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Divided City Council Repeals Utility Tax

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By CHRISTIAN M. WADE

The Tampa Tribune

Published: July 24, 2008

PORT RICHEY - It has been a major source of municipal revenue for nearly a half-century.

But the utility tax, a 10 percent levy tacked on to property owners' annual tax bills, long has been a source of discontent for those who argue it amounts to double taxation.

The momentum behind efforts to do away with the costly tax has been building for years, with political action committees and even city council members campaigning against it.

Tuesday night, a sharply divided council voted to repeal the tax.

Mirroring a vote on the ordinance two weeks ago, the measure was approved 3-2, with Mayor Richard Rober and Councilman Steve O'Neill dissenting.
Vice Mayor Mark Hashim said repealing the tax would put more money back into the pockets of city taxpayers at a time when the economy is forcing many to make difficult decisions.

He called the move part of an overall effort to lessen residents' tax burden.

"This is just the beginning," he said.

The tax, which has been charged since the early 1960s, generates an estimated $264,000 a year for the city's general fund. City officials have not said how they will make up the shortfall in the 2008-09 budget.

Opponents argued that the city can't afford to forfeit more revenue with statewide property tax reforms forcing it to operate on a shoestring budget.

Rober and O'Neill said they didn't oppose fellow council members' efforts to reduce the tax burden on residents but felt that a repeal of the tax was excessive.

"My problem with this is the way that the council is going about changing it," Rober said Tuesday. "Where are these cuts going to come from? The reality is, we don't know yet."

O'Neill questioned why the city didn't reduce the tax instead of repealing it.

Figures compiled by the city indicate it charges more in franchise fees than Pasco County and other municipalities in the county and Tampa Bay area. Besides the utility tax, residents are assessed an electric fee of 6 percent and a 5 percent gas tax. Such fees are charged by governments to utility companies for using their rights of way and are passed along to consumers.

By comparison, businesses, property owners and residents just outside the city limits in unincorporated Pasco pay no utility, gas, cable or electricity taxes, but enjoy many of the same services of city residents through mutual assistance agreements.

Collectively, that adds up to more than $650,000 a year in revenue for Port Richey. The money pays for police, fire and other services.

Only a handful of residents attended Tuesday night's public hearing. Most spoke in favor of repealing the utility tax.

"It's a double tax," said resident Carol Casey. "This is the only city in Pasco County that charges it, and it makes properties less valuable."

Union representatives, concerned that repealing the tax would mean less revenue to pay the salaries of government workers, police officers and firefighters, voiced their opposition Tuesday.

"The largest beneficiary will be Wal-Mart," said Steve Sarnoff, president of Local 3179 of the Communications Workers of America, which represents two dozen city workers.

Council members will meet tonight at city hall to discuss the preliminary 2008-09 budget and vote on a proposed tax rate. If the tax rate is maintained, the city would lose about $199,000 in revenue.

Reporter Christian M. Wade can be reached at (727) 815-1082 or cwade@tampatrib.com.

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