MAJOR REVENUE SOURCES
Major Revenue Sources
The following revenue sources represent the most significant or major revenue sources supporting the City’s
General Fund and major enterprise operations. City revenues are analyzed early in the budget process and
during the rate study reviews of our utility and enterprise operations. Revenue descriptions and trend
analysis is provided for these revenue sources as outlined below. The first five revenue sources outlined for
the General Fund together represent 66% of total anticipated General Fund revenue in fiscal year 2009/10.
Property Tax Revenue
Property taxes, or ad valorem taxes, are derived from the levy of taxes on all real and personal property in the
City of Clearwater. Homesteaded property owners are now allowed an exemption of up to $50,000 from the
value of their taxable property. Furthermore, senior citizens in the City of Clearwater can qualify for up to
an additional $25,000 in exemptions.
As shown in the chart below, property tax revenues have dropped by 18% since the high point in fiscal year
2006/07, from a high of $53.7 million to the estimated $43.8 million for the 2009/10 budget year. This loss
of $10 million is a result of property tax reforms as a result of Amendment 1 in 2007 mandating the rollback
of millage rates, as well as providing limitations to future millage increases. During this same period of
time, the housing market has declined dramatically resulting in a 20% decrease in City taxable property
values in just a few short years.
Property tax revenues are estimated at $43.8 million in fiscal year 2009/10 and will provide funds to support
general fund operations and the maintenance of City streets. Property tax revenues represent 36% of total
general fund revenues.
Property Tax Revenue
Million
$60
$53.7
$50
$43.8
$40
$27.7
$30
$20
$10
$0
61
Utility Tax Revenue
Utility tax revenues are derived from fees levied on the purchase of electricity, gas, water, fuel oil, and
propane with the limits of the City of Clearwater. The current rate is 10% of gross receipts for all services
with the exception of fuel oil purchases which is taxed at four cents per gallon.
Utility tax on telecommunications providers was repealed by the Florida Legislature in October 2001, with
the passing of the Communications Services Tax Simplification Act, and resulting in the dramatic $5 million
decrease in revenues between fiscal years 2000/01 and 2001/02. Utility tax revenue growth has been fairly
slow over the last eight years, with an average increase of about 2% annually since 2001/02. Estimated
collections from utility tax are approximately $12.3 million for fiscal year 2009/10 representing
approximately 11% of total general fund revenues.
Utility Tax Revenue
Million
$18
$15.5
$15
$11.3
$12
$10.4
$9
$6
$3
$0
62
$12.3
Franchise Fee Revenue
A franchise fee of 6% of gross receipts is levied on a business in exchange for the purpose of operating a
franchise for an electric power plant (Progress Energy) or a gas system (Clearwater Gas).
Telecommunications companies and cable providers were also granted franchises subject to franchise fees
until the adoption of the Communications Services Tax Simplification Act which went into effect in October
2001, resulting in the $1.6 million drop in revenues between fiscal years 2000/01 and 2001/02.
Estimated collections from franchise fees are approximately $10.2 million for fiscal year 2009/10
representing approximately 9% of total general fund revenues.
Franchise Fee Revenue
Million
$12
$9
$9.4
$8.7
$7.1
$6
$3
$0
63
$10.2
State Half Cent Sales Tax
The State of Florida’s Local Government Half-Cent Sales Tax Program provides for the return to cities and
counties 8.814% of sales tax collections remitted to the State of Florida. This percentage was as high as 10%
when the program started in 1982 and was 9.653% for almost ten years until July 2004, when adjusted to the
current rate of 8.814%.
The allocation factor for municipal governments is computed by dividing the municipality’s total population
by the sum of Pinellas County’s total population plus two-thirds of the county’s incorporated population.
The City’s distribution is then determined by multiplying the allocation factor by the sales tax monies
earmarked for distribution within Pinellas County.
The recessionary economy starting in approximately fiscal year 2006/07 reflects an annual loss of
approximately 18% in the most current 2008/09 collections and estimated for fiscal year 2009/10 from this
peak collection period. Estimated collections from sales tax revenue is approximately $5.3 million for fiscal
year 2009/10 representing approximately 5% of total general fund revenues.
State Half Cent Sales Tax
Million
$8
$6.5
$6
$5.5
$5.3
$4
$2
$0
64
Communication Services Tax
The Communication Services Tax Simplification law went into effect in October 2001. This tax replaced the
franchise and utility tax revenue that the City had previously collected on communication services. The tax
is imposed on retail sales of communication services at a rate of 5.12% of local gross service revenues.
With the exception of the first year of collections, communication tax revenue has remained fairly flat for the
past seven fiscal years, and no revenue growth is anticipated in fiscal year 2009/10. Estimated collections
from the communications services tax is estimated at $6.8 million for fiscal year 2009/10 representing
approximately 6% of total general fund revenues.
Communication Services Tax
Million
$7.9
$8
$6.9
$6
$4
$2
$0.0
$0
65
$6.8
Water and Sewer Utility Operating Revenue
The City operates several enterprise operations. The Water and Sewer Utility Fund is the largest of these
operations. The following operating table reflects operating revenue from the sale of water, reclaimed water,
and the collection of sewer for approximately $57.3 million in fiscal year 2009/10.
By City Council policy, the City obtains an independent rate study on a regular basis. Rates have increased
by 6% annually for the last several years, and planned increases of 7% are scheduled in each of fiscal year
2010 and 2011, and 6% increases in 2012 and 2013. These increases are necessary to meet the revenue
needs for further system expansion and provide adequate revenue to meet the utility’s cost, debt service
coverage, and reserve requirements through fiscal year 2013.
Water and Sewer Utility
Operating Revenue
Million
$57.3
$60
$49.0
$50
$40
$35.6
$30
$20
$10
$0
66
Gas Utility Operating Revenue
Clearwater Gas System is owned and operated as an enterprise utility by the City of Clearwater and operates
over 700 miles of underground gas main and handles the supply and distribution of both Natural and Propane
(LP) gas throughout northern Pinellas County and western Pasco County. The operating revenues of the
Clearwater Gas System reflects primarily revenue generated from the sales of natural gas within portions of
both Pinellas and Pasco counties. Operating revenues are estimated at $40.1 million in fiscal year 2009/10.
Gas utility revenues reflect are swing in relation to the cost of natural gas. From the following chart, gas
utility operating revenues at $42.9 million, and the related fuel costs, were at an all time high in fiscal year
2005/06. Fuel costs have been relatively steady for the last few years and operating revenues have stabilized.
Operating revenues are estimated at $40.1 million in fiscal year 2009/10.
Gas Utility Operating Revenue
Million
$50
$42.9
$40
$30.2
$30
$20
$10
$0
67
$40.1
Solid Waste Utility Operating Revenue
The operating revenue of the Solid Waste Fund is derived from services provided for the commercial and
residential collection of garbage and yard waste, as well as roll-off services. Rates have increased by 4%
annually for the last several years, and based upon the current rate study, solid waste rates reflect the Council
approved increase of 5% for residential rates from $22.55 to $23.68 effective October 1, 2009. Commercial
rates will also increase by 5% and roll-off rates will increase 4.5%. Operating revenues are estimated at
$17.9 million in fiscal year 2009/10.
Solid Waste Utility Operating
Revenue
Million
$20
$16.6
$15.6
$15
$10
$5
$0
68
$17.9