Latvala and Pinellas Conspiring to Rob Peter to Pay Paul?

Is this a coincidence?  Pinellas has their Greenlight Pinellas transit/rail referendum on the ballot in November.  State senator Jack Latvala (from Pinellas) is pushing a bill that amends a current statute that appears aimed at enabling the Greenlight Pinellas boondoggle to grab more of your county tax dollars. The bill also adds an additional tax counties could impose for homeless facilities and services.

Section 212.054-.055 of the Florida Statutes currently allows:

Eight different types of local discretionary sales surtaxes (also called local option county sales taxes) are allowed by law and are potential revenue sources for county and municipal governments and school districts. Local discretionary sales surtaxes apply to all transactions subject to the state sales and communications services taxes. 

Local discretionary sales surtax rates vary from county to county.

The 8 types of local discretionary sales surtaxes are:

• Charter county and regional (emphasis mine) transportation system surtax
• Local government infrastructure surtax
• Small county surtax
• Indigent care and trauma center surtax
• County public hospital surtax
• School capital outlay surtax
• Voter-approved indigent care surtax
• Emergency fire rescue services and facilities surtax

The term "regional" was added to the local transportation surtax sale tax statute in 2010. Could that be a setup for an eventual regional transit tax?

The local government infrastructure surtax is the Penny for Pinellas tax in Pinellas and the Community Investment Tax in Hillsborough. This tax today can be used for capital road improvements and other infrastructure projects but it CANNOT be used for operating and maintenance expenses, e.g. like operating and maintenance for transit agencies.  

The transportation surtax can be used for transit operating costs and that is the sales tax increase that is on the ballot in Pinellas for Greenlight Pinellas.  It  was also the rail tax that was on the ballot in Hillsborough that was defeated in 2010.

From the Pinellas County budget, this describes what the Penney for Pinellas may be used for today:

Penny for Pinellas is capital funding for infrastructure projects  

Now Latvala introduced SB786 (accompanying house bill is HB723).  Go to 77:30 of the Community Affairs Committee video to view state senator Latvala recently introducing this bill.

Aaccording to this WTSP Channel 10 report:

Wording in the bill says that "discretionary sales surtaxes" can be used "for the maintenance of transportation infrastructure if the local government ordinance authorizing such use is approved by referendum." 

To some, that means a double tax to fund Greenlight Pinellas, which is supposed to be funded by the sales tax increase. 

"This Latvala bill shows that the rich and well-connected, that not even a three percent tax hike to raise $1.8 billion, is not enough to build their precious train," said David McKalip with No Tax for Tracks, a group firmly against Greenlight Pinellas.

The latest version of the bill states:

A bill to be entitled
An act relating to discretionary sales surtaxes; amending s. 212.055, F.S.; revising the uses of the proceeds of the local government infrastructure surtax to include the maintenance of transportation infrastructure; revising the term “infrastructure” (emphasis mine); authorizing a county to levy a homeless services and facilities surtax; defining “homeless services” and “homeless facilities”; requiring an ordinance, referendum, and voter approval; providing an effective
date.

Senator Latvala is denying this change has anything to do with Greenlight Pinellas.  This change at this time certainly appears it relates to Greenlight. The Pinellas County commissioners requested this change as one of their 6 legislative priorities for 2014 late last year.

Support an amendment that would allow a bigger say on future Penny for Pinellas spending. Penny for Pinellas money is restricted to capital improvements only and not for infrastructure.

This is an admittance that the transportation surtax in Pinellas, if passed, will never begin to cover the costs of operating a high cost train in Pinellas county or probably anywhere else in the state.  The federal dollars are dwindling as the Highway Trust Fund, our federal gas taxes, have been diverted to high cost rail systems and the Fund bankrupted. There's no guarantee that Pinellas will even get all the state and federal funds they want and know they must find MORE local tax dollars to cover the gaps.

Chris Latvala, senator Jack Latvala's son who is running for a state house seat and supports the Greenlight Pinellas boondoggle, stated in a BayNews9 interview on February 20th that he wanted to rob the Penny for Pinellas to pay for the train.  Hmmm - our legislative session had not started yet at that time. Do you think he knew his father was going to file a bill to change Penny for Pinellas?  Is this what we expect to see - like father, like son from Chris Latvala?

The Eye posted previously here that Greenlight Pinellas has a basic financial problem.  

$130M per year of sales taxes leaves $314M gap in annual operating expenses that have to be covered somehow. Or a $14.1B shortfall of the expected $20B costs.

The projected $130 million annual revenue stream from the huge tax increase simply will not cover the cost of operating and maintaining the rail system.  Even if Pinellas kept the PSTA $30 million property tax which there is nothing legally stopping them from doing,  the math doesn't add up to fiscally sustain a train in Pinellas over the long term.

The only way to cover this huge revenue gap is to find another source of revenue.  This always occurs wherever light rail is implemented.  Either bus service or other services are cut or find a new revenue source.

The Latvala bill will allow Pinellas to rob the revenue from their infrastructure sales tax that pays for road improvements, parks, and other capital improvements and use that revenue for rail/transit operating and maintenance cost. Would that strip the county of revenue for critical road improvements or other important capital projects?

Interestingly, we found this comment from a 2008 TBARTA presentation:

TBARTA 2008 Presentation 

Also don't forget the counties that must take over the operating  & maintenance (O & M) costs for SunRail in 2021.  While all FL taxpayers pay to build and to operate SunRail from May 2014 when it launches thru 2020, the local municipalities must pick up the O & M beginning in 2021.  NOT ONE of those counties or municipalities, Osceola, Orange, Seminole, Volusia or city of Orlando, has a funding source to pay for SunRail.

Guess what?  Seminole county has scheduled a special election on May 20 for voters to decide to bring back the one cent infrastructure tax they had until it expired last in 2011. 

A new proposed sales tax increase, known as the "One Cent Infrastructure Tax," was recently approved by the Board of County Commissioners in Seminole for consideration in a special tax referendum election to be held on May 20. If approved by voters, the tax would be in place for 10 years and raise an average of $63 million annually, according to county documents. 

According to county documents, 25 percent of revenues generated from the tax would go to Seminole County Public Schools for capital improvements to schools, and the other 75 percent would be divvied up among the county and the seven cities within the county to finance a range of infrastructure improvements throughout the county.

Why have a special election on May 20 that will cost taxpayers a half million dollars when we have a regular election in November?  This is their excuse.

Additionally, the May 20 special election will cost around $455,000. Had the vote been pushed off to the general election, it would have been of no additional cost to the county, Ertel said. The county's defense in this notion is that it is moving ahead with a special election to allow the School Board to consider the new revenue as it contemplates its budget for the next fiscal year. The budget must be approved by June 30.

The schools are one of, if not the largest, employer in any county.  The county itself is a huge employer.  So schedule an off-cycle special election to raise more tax dollars to dole out to schools and other government agencies and who will certainly show up and vote in May? Probably the ready made base of support directly benefiting from the increased taxes - the employees of the schools and the county. This is called election rigging. Sounds similar to what we heard recently in Hillsborough about a proposal to put another county transit referendum on the ballot, but in the March 2015 city of Tampa mayor/city council election, instead of the regular county election time. 

In Hillsborough, the CIT tax was passed 53-47% in a special election held in September 1996, after a Bucs stadium only tax was soundly defeated in September 1995 60-40%.

As reported here, referendums are more likely to pass for a number of reasons, including:

• the election is held "off-cycle" to yield lower voter turnout overall but proportionately higher turnout of supporters, especially those with a school connection; 

• it is often necessary to try and try again - to keep putting the same issue before the public and eventually the voters will be convinced that the money is really needed 

• an existing tax is increased rather than a new one proposed; 

• scolding the voters after they reject a proposal will shame them into voting for a tax hike proposal the next time around

If Latvala's bill passes, will SunRail counties then rob their infrastructure tax that pays for roads, schools and other CAPITAL improvements to pay for SunRail operating expenses? SunRail is the poster child of bad policy - using tax dollars to build a commuter rail system that has NO long term funding source. Do you think the SunRail counties want to put another referendum for the transportation surtax on the ballot?  They have to find the revenue somewhere to operate SunRail, a train the power brokers in those counties begged for but never provided a long term revenue source to pay for it.  

Hold on Hillsborough!  Hillsborough's infrastructure surtax is the half-cent Community Investment Tax (CIT). That tax is already a travesty and one reason why Hillsborough has a critical road funding issue. The CIT money is gone and spent even though we're paying the tax until it expires in 2026. With Latvala's change, if the CIT tax is ever extended, and it could also be raised from half-cent to a full cent, the revenues could then be used for operating and maintenance expenses for transit instead of roads and other capital improvements.  

Latvala's SB786 bill will also allow counties, with voter approval, to enact another discretionary sales surtax, a half cent surcharge tax for homeless services and homeless facilities.  If our economy is supposedly improving, do we want or need MORE taxes?

Changing the existing infrastructure tax that today is used as capital for roads, schools and other infrastructure improvements so that the revenue can cover operating expenses is not good policy. 

Here's a graph from Greenlight Pinellas of tax receipts until 2050. 

Greenlight Pinellas tax receipts vs Bus/Light Rail "net" costs

Have you ever seen tax receipts go up every year for 25 years?  That is very unlikely. Penny for Pinellas has had huge drops over the 20 plus years of its existence like in 2009. In Pinellas County budget, this risk is reported.

Sales tax revenue sensitive to swings in the economy

The timing of this change is no coincidence. It provides a backdoor way for Pinellas to pay for a high cost rail that Greenlight Pinellas transit tax can never pay for.  This change could also be a backdoor way for the SunRail counties to pay their SunRail operating expenses without having to pursue another tax.

Latvala and Pinellas are conspiring to Rob Peter to Pay Paul. SB786 will rob roads and other capital improvements to pay operating expenses for high cost rail boondoggles. This change will have state wide implications. Yes, it appears that local voters must approve. However, then the power brokers will election rig by scheduling a low turnout, off-cycle special election to get their supporters out to get it passed.

This change is an admission that the 14% sales tax rate increase in Pinellas, that increases revenues by over 300%, will never cover the costs of operating the Greenlight Pinellas rail boondoggle. This is a dire prediction that more Pinellas county tax dollars will be needed.

Stop SB786 and it's accompanying house bill HB723 and stop robbing Peter to pay for Paul.