Another Go at the Sales Tax on Tuesday

The proposal for a county sales tax increase is back on the agenda, Tuesday March 11, postponed from the December 17 meeting by a 4-3 vote. (See Item 5G1.)

In December, there was consensus that the proposal was a “potpourri” or grab-bag of small projects lumped togther to utilize the $110M a year that a .5% increase would bring. It’s reincarnation is still a grab-bag of small projects, but they are limited to infrastructure and spending for Parks and Recreation was removed. Since the total hasn’t changed, the net effect is to add MORE road projects to the proposal. The largest of these is a line item for “resurfacing – 7 years @ $12M/year” for $84M.

A noteworthy aspect of this proposal coming out of George Webb’s Engineering and Public Works Department, is the condition that 40% ($44M per year) is to be shared with the municipalities for wherever they would like to spend it. However allocated, this would represent a sizeable amount relative to most city, town and village budgets. (Note- this sharing is required by the authorizing statute for sales tax surcharges).

As for Engineering and Public Works itself, the $66M / year retained in this proposal would more than double their $53M current budget.

It should be said that road projects have gotten more of their share of cuts over the last few budget cycles, as the enormous half a $Billion (with a “B”) Sheriff’s budget gobbles up an ever larger percentage of the county tax revenues. Adding $66M to E&PW from a different revenue source would seem to be a questionable action.

The December proposal was allocated differently – $44M for the School District, $40M for the county (including Parks and Recreation), and $26M for the municipalities. The school district did not want to play in this though – rumor has it that a separate sales tax increase will be brought forward by those folks. In the revamped proposal, E&PW decided to just keep all the money for themselves.

This proposal should be considered within the overall background of county finances, not in isolation. Property Appraiser Gary Nikolits is projecting a 6-7% increase in taxable valuations this year. Even with some reduction in millage (which we think is justified), there should be sufficient property tax revenue to start addressing infrastructure maintenance that has been deferred over the last few years. When you build a road, you should plan to maintain it – this is one of the natural and expected functions of government. That spending was diverted to other priorities is a management failing – not a justification for a new tax.

A serious proposal for a sales tax hike could be justified if it was revenue neutral – ie. offset the $110M in new revenue with an equal reduction in ad-valorem tax. That is not what is being proposed. Instead, it is still George Webb’s “wish list” of work he’d like to do but was unable to justify in the normal budget process.

If this were actually to get on the ballot in November, particularly next to a School System increase (“it’s for the children!”) and the re-authorization of the taxing district for the Children’s Services Council (“It’s also for the children!”), then a betting man would wager that it will go down in flames. Perhaps they all will, as the taxpayers do not sense that their money is spent wisely today.

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Palm Beach County Commission to Rule on Children Services Council Request for Referendum on November 2014 Ballot

At its February 4^th meeting the Palm Beach County Board of Commissioners will rule on the Children’s Services Council request to get the reauthorization vote on this coming November ballot. This is a terrific opportunity for Palm Beach County voters and taxpayers to make an informed decision regarding the continuation of a special taxing district.

The Palm Beach Children’s Services Council (http://www.cscpbc.org/ ) is one of 8 special taxing districts in the state (Hillsborough, Broward, Martin, Miami-Dade, St. Lucie, Okeechobee, Pinellas are the others).The Palm Beach taxing district, which levies a tax directly on Palm Beach County real estate (2012 mil rate was .7459), was authorized by Florida Statute in 1986 and created by local referendum on November 4, 1986. For the current year, $80.2 million of an approximately $100 million budget is allocated through 66 grants to 38 organizations. Ten (10) organizations receive 80% of the funds.

The Early Learning Coalition of Palm Beach County, the recipient of more than a third of the taxing district’s revenue, runs a school readiness and voluntary pre-kindergarten program. Based on the 2012 Annual Report the total expenditures were $87 million with the Childrens Services Council contributing about 25% of that amount.

Taxing District Referendum To Be Set for Children’s Services Council

Voter / Taxpayer Opportunity Alert

Taxing District Referendum To Be Set for Children’s Services Council

The Palm Beach Children’s Services Council is one of 8 special taxing districts in the state (Hillsborough, Broward, Martin, Miami-Dade, St. Lucie, Okeechobee, Pinellas are the others ). The Palm Beach taxing district, which levies a tax directly on Palm Beach County real estate (2012 mil rate was .7459), was authorized by Florida Statute in 1986 and created by local referendum on November 4, 1986.

From the 2012 Annual report: ‘The purpose of the Council is to plan, develop, fund and evaluate programs and promote public policies which benefit Palm Beach County’s children and families”

Legislation passed in 2010 required that the Children’s Services Council go before the voters for reauthorization in 2016. Martin County and St. Lucie County go before the voters in those areas this coming November.

The CSC in early December of 2013 petitioned the Palm Beach County Commission to go on the ballot for reauthorization in 2014 … two years earlier than required by state law. The county commissioners have not said yet when they will take the matter up … but it is expected soon.

Palm Beach County Voters and Taxpayers may have a significant opportunity this fall to either reauthorize the existence of this 28 year old taxing district, or failing to do so, conserve and/or redirect public expenditures in a different direction.

Over the next few weeks we will publish facts, gleaned from public records and from the public statements of the CSC itself and its grantees regarding what the taxing district does, how it is managed and specifically where the tax funds are spent.

For the current year, $80.2 million of an approximately $100 million budget is allocated through 66 grants to 38 organizations. Below, in order of percent of total allocation, are the recipients.

Agency	% total	Web Site
Early Learning Coalition of PBC	36.56%	http://www.elcpalmbeach.org/
Florida Dept of Health/Palm Beach County Health Department	9.42%	http://pbchd.com/
CP-CTO-Housing Partnership	5.68%	http://www.cp-cto.org/housing-partnership
Prime Time	5.64%	http://www.primetimepbc.org/
Palm Beach State College	4.94%	http://www.palmbeachstate.edu/
Family Central	4.26%	http://www.familycentral.org/
Literacy Coalition of Palm Beach County	3.53%	http://pbcliteracy.org/
Children’s Place at Home Safe	3.48%	http://www.helphomesafe.org/
Children’s Home Society of Florida	3.13%	http://www.chsfl.org/Home
Legal Aid Society of Palm Beach County	3.02%	http://www.legalaidpbc.org/
The Arc of Palm Beach County	2.95%	http://www.arcpbc.org/
Healthy Mothers/Healthy Babies Coalition	2.61%	http://www.hmhbpbc.org/
United Way	2.55%	http://www.unitedwaypbc.org/
NonProfits First	2.25%	http://www.nonprofitsfirst.org/
Easter Seals	1.97%	http://www.easterseals.com/
School District of Palm Beach County	1.95%	http://palmbeachschools.org/
Families First of Palm Beach County	1.58%	http://www.familiesfirstpbc.org/
Friends of Community Services Inc.	1.27%	http://www.friendspbc.org/index.php
Sickle Cell Foundation of Palm Beach County	0.72%	http://www.sicklecellpalmbeach.org/
Father Flanagan’s BoysTown of Florida	0.71%	http://www.boystown.org/
Palm Beach Board of County Commissioners	0.63%	http://www.pbcgov.com/countycommissioners/
Children’s Forum	0.55%	http://www.fcforum.org/
Children’s Services Council	0.50%	http://www.cscpbc.org/
Urban League of Palm Beach County	0.37%	http://ulpbc.org/
Center for Family Services	0.30%	http://www.ctrfam.org/
Esereh Youth and Family Center Inc.	0.29%	http://esereh.org/
Lutheran Services of Florida	0.28%	http://lsfnet.org/Pages/LSF_Master.aspx
Palm Beach County Food Bank	0.28%	http://www.pbcfoodbank.org/
Nutritious Lifestyles Inc.	0.27%	http://www.nutritiouslifestylesonline.com/index.php
Jerome Golden Center/Oakwood Center of Palm Beaches	0.25%	http://jeromegoldencenter.org/
Tomas Boiton	0.23%	http://citizens4transit.org/
Health Council of Southeast Florida Inc.	0.21%	http://www.hcsef.org/navigate-pbc
Resource Depot	0.12%	Organization Not Found
Florida Rural Legal Services Inc.	0.10%	http://frls.org/
Florida Department of Children and Families	0.09%	http://www.myflorida.com/accessflorida/
Palm Beach County Education Commission	0.06%	http://pbceducation.com/
Redlands Christian Migrant Association	0.04%	http://rcma.org/

Best Practices in Transportation for the Mobility Impaired

While researching our article “Growing Government in Giant Steps: A County Takeover of Palm Tran Connection?”, we encountered an excellent reference for best practices in ADA compliance for public transportation.

See “Innovative Approaches for Increasing Transportation Options for People with Disabilities in Florida” – published by Center for Urban Transportation Research and sponsored by the United States Department of Health and Human Services, Administration on Developmental Disabilities, the Florida Developmental Disabilities Council, Inc. and The Able Trust, in 2010.

The above paper analyzed approaches throughout the country – and Chapter 3 highlighted Best Practices. Many communities used a combination of fixed route incentives, door to bus-stop (ADA required), vouchers with approved taxi and transportation companies, and volunteer drivers – all incorporated to provide maximum flexibility, improved access and lower cost per trip and allowing for increased ridership as well. Customer satisfaction was also improved by 24/7 access that taxis provided and ability to make same-day reservations.

Amongst those best practices highlighted in Chapter 3:

Vouchers: Implementing voucher and volunteer programs – especially in rural areas where there is limited public transportation; allowing vouchers to be used to pay mileage reimbursement to volunteer drivers; using taxi or volunteer vouchers for return trips from dialysis treatment to reduce wait times

Provider selection: Contract with multiple providers – annually conducting reviews and requiring participating transportation companies trained in ADA requirements, first aid/CPR, background checks etc.

Trip Rate/Rider Selection: negotiated fixed price trip rates with local taxi operators; Reduce or require no co-payments for dialysis transport; allow participants to schedule directly with participating providers

Billing Oversight: Focal point/administrator for the entire network; smart cards or close monitoring of voucher budget – enhanced by fixed flat rate negotiated w taxi/transportation companies; have driver and rider sign vouchers to document that trip was actually made

Funding: Use FTA funds for mobility management services, technology. Use savings from voucher program to expand service areas. Actively pursue support from charitable organization, non-profit and community groups and foundations.

Growing Government in Giant Steps: A County Takeover of Palm Tran Connection?

Now that the county has decided to end the relationship with Metro Mobility Management Group a year from now, a serious proposal has surfaced to bring the operation into the government – with county-owned vans and equipment, and with county employees with their higher salaries and generous benefits.

If executed as described, it would require the hiring of 416 new county employees, a 7% growth in total staff and a 72% growth in the Palm Tran Organization.

By staff’s estimate, the county would need to purchase 241 new vehicles, and build new facilities for administration, fleet storage and maintenance. In addition to $43M in capital investment, the annual costs for labor and operations would be $34M – 23% higher than today’s $28M with the Metro contract.

How could this possibly make sense?

To understand the thinking, you first have to acknowledge that operations under the Metro contract over the last year have not been smooth. Vehicles in service are older and more worn-out than promised, customer service problems have persisted, and the experience of the elderly and disabled riders has not met expectations. Commissioner Shelly Vana, to her credit, has pushed for changes after going out and experiencing using the service herself. The promise of the Metro contract was for acceptable service levels at lower cost than the previous vendor – a bar that has been difficult for the vendor to achieve.

What is Palm Tran Connection?

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Palm Tran Connection delivers about 820K trips a year to a ridership of approximately 13K individuals who are eligible through either the federal Americans with Disabilities Act (ADA) – an unfunded mandate affecting entities that otherwise provide public transportation (700K trips and 11K riders) or the state’s Transportation Disadvantaged program (123K trips and about 2K riders). TD riders are 90% subsidized by state funds. Using the current year’s $28M budget, the cost per rider is over $2000 per rider, and the average cost per trip is $34 (calculated by dividing the $28M budget by 820K trips/year).

Although there are federally defined requirements for eligibility (ie. what qualifies as “disabled”), it is not strictly a welfare program as riders must pay a fare to use the system, currently $3.50 per trip (about 10% of the cost). If you work the same numbers for the Palm Tran fixed route system, it is not too much different. ($87M fixed route budget divided by 12M trips is $7.25/trip – making the $1.25 average fare with discounts about 17% of the cost).

So what are the real issues?

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We will stipulate that Connection provides a needed service to the county’s disabled population, and as long as the county is in the public transportation business, the service is required under the ADA (although the county does exceed requirements by providing service beyond the “3/4 mile from fixed route” demanded by ADA.) The problem is to provide a reasonable level of service at a reasonable price.

Privatization of county functions where it makes sense has been a long-term goal of TAB, as there is body of evidence that suggests that the private sector, particularly when operating in a competitive environment with an incentive to maximize customer satisfaction at the lowest cost, is best suited to delivering a needed service. A government agency, by its nature, is often hampered by other conflicting considerations (eg. politics, union demands, special interests, etc.)

The current Connection system is a hybrid. The contract is sole-sourced, and part of the function (customer service, scheduling) is performed by the government as the county places itself in between the riders and the provider. The vendor’s customer is the county, not the riders.

How much different would it be if multiple vendors could provide the service, perhaps in smaller service areas than the county as a whole. Companies and drivers could be regulated much the way taxi and limousine services are today. By introducing customer choice into the mix, with the county subsidy delivered through a voucher system, the customer service levels would improve – much as they do in any competitive area.

Private sector competitive based solutions for service delivery versus government run enterprise is an age-old question, usually decided along ideological lines. Given the political makeup of Palm Beach County and those who represent their districts, I would expect the “government run” position to have an edge in this discussion. Before taking that step though, we would hope that the Commissioners consider that de-privatizing Palm Tran Connection is most likely an irrevocable step. Regardless of future changes in ridership level (2014 is projected to be 9% less than 2013) or customer needs, a new 416 person county organization with significant capital assets would be here to stay.

Some Alternatives

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Some alternatives to a total government-run Connection provided by staff include partial moves such as in-house dispatch, in-house takeover of service in Belle Glade only, and having the county own the vehicles and leasing them to the vendor.

We think allowing competitive service delivery, a voucher system, expediting the growth of existing transportation companies who wish to enter this space would be a rationale alternative as well. In areas that need to be served for which there is little competitive interest, a sole-source vendor should be sought, much like the existing model. Providing incentives for the mobility impaired to utilize the fixed route system is also desirable.

Many government entities face similar challenges, and a number of best practices have emerged. Please see “Best Practices in Transportation for the mobility impaired.”

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

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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.

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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.

County Commission votes to penalize West Palm Beach and Riviera Beach over Inspector General Lawsuit

In a clever but unusual move, County Administrator Bob Weisman last night proposed $916K in additional spending over the July budget package that specifically excluded amounts requested for West Palm Beach and Riviera Beach by $70K and $50K respectively. This was a direct response to those city’s refusal to pay their share of the Inspector General budget. The proposal included additional spending of $916K – $400K for the YECs, $175K for the Pahokee Recreation center, and $341K for the Inspector General.

The additional $346K to cover the IG shortfall will come from the Solid Waste Authority ($100K), funds from the non-suing cities released by the Clerk ($262K), and $16K from other county departments.

Since the maximum millage was set in the July workshop to 4.7815 (unchanged from last year), the additional funding will come from reserves and tapping an additional $800K from the proceeds of the Mecca Farms sale to South Florida Water Management.

A motion by Commissioner Priscilla Taylor to restore the funds for the West Palm and Riviera YECs and provide an additional $40K for the Belle Glade YEC (requested by Commissioner Shelley Vana) was defeated 4-3 and the Weisman proposal was passed without change. Commissioners Valeche, Burdick, Santamaria and Berger rejected the change for a variety of reasons.

Hal Valeche said “The cities are taking us for a ride..”, and “By restoring this funding they are taking us for a further ride.” Commissioner Santamaria explained to the many children and instructors from the YEC who turned out to support their programs that “Unfortunately the YECs and the IG are connected”. He said that the cities could have opted to spend the IG money they are keeping on the YECs but declined to do so. Commissioner Vana, seeing her request for additional Belle Glade money “for the children” going down to defeat, said “It is disgraceful what we are doing here today”. “I am ashamed to be part of this board at this point.”

It should be noted that the 14 cities participating in the IG lawsuit owe $1.9M to the county – 90% of it from the 5 cities of West Palm Beach ($657K), Boca Raton ($406K), Delray Beach ($348K), Riviera Beach ($169K) and Jupiter ($142K). It is a positive step that the county should withhold grants and assistance to these cities while they are declining to pay for the IG services. The $120K at issue here is a drop in the bucket and it would be appropriate to raise the ante by challenging other grants to these five, in areas such as community development, environmental resource projects within their boundaries and social services. Money is fungible and amounts could be held in escrow while the litigation continues.

The final budget hearing will be held on September 23 at 6:00 PM.

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