A half-penny sales tax that built a football stadium, schools, roads, libraries and fire stations in Hillsborough County can build no more.
Budget director Tom Fesler told county commissioners recently that no new building projects can be undertaken using the Community Investment Tax a funding source.
Once expected to grow at a robust 6 percent a year, receipts from the voter-approved tax have increased just 1.8 percent annually over the last decade, Fesler said. He blamed the recent economic downturn for the tax’s demise.
But that’s only part of the story. Another reason the tax can’t pay for big projects is that prior county commissions borrowed heavily against the CIT for drainage, transportation and other needs requested by constituents.
“Now they’re in a pickle because they don’t have the money to do some of the projects that are needed, but the pickle was created by the attitude of the elected officials,” said former Commissioner Joe Chillura, who first proposed the tax and helped sell it to voters in 1996.
The tax, which passed with 53 percent of the vote, promised new schools, strengthened law enforcement and better roads. It also included money to pay back bonds for Raymond James Stadium, home of the Tampa Bay Buccaneers pro football team.
Voters had rejected previous referendums for police and schools, and many thought the 1996 vote succeeded because it included the stadium, which kept the Buccaneers from leaving town.
Chillura said it was his intent that the only project to be bonded using the tax as collateral was the stadium because of its $169 million price tag. Everything else the tax would fund was supposed to be pay-as-you-go, with projects approved in five-year cycles.
But at a September 2005 meeting, Commissioner Ronda Storms pushed to spend an additional two or three years of Community Investment Tax money to pay for storm-water drainage and transportation upgrades. County officials told commissioners Storms’ proposal could be done, but the money would be borrowed against taxes collected a decade later.
Commissioners unanimously approved the proposal.
“That was during the headier days when revenue was coming in,” Sharpe recalled. “The needs were so large; the opportunities were so large. We were trying to build and keep up with 60,000 people a year coming in and the needs that were so enormous.”
Two years later, commissioners approved a $500 million transportation plan that used up most of the remaining revenue from the Community Investment Tax. Jim Norman, who was chairman at the time, and Brian Blair voted no.
Norman, who could not be reached for comment, told the other commissioners they were denying future boards the opportunity to finance projects using the CIT. His warning seemed to echo across the years to the recent budget workshop where Fesler told commissioners the CIT was depleted.
About the same time the commission approved the $500 million in road projects, they learned that projections on CIT tax revenues had been downgraded because of a slumping economy.
Current County Administrator Mike Merrill, who was the debt management director in 2007, told commissioners then that the county could expect just $213 million before the tax expired in 2026, rather than the previously anticipated $480 million.
This $213 million projection for the remaining CIT proceeds was over and above the $500 million commissioners bonded for transportation spending that month.
Nevertheless, Merrill said at the time that spending the CIT money made sense. He hasn’t changed his mind, he said, despite the duration and depth of the intervening economic downturn.
“It was a good time because interest rates were low and we thought we could get better pricing on contracts,” Merrill said. “If we hadn’t done those projects, looking at it in the big picture, I don’t know if we would be better off as a community. We would have been further behind.”
“So bonding the CIT using favorable interest rates at the time was an extremely prudent thing to do,” Hagan said recently. “If we refused to raise taxes, how else are you going to meet the infrastructure needs using existing revenues?”
As Norman warned, the decision to bond out the remaining CIT revenues on the cusp of a recession puts today’s commission in hard position. The county has an $8 billion deficit in transportation and other infrastructure, according to Hagan.
And Sharpe, citing national studies, said the Tampa area is 12th in the nation in traffic congestion. Without transportation improvements, including better mass transit, Hillsborough is unlikely to achieve the economic dynamism that commissioners crave.
At the April 10 meeting, Merrill’s staff presented commissioners with a list of possible ways to raise revenues. Most of the ideas involved tax increases or new taxes, hardly palatable options for the Republican majority, two of whose members face election in 2014.
Sharpe thinks some answers will emerge from a new economic/transportation policy group that includes commissioners, the county’s three mayors and other agency heads. The first meeting is scheduled for May 22.
“My thought is that this conversation about CIT really needs to be part of a larger conversation how are we going to grow,” Sharpe said. “To not invest infrastructure is not an option.”