonessential expenses but still faced a reserve draw of about $500,000.
Mayor Arthur Penny recalled that the city once had reserves equivalent to 13 months of operating expenses, a cushion that had diminished over the years. He said having more money available would have helped the city respond to the 2024 hurricanes.
Penny also noted that the city had provided tax relief after hurricanes Helene and Milton by keeping last year's millage rate below rollback and waiving building permit fees for more than a year.
Commissioner Mark McAlees said commissioners had spent considerable time reviewing the budget with staff before concluding that the higher rate was necessary.
Pressure on reserves
At the Sept. 9 commission meeting, resident Shawn Brown questioned why the city needed to raise property taxes and what was driving the increase.
Penny pointed to rising costs, including the city's fire department and Pinellas County Sheriff's Office contracts.
“Everything else is just what it costs to run the city,” Penny said.
Brown also asked how Amendment 3, the proposed property tax measure on the November ballot, could affect the city.
Penny said it could cost South Pasadena more than $900,000 in the first year and about $1.2 million in the second. He said the city would have to find another tax, fee or revenue source to replace the lost money because much of it pays for public safety.
When Brown asked whether the city was already making plans for that possibility, Penny simply replied: “Wait and see what happens.”
Guadagnoli later underscored the pressure on the city's finances.
“Using the proposed millage rate, we are budgeting a deficit of over $532,000 in the general fund,” she said. “And if you reduce the millage rate below that, it will increase that deficit even further.”
The resolution adopted Sept. 16 puts a number on what would have happened if commissioners had instead kept the current 5.175-mill rate.
Doing so would have generated about $554,000 less revenue and reduced general fund reserves from the equivalent of about 7.7 months of operating expenses to about 6.5 months, according to the resolution.
The tax increase comes as South Pasadena's tax base has shrunk.
The city's total taxable property value fell 0.72%, from $913.9 million to $907.3 million, making it the only one of Pinellas County's 24 municipalities to record a decline on the tax roll certified July 1.
Commissioners already have made substantial cuts to next year's capital spending, including shelving plans for a $15 million replacement City Hall. Instead, the city plans to renovate its existing hurricane-damaged building.