Dark Cloud of Sales Tax Referendum Hangs over the County

A “half-baked” proposal with a “half-hearted” sales pitch. That could describe what was brought before the commission yesterday. After the initial plan of a 6 year tax hike divided up among the School District, County and Municipalities fell apart when the School Board declined, a reduced proposal for 3 years and a 60/40 split between the county and cities was floated.

It was clear that Administrator Bob Weisman’s heart was not in it. We can only assume he was given direction to dust off the shaky proposal from May 2012 and make another try for the 2014 election window. There are some on the Commission, most prominently Mayor Taylor, who are not happy that our sales tax burden is not as high as some other Florida counties. We are leaving money on the table after all. After some modest pushback by the board, Mr. Weisman wisely suggested tabling it (unsuccessfully) for another two years.

About a dozen members of the public spoke on the issue, most against. In favor were a few folks who wanted some of the money directed at beach maintenance and Mayor Wilson of Belle Glade, who wants more tax dollars sent to the Glades cities. Others, including the Palm Beach Civic Association, the Economic Council, and TAB, objected to the unfocused wish list of non-urgent minor projects presented as the reason for the tax. In the words of one speaker: “..parking lots and drainage ditches, guardrails and other anonymous improvements, spread around the districts and the cities presumably to spread the wealth around..”.

With the exception of Mayor Taylor, who was enthusiastic for the prospect of more tax dollars, the rest of the commissioners found fault with the proposal. Commissioner Santamaria thought it wasn’t needed if we could restore the impact fee cuts. Commissioner Valeche was against it from the start but defended the impact fee cuts as pro-growth. Commissioner Vana agreed with the speaker’s view of the unfocused list, calling it a potpourri, and worried that an ill-formed proposal that would fail at the polls could poison the new tax well. Commissioner Abrams, calling it a “grab-bag” thought it too broad and that it would not pass. Commissioners Burdick and Berger both opposed the current proposal but would support more spending on roads and infrastucture.

An Abrams attempt to kill it outright (“don’t come back, regroup”) gained some support, but a Vana proposal to seek input from the business community and others for an acceptable plan in six months or so gained some traction (although Commissioner Berger would not focus only on a sales tax hike). The Mayor still wants it on the ballot this year though, so the motion that finally passed has staff coming back in a shorter time with a new proposal. The motion passed 4-3, with Valeche, Burdick and Abrams voting no.

Unfortunately, the dynamic that seems to be operating here is that a sales tax hike is good – just find an important enough project on which to market it. The “potpourri”, “grab-bag” and “wish-list” are clearly not up to snuff.

We would not oppose a sales tax increase that was accompanied by an equal reduction in ad-valorem taxes (ie. “revenue neutral”). We would not oppose a temporary hike for an urgent need such as relief after a major storm or other catastrophe. In this case however, it appears they are now “on the hunt” to find or create a project that could be used to justify the tax increase. That is putting the cart before the horse. Hopefully, if such a measure were to get on the November ballot, the county voters will not be fooled.

Another Attempt to Raise the County Sales Tax

12/13/13 Update: This proposal now seems to be in disarray – the School District has requested the county administrator to remove any reference to them in the proposal. In a letter to County Administrator Bob Weisman, Superintendant Wayne Gent said:

So that there is no misunderstanding, I am taking this opportunity to clarify the School Board’s position at this juncture on the subject of a joint referendum.

We have not taken any formal action; however, from the discussion on this matter during informal Board Workshops, it appears unlikely that the School Board would support a joint referendum.

To the extent that the attached County Board Item suggests otherwise may place the School Board in an awkward position.

Please take appropriate steps to delete any reference to the School Board in the item.

As a result, the Tuesday agenda item has been revised: See Item 5A2-Revised The Palm Beach Post reports that many of the Commissioners are skeptical of the proposal, and the business community and watchdog groups (including TAB) are organizing to oppose it. See Schools want out of sales tax hike

At next Tuesday’s 12/17 BCC Meeting (time certain 10:30), staff will propose raising the sales tax to 6.5%, projected to raise $110M per year starting in 2015 and running until the end of 2020. Unlike a preliminary proposal that would have competed with the School District which also seeks higher taxes, this revenue would be shared. 40% ($44M/year) would flow to the Schools, 36% ($40M/year) to the county, and 24% ($26M/year) to be divided up among the 38 municipalities. The tax would generate $660M over the six years it would be effective, if approved by the voters next fall.

What is the stated need for this additional revenue? The proposal states “County, School Board and municipal staffs have identified significant facility and infrastructure needs to maintain and enhance our public quality of life.”

The county alone has identified $197M in wish-list projects, divided equitably among the seven districts so everyone gets some of the “goodies”. These are mainly road projects and new spending for Parks and Recreation.

It should be noted that both of these areas are funded in the current county budget at the level of $53M/year for Public Works and Engineering, and $64M/year for Parks & Rec, so the county windfall that this represents would be an increase to that spending by 34% in the first year alone.

Some would say that sales taxes are preferable to property taxes because the burden is shared by all, including visitors, and that is true as far as it goes. But keep in mind that this proposal is NOT revenue neutral – it is net additional taxation. The county ad-valorem taxes rose over $23M this year and the county forecasts overall property taxes to go up over 20% in the next four years. They have plans to spend every penny.

Historically, sales tax hikes have not gone down easy. In 2010, a Fire/Rescue sales tax was defeated before it got on the ballot. The predecessor to this proposal that was brought to the commission in 2012 was rejected as “half baked”. This time, there is an attempt to “sweeten” the deal by distributing some money to the cities and spreading the largess around the commission districts. Presumably an orchestrated collection of speakers will come forward to talk about the “need” for these projects. We will be told that our sales tax is “too low” as other counties have higher.

Don’t be fooled. This is an attempt to significantly increase government spending in Palm Beach County, at a time when valuations (and likely ad-valorem taxes) are expected to climb. It should be rejected before it gets to the November ballot, and now is the time to voice your opposition.

If you oppose raising the sales tax,  make your voice heard. Call or email your commissioners prior to next Tuesday’s meeting, and attend the meeting if you can. And let us know your thoughts.

Some talking points:

  • The proposal is a net increase in taxation of $110M/year – about $100 per resident.
  • Parks&Rec and Engineering / Public Works are already funded at $117M – the sales tax would support a 34% increase in spending every year for the next six years.
  • Sales taxes have a negative effect on business, driving sales to lower tax counties or the internet and stopping incoming business from counties with higher taxes.
  • Neither of our neighboring counties (Martin, Broward) have a discretionary sales tax.
  • The county has shown restraint in recent years regarding increases in ad-valorem taxes – this proposal is an end-run around the scrutiny that the millage rate gets on a yearly basis.
  • A sales tax is a fixed rate that grows automatically with rising prices and economic recovery and is not subject to yearly adjustment like property taxes.