New Budget up 6.9% with Flat Millage

On Tuesday evening 6/13 at 6:00PM, the County Commission will hold the first budget workshop for the 2018 fiscal year.

The meeting will be held on Tuesday, June 13 at 6PM in the BCC chambers, 301 N. Olive Street, 6th floor.

There are no surprises. As they have done for the last 5 years, the county staff proposes to take full advantage of another rise in property values by continuing the 4.7815 millage rate and reaping a tax increase of $54M, up 6.9% over last year, for a total ad-valorem tax levy of $844M.

There is no discussion of reducing millage in recognition of the $75M windfall from the sales tax surcharge. When property tax is combined with the yearly surcharge revenue, the total take of $919M is up 53% over the last 5 years.

This is the fifth year in a row of a 3% across the board pay increase for all employees, representing a raise of 16% since 2013. The Sheriff, as usual, gets a 5% increase and at $542M, now represents about half of the total countywide net spending from property taxes.

The graph below shows the trend in ad-valorem taxes and millage since 2003, with the sales tax surcharge added to put it in perspective.

The next graph shows the budget over time compared to the valuation curve and the “TABOR” line. The orange dotted line is valuation which has just doubled since 2003 and is at a new peak for the first time following the 2008 “crash”. Note that the Sheriff’s budget has shown little restraint and has only declined once in 15 years – it is now up about 130% since 2003.

The “TABOR” line (green dotted “County P&I limit”) reflects the combination of inflation and population growth over time and is a model for what responsible budget growth would look like. TABOR would suggest a growth in taxes of about 54% for the period. Although not shown on this graph, if the Sheriff’s budget is subtracted from the total, the budget for the rest of the county departments has not exceeded the TABOR line, clearly indicating where the problem lies.

For more information, see the Budget Presentation and the Budget Package.

Proposed sales tax hike raises discourse at Palm Beach political forum

On Monday, more than 150 people at a political forum in Palm Beach heard arguments on both sides of the proposal, which would generate $2.7 billion over a decade. The money would be divided by the county, the public schools, and the county’s 39 cities and towns, and be earmarked for roads, bridges, school buses, and other infrastructure and equipment.

Tab Point of View Presented at PBCA Candidate Event

At Monday’s Meet Your Candidates forum, Todd Bonlarron, an assistant county administrator, deciphered the confusing language contained in the five questions on the November 8 ballot.

In addition to Mr. Bonlarron, Joseph Rooney, acting president and CEO of the Economic Council of Palm Beach County, and Fred Scheibl, of the Palm Beach County Taxpayer Action Board, gave their differing perspectives on the countywide proposal to increase the sales tax by one percent. Rooney is for the tax and Scheibl is against it.


Shortly, the Economic Council and others will be spending over $200,000 to convince you that the county sales tax should be raised to 7%. You will hear that the infrastructure is crumbling, that the children are sweating in their classrooms with broken air conditioners, that the roads have potholes and the bridges are falling down. You will hear that a sales tax is good because 25% of it will come from tourists, and that tens of thousands of jobs will be created to rebuild those roads and bridges, county buildings, the jail and the parks.

Don’t be fooled. This 17% increase in the sales tax will generate much more revenue than is arguably needed to repair the infrastructure that was neglected by conscious choices of county staff and commission. Over the last 5 years, the ad-valorem budget has grown 33%, yet Engineering and Public Works only saw a 3% growth. At the same time, the Sheriff’s budget grew by 28% and county employees saw 12% in across the board raises (3% / year for 4 years). These conscious choices indicate that those running our county and school system were willing to defer maintenance until a pitch could be made for a new source of revenue.

A bond issue could have funded the critical needs. Instead, they want a sales tax that will generate $2.7B over 10 years whether it is needed or not. Do not doubt that they will spend every penny.

10 important reasons to reject the sales tax question on the upcoming ballot:

1. A 17% increase in the sales tax is a net tax increase of $270M per year, with no offsets to property taxes.

2. It is regressive and will affect low income residents the hardest.

3. It is not subject to the scrutiny applied to the annual ad-valorem budget.

4. It creates an incentive to purchase outside the county (Both Broward and Martin are at 6%, many internet retailers do not collect sales tax).

5. It is not an “infrastructure maintenance tax” but includes many new capital projects.

6. Unlike an infrastructure bond that would raise just enough money for critical needs, this granular tax generates a specific amount of money, and low priority projects will have to be funded in order to spend it all. Like previous proposals, it is a grab-bag of projects, many of which would never be done without a “must spend” windfall.

7. Charter schools get nothing.

8. Many of the municipalities (PBG, Boca) didn’t want the money.

9. It comes on top of the largest ad-valorem tax haul at the county level in history, up 8.2% over last year and up 33% since 2012. If passed, the 2017 equivalent tax hike would be 18%.

10. Over the last 5 years, the county has consistently underfunded engineering and public works (+3%), while increasing the Sheriff’s budget by 28% and giving across the board raises to employees of 12% (3%/year for 4 years). When the overall ad-valorem budget increased by 33%, engineering saw a total of 3% in 5 years. This was a conscious choice.

Don’t be an enabler!


Final County Budget Hearing This Evening 9/19

At the first September budget hearing, the Commission unanimously adopted the 4.7815 millage – unchanged for 6 years, and tonight they will make it official.

When this tax rate was first set for the 2012 fiscal year, the countywide ad valorem tax was $595M against a valuation of $124.6B. This year, property valuations have greatly recovered and now total $165.1B. At that level, this millage will generate $790M – up 33% in 6 years, 8.2% in this year alone.

OVer those 6 years, there has only been about 4% inflation and population has grown about 3%. The average household income throughout Palm Beach County grew about 6%.

The government did much better. County employees saw across the board raises of 3% for 4 years in a row (12.6%), and taxes went up 33%.

Remember this growth in taxes – far in excess of inflation and population growth, as you consider whether a 7% sales tax makes sense. If passed, the tax will provide another $70M per year to the county government – larger than the $60M increase in this year’s ad-valorem.

Public Hearing Tuesday on 2017 County Budget

The first public hearing for the 2017 budget will be held on Tuesday, September 6 at 6PM in the BCC chambers, 301 N. Olive Street, 6th floor.

On Tuesday 9/6 at 6:00 PM, the County Commission will most likely vote to leave the millage unchanged for a sixth year in a row, accepting the tax windfall from rising valuations.

The numbers are slightly higher than the June package as the valuations have been adjusted up slightly to $165.1B – 97% of the all time peak that occurred in 2008. This year’s tax take of $790M is up 8.2% over last year and up 33% in the 5 years since 2012.

Highlights of the budget include:

  • a 3% across-the-board salary increase for all employees (on top of 3% in each of the last 3 years). Note that this 12.5% increase for county employees came during the 4 year period when the county average household income only went up about 4%.
  • 62 new positions. County staffing has grown by 286 in the last 4 years to a total of 11,202.
  • A $28M increase for the Sheriff. The Sheriff now accounts for about 48% of the general fund total appropriation budget.
  • A 4.7% decrease in the budget for Engineering and Public Works.

Note that there is nothing in the budget for revenue and appropriations associated with infrastructure projects that would be funded by the proposed 1 cent sales tax surcharge. If the tax were to pass, the county would receive about $70M per year – about $10M more than the amount of the increase in this year’s property tax. When added together, the total tax increase would be 18% in 2017.

First 2017 Budget Hearing on June 14 at 6pm

In an unrelenting desire for ever more taxpayer money, the county Administrator has proposed a $57M tax increase for the next fiscal year, which will be in addition to about $75M per year that the county will get from the sales tax if approved by the voters.

This is just greedy.

The first budget workshop for the 2017 budget will be held on Tuesday, June 14 at 6PM in the BCC chambers, 301 N. Olive Street, 6th floor.

At $787M, up 7.9% over last year’s county-wide operating tax haul (which was the highest in county history), this budget will surpass the peak tax during the real estate bubble by almost $100M and is up 32% from the post-bubble low of 5 years ago.

During these last 5 years, inflation (measured by the consumer price index) is up only 4%, and the population has grown by only 3%. So why do they need to increase taxes by 32%?

One reason is employee raises – cost of living raises across the board of 3% each of the last 4 years (did you get a 12.6% raise over the last 4 years?).

Another is the insatiable appetite of the Sheriff. The current budget of $511M is up from $394M in 2012 – an increase of $117M (30%) in 5 years. Maybe PBSO needs it to pay for all those use-of-force lawsuits they have been losing lately.

Not part of the county-wide budget, but paid by those in their service area, county Fire/Rescue is also up 30% in those 5 years.

By keeping millage constant since 2012, they have been able to ride the increase in property valuation that has almost (but not quite) returned to its 2008 peak, at $164.5B.

We think the millage should be reduced this year. If they really expect the sales tax increase to pass in this interesting “anti-establishment” year, then show some confidence by reducing the ad-valorem burden.

In the above chart, the dotted orange line shows what has happened to property valuations – peaking in 2008, dropping to a low in 2012, and then climbing almost back to the peak. The dotted green line is a combination of population growth and inflation – a measure of “reasonable” tax growth. Comparing this to the blue adopted tax line, you can see how much more our taxes have risen over what is reasonable. And of course the green “Sheriff” line is a tale unto itself.

Sales Tax Increase – Are the intended uses lawful?

As you probably know, the County Commission voted 5-2 to proceed with a 1% sales tax referendum for the November election. Ballot language is expected to be voted on at an upcoming meeting.

Under the terms of the proposal, the $270M annual proceeds are distributed as follows:

48.0% $130M School District
27.5% $74M County
18.5% $50M Municipalities
4.5% $12M Cultural Council Projects
1.5% $4M Economic Development

A sales tax can only be imposed under the rules established by Florida Statutes 212.055 “Discretionary sales surtaxes; legislative intent; authorization and use of proceeds”, which spells out how proceeds may be used.

Specifically, it says in 2(d): “The proceeds …. shall be expended … to finance, plan and construct infrastructure; to acquire land for public recreation, conservation or protection of natural resources ….

Section 2(d)1 provides a definition of “infrastructure”, which includes construction and improvement of public facilities, acquisition of public safety vehicles and equipment, etc.

Then in 2(d)3, it says “a local government infrastructure surtax … may allocate up to 15 percent of the surtax proceeds for deposit into a trust fund within the county’s accounts created for the purpose of funding economic development projects having a general public purpose of improving local economies, including the funding of operational costs and incentives related to economic development.

It is probably safe to assume that the school district, county and municipalities can easily identify their intended projects as “infrastructure”. The Cultural Council projects though, as they are privately owned, do not qualify. Therefore, to be able to spend money from the sales tax, the museums, theaters and other entities would have to be considered “economic development” projects.

Are they really? Do they have “a general public purpose of improving local economies”? Is improving the outside appearance of the Norton Museum really in the same category as offering an incentive to a company to move its headquarters to the county?

What about the argument that these projects encourage tourism, and thus bring jobs and economic activity to the county?

On the WPTV show “To the Point” last Sunday, Tourist Development Council Executive Director Glenn Jergensen spoke of the drivers of county tourism – specifically beaches, baseball, and the convention center. He never mentioned theaters, museums or the zoo.

The statute also says that the “economic development” money needs to be put in a trust fund, presumably to be allocated for projects that are prioritized by some process. How can it be lawful to designate a fixed 4.5% of the proceeds to the discretion of the Cultural Council – an unelected board representing private interests?

The Cultural Council itself gets money from the bed tax and provides grants to the museums, theaters and other entities who typically have their own endowments or sources of private funding, and are not totally dependent on public money. Many of the projects intended for sales tax dollars were already in the pipeline and would happen with or without public funds.

It would seem that allocating 4.5% of the proceeds to these cultural projects may violate the letter of FS212.055, making the entire proposal subject to legal challenge. As such, we think the county should seek an opinion from the state Attorney General before proceeding with this ballot initiative.

As the municipalities are in the process of deciding whether to sign an interlocal agreement in support of the package, they too should be concerned. If any of you plan on attending your city or town’s meeting on the subject, consider bringing it up.

Sales Tax Referendum Gathering Steam

The county commission will vote Tuesday whether to ask the voters to raise the county sales tax from 6% to 7%. (Agenda Item 5B1)

After aborted attempts in 2012 and 2014, when a majority of the board thought the proposal was “half baked” and the need not urgent enough to convince the voters to cough up several billion over ten years, this time no one will say that the proposal hasn’t been finely tuned.

To her credit, County Administrator Verdenia Baker has put enormous energy and thought into lining up partners and getting potential opponents on board. She has made countless trips to the District, the League of Cities, business groups, city and town governments, and even homeowners associations to solicit ideas and sell the concept.

The School District has bought in, voting to partner up and accept just 48% of the take – less than they would have received with a go-it-alone half cent increase “for the children”.

The cities have also rallied to grab a piece of the potential windfall, producing a detailed wish list of projects to absorb their 18.5% – many of which would never have been conceived under their own municipal budgets.

And the master stroke was to bring in the Cultural Council as the tip of the spear. Acting in a capacity that can be looked at as “fee for service”, the Cultural Council is the hired gun whose “One County, One Plan, One Penny” campaign is already cranking up. The School District and the County Government are prohibited by law from engaging in political campaigning to pass a measure favorable to them, but the Public/Private Cultural Council is under no such restraint. Their 4.5% of the proceeds (about $122M over 10 years) is payment rendered to convince the public that this tax increase is to their benefit.

If it passes, the county will receive 28.5% of the proceeds, and although it is an “infrastructure surtax”, intended for maintenance of roads, bridges and facilities, much of the money is earmarked for new capital projects. It even contains a $27M “Economic Development Fund” for unspecified projects “to attract, retain, and expand businesses to improve the local economy.”

We think this a bad direction for the county, but there is enough muscle behind the proposal, that keeping it off the ballot would seem unlikely at this point. Only one Commissioner has signaled his opposition (Hal Valeche, to his credit), and the usual folks who oppose tax increases – such as the Economic Council, the Palm Beach Post editorial board, even some TAB partners, are either supporting the proposal or remaining neutral.

If you would like to go on record as opposing this referendum, send an email to the BCC or speak at the meeting on Tuesday.

Here are some things to keep in mind:

  • It is a net tax increase of $220M per year – there is no talk of reducing ad-valorem taxes
  • It is not subject to the scrutiny applied to items in the annual ad-valorem budget
  • It creates an incentive to make purchases outside the county (both Broward and Martin are at 6%)
  • It is regressive
  • It is not an “infrastructure maintenance” tax, but includes many new capital projects

Sales Tax Proposal Sent Back for More Info

During a long meeting that stretched from before lunch until 5pm, the Board of County Commissioners yesterday deferred action on staff’s sales tax proposal, sending it back for more information.

Commissioners Valeche, Burdick and Abrams all wanted to see things slow down while the proposal is fleshed out. They did not want to see ballot language as of yet, rather the next session should discuss the unknowns of the proposal, including:

– What is the project list from the cities and School District?
– How would funds be distributed among cities, Cultural Council, county, schools?
– What it looks like without the Cultural Council projects included?
– What does the Hospitality Industry think of it?

While no one wanted to shut it down, they are clearly not ready to move on it. Some concerns expressed were that the proposal had expanded way beyond the original infrastructure funding, encompassing new construction projects, equipment for the Sheriff, and other items. Commissioner Abrams worried that the “Christmas tree” could tip over from all the ornaments.

Regarding the proposals from the Cultural Council – illustrated by a procession of over 10 museum directors, zookeepers, theater managers and the like, some of the projects go way beyond what you would expect from public funding, including architectural enhancements to the exterior of existing buildings to make them more trendy.

We will wait and see. We have listed objections to the plan as it is currently known. We expect that the devil is in the details though, specifically:

– Will the cities give up some of their share to fund CC projects?
– What will each of the 39 municipalities do with their share? Will any reduce their ad-valorem?
– What effect will this have on the county Ad-valorem budget process this year?

Regarding the Fire/Rescue sales tax proposal, there were too many questions about the enabling statute to move forward at this time. In particular:

– It is unclear what happens if sales tax revenue exceeds needs – can the surplus be spent on non fire/rescue projects by the county or cities? – It needs a statute change or AG opinion.
– What would be the process for collecting and distributing the cash, and how could ad-valorem be adjusted after trim notices are sent – Tax Collector Anne Gannon came and listed some of her process issues with it.
– What does Fire/Rescue administration (ie. Fire Chief Collins) think of the proposal. (The proposal is being brought forward by the IAFF union, not Fire/Rescue management).

We will keep you posted.

Some of the organizations with whom we have spoken, are also in a “wait and see” mode. Many believe there are real infrastructure needs, but many of the add-on projects give them pause.

For the Post story on the meeting, see: Action on Sales Tax Issue Delayed.

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