A referendum on the Nov. 8 general election ballot stands as an object lesson on the long-term impacts of an economic downturn.
Voters will decide whether to increase the sales tax in St. Johns County by one cent per dollar spent, from the current 6.5 cents to 7.5 cents. The increase would apply to the first $5,000 of the purchase price of an item and would sunset after 10 years.
It would generate an estimated $500 million over that decade, an amount sufficient to fund a severe backlog of projects, the absence of which is becoming increasingly apparent as the county’s population surges.
The surtax couldn’t be renewed without another voter referendum. The penny would fund only capital projects.
“In other words, brick and mortar,” said St. Johns County Commissioner Henry Dean. “No added staff. No operational expenses.”
The commission voted 4-1 in March to place the issue on the ballot to allow voters to decide it.
Dean said about $220 million of the revenue generated would be spent on transportation projects, including widening some two-lane roads to four lanes, work on bridges, sidewalks and more.
Other projects would include construction of three fire stations, three regional parks, three libraries and a sheriff’s office command center, as well as work on beach renourishment.
In the Ponte Vedra area, it would fund a broadening of Mickler Road from the roundabout to State Road A1A and Palm Valley Road from South Roscoe Boulevard to the roundabout from two to four lanes.
There would also be $17 million for drainage improvements along the greater Ponte Vedra road network and $6 million for sidewalk construction, also in the Ponte Vedra-Palm Valley area.
Dean said about 40% of the sales tax revenue would be generated by out-of-county visitors, with residents paying the other 60%.
The Road to 2022
To understand how the need for additional revenue came about, it’s necessary to look back at the so-called “Great Recession” of 2008.
The immediate result was that local development came to a halt.
“Almost no homes were built for three years in St. Johns County,” Dean said.
In addition, property values fell 30% between 2008 and 2010. The result was a decrease of ad valorum tax revenue.
Meanwhile, a decrease of tourism at that time impacted the county’s bed tax revenue. Adding to this was a mandate by the state about a decade ago that counties reduce their millage rates by one mill.
The county needed to do something to encourage a growth in the tax base, in other words, development.
“The commission basically significantly reduced the impact fees on residential development to encourage development to come back,” Dean said.
Arguably, that reduced potential revenue.
Then, starting in 2010, the population in St. Johns County began to boom. Over the next 10 years it grew by about 50%. Development, too, returned.
Recognizing that there was no money to fund the infrastructure needed to meet the demand, then-Commissioner Jay Morris alerted his fellow commissioners in 2015 that a one-cent surtax should be placed on the ballot. Ultimately, by a vote of 3-2, this proposal was defeated.
Because there was no money to fund capital projects, virtually none were budgeted between 2010 and 2018.
“So, we have this tremendous backlog of capital projects,” Dean said.
Dean was elected to the board in November 2016, and he and the other commissioners sought a solution over the following year and, in 2018, approved a hike in impact fees to the maximum allowed by law.
While this helped the county to adjust to the greater demand, it didn’t resolve the backlog that had occurred between 2008 and 2018. The estimated cost to address that backlog is $500 million, thus the proposed one-cent surtax.
That number won’t remain static, however. If the referendum is defeated, the cost of eliminating the backlog would only continue to grow, largely due to inflation.
In fact, inflation is already causing the county some headaches.
“We just experienced an unbelievable increase in materials and labor for things like roads,” Dean said. “It used to cost $1 million a mile to widen the roads from two to four lanes. It’s now upwards of $10 million to $12 million — maybe higher.”
Dean said he wanted to bring the issue before the voters to give them the chance to approve or deny the increase. The alternatives would be to do nothing and allow the backlog to grow or else to raise taxes, something Dean does not want to consider.
“We have too many elderly folks on fixed incomes, and in these times that we’re in, I don’t want to increase their millage rate,” he said.
