Yet Another Taxing District?
Palm Beach County property owners are taxed in many ways. We pay separate tax rates for our cities, for our schools, and for the county government. We also pay for the county libraries, the Health Care District, the Children’s Services Council, and a variety of inlet and water management districts. If we live in the unincorporated areas we pay separately for Fire/Rescue.
Now there is a proposal to create yet another tax district – for the Office of Inspector General. Why this and why now?
It is raw politics.
Some Background
The Office of Inspector General was established in 2009 by the County Commission in response to the grand jury report investigating “Corruption County”. With many commissioners and lobbyists serving jail terms for abuse of the public trust, it was a correct response, and much effort went in to making the office “independent”. Hiring was performed by an independent selection board. Removal required the votes of the entire selection board plus 5 of the 7 commissioners. The budget was floored at an amount .25% of the contracts that vendors have with the county, and could not be reduced without 5 votes of the commission.
In 2010, a ballot initiative asked the voters if the IG jurisdiction should be extended to the 38 municipalities, with a proportional increase in funding to come from those entities. 72% of the voters agreed and the result was codified in the county charter after a six month effort by an ordinance drafting committee. The committee was composed of representatives of the county, the League of Cities, and the public, but much of the discussion was contentious. The cities objected mainly on two grounds – that the scope was too broad and that the purview of “waste, fraud, abuse and mismanagement” needed to be narrowly defined to limit what the IG could investigate, and that the funding formula based on a LOGER estimate of contract activity constituted an illegal tax. The ordinance draft did pass by a majority vote.
In 2011, after the IG began her work with the cities, the opposition began. Many cities passed local ordinances adding the definitions that were rejected by the drafting committee. A narrative was established that complying with the IG would be prohibitively expensive to answer their questions and fix any problems found. “The people did not know what they were voting for” became the operative justification for the opposition. Finally, in a major strike, 15 of the 38 municipalities filed a lawsuit claiming that the funding mechanism is illegal under Florida law, and refused to remit their obligated funding. Funds already provided by the municipalities that were not party to the lawsuit were sequestered by the County Clerk. A crisis in funding was at hand.
Recent Developments
On Tuesday, 3/20, a lawsuit “settlement proposal” negotiated by County Attorney staff was brought to the Commissioners. Under its terms, the cities would collect a contract fee of .25% levied by the county on their contracts, to be used for IG oversight of only those contracts. Contracts that predated 6/12 would be excluded, as would a long list of exempted contracts including large ones like FPL, waste collection and all federal grants. The IG office estimated that acceptance of this settlement would gut 60% of their budget, effectively limiting their oversight of the municipalities. After a large number of members of the public came forward urging rejection of the settlement, the commission voted 7-0 to reject it and move on to mediation.
On Monday 3/26, a joint meeting was held in the West Palm Beach City Hall between the County Commission and the representative of the municipal litigants. It was an august collection of the most senior public officials at the local level. While all professed to “support the IG”, and that the lawsuit was “just about the funding”, an objective observer could conclude that an independent Inspector General with free rein to investigate in the cities was not universally embraced.
Commission Chairman Shelley Vana correctly summarized that the intention of the ordinance is to provide for IG independence by having the governing body NOT control the IG budget. Mayor Muoio and the others see that as the crux of the problem – how can you be responsible for a budget if you can’t set the level of spending on a line item. Why, if the economy is bad, we may just decide not to fund the IG at all in a given year! Control of the IG budget is control of the office – just what the ordinance is intended to prevent.
During this meeting, West Palm Beach attorney Glen Torciva suggested an independent taxing district as the way out of the dilemma. Let both the county and the municipalities wash their hands of the funding issue and let the people decide. Of course a new taxing district would have to go on the ballot – perhaps this November. This is perfect for those who believe “the voters didn’t know what they were voting for” in extending the IG to the cities. Instead of asking “.. should we have an IG?” as in the 2010 question, we will ask ” .. should we pay more taxes so we can have an IG?” Maybe then the 72% of the voters who wanted to meddle in the affairs of our elected officials will think twice.
If you have any doubts about the motive here, consider Mr. Torciva’s statement to the Palm Beach Post:
Commissioner Burt Aaronson, a supporter of the concept, added (with a smile):
The creation of the Office of Inspector General and the Ethics Commission has gone a long way to correct our reputation as “Corruption County”. This latest attempt to neuter or eliminate the office proves that we still have a lot of work to do. The roughly $3.5M OIG budget would be equivalent to a 0.03 millage rate on our $120B property valuation – hardly worth the effort it would take to collect it. The current LOGER system is an accurate, reliable way of measuring local economic activity and establishing a fee for IG services. Whether a fee is actually charged to a contract or not, it is a reasonable way to both estimate and bill.
We think the county and cities should find a way to make it work and drop any attempt at forming a new taxing district.
Commission and Staff Hold Off-site Retreat
The County Commissioners and senior staff assembled today in Boynton Beach at the Intracoastal Park Clubhouse, for an off-site “retreat”.
In January of last year, a similar meeting was held at the Riviera Beach Marina, and a wide variety of strategic topics were discussed (energy and water costs, Glades restoration, Biotech investments) as well as the upcoming budget outlook. The most significant result of that meeting was the setting of clear board direction to staff to return a flat millage budget. This benchmark was the driving force for the budget workshops and resulted in a final budget in September that was very nearly flat. The meeting was successful largely as a result of then Chairman Karen Marcus’ efficient management style, which kept the discussion focused and moving.
This year’s meeting was different. Instead of herself leading the discussion, current Chairman Shelley Vana turned the meeting over to a professional “facilitator”, David Rabiner. Mr Rabiner’s website lists as one of his services “Retreat Facilitation for Governing Boards and Managing Teams”. As a leadership trainer, he was compelling and entertaining, and one could easily see him in a corporate setting. However, for this group, his techiques to “facilitate trust and an effective working relationship” between commissioners and staff were off the mark.
Last year’s meeting was effective because the commissioners spoke freely to each other and related their views on the budget and strategic topics in depth. In this year’s meeting, much of the content consisted of Mr. Rabiner talking about his views on process and how things work in his native Oregon. Perhaps the commissioners found it useful but I suspect not. Many people who attended the meeting to hear some discussion of the budget outlook left before lunch and did not return.
After lunch, Mr Rabiner attempted to extract from the group a clear direction to staff for this year’s budget assumptions. He failed. When the meeting ended at the appointed time, a conficting set of requirements were laid on Bob Weisman and staff.
Steven Abrams and Paulette Burdick want a flat millage budget like last year.
Shelley Vana wants a budget proposal that delivers a “consistent service level”, even if a millage hike is necessary. Priscilla Taylor seemed to concur.
Jess Santamaria wants a “flat taxation” proposal – ie. a rollback budget, regardless of millage rate.
Burt Aaronson wants to reverse the cuts that have been made in ad valorem spending over the few years and “enhance the product” with either a 3% or 5% increase in millage.
Karen Marcus does not want to see any layoffs this year, but wants to start with a “consistent service level” proposal and have the board make cuts to approach flat millage from the high side.
When the meeting ended, these conflicting positions were on the table. Hardly a “clear direction to staff”.
Commissioner Marcus’ proposal deserves further comment however, as it represents a new approach. Mr. Rabiner made the point that there are two ways to achieve budget cuts. The first is to cut “line items” – which are portions of programs similar to what is presented on the “green pages” and “blue pages” prepared by staff in the last two years, sized by dollar and people impact. The second is to cut programs entirely (presumably those that are not needed anymore or no longer appropriate to the current environment).
With the “line item” approach, the priorities are driven by the County Administrator and staff since they present to the board their list of potential cuts from which to choose. Typically, these are sprinkled with items with vocal constituencies, leading to the yearly “Kabuki Dance” of the colored tee shirts.
With the “program” approach, the priorities are driven by the board itself, and have the possibility of being strategic in nature, or at least policy driven.
Karen Marcus seems to be proposing the latter approach, with a consistent service level starting point. Criticism of her proposal pointed out that only the staffs have the inside knowledge of how the pieces fit together and without the green/blue pages, intelligent choice is impossible. This misses the point – the commissioners, particularly long serving ones like Marcus, do have the knowledge and experience to make informed choices for program elimination or even adjustment of sub items. We think they should give this a try.
Another decrease in valuations in 2012?
As you may recall from last year, county property valuation fell 1.8%. This put pressure on the commissioners to raise the millage in order to avoid cutting spending. As it turned out, the final millage did result in a budget reduction of $7.9M or about 1%, helped enormously by the Legislature’s passage of pension reform that provided a county windfall.
This year, Legislative action will again impact county budgets. One way is through HB251/SB928, which changes the rules under which county property appraisers operate. Specifically, this bill would require consideration of “open market transactions..”, “.. including, but not limited to, a distress sale, short sale, bank sale, or sale at public auction.”
Although the proposed statue would give the local PA some discretion, it is likely to depress valuations. Palm Beach County Property Appraiser Gary Nikolits estimates this could be as much a 2% reduction in valuaion – good for the homeowner, but not so good for city and county governments. (See the Palm Beach Post Story by Jennifer Sorentrue: “Property values stable in Palm Beach County, but bills leave tax revenue uncertain” )
The 2012 adopted budget which is now available on the county website, states on page 2, “Following four years of decline, property values have begun to stabilize and are projected to be level for FY 2013.” More optimistically, on page 58 they estimate a 2013 valuation forecast of $125.8 B, a 1% increase. Maybe not.
In any case, expect another difficult budget year.
County Adopts New Financial Standards
The county commission today discussed and approved new accounting standards for the next budget year that will adopt a more standard accounting methodology, making comparisons with peer counties possible (perhaps). For a full description, CLICK HERE.
Highlights included:
- Adoption of GASB 54, reporting spendable fund balances in 4 categories, possibly providing more transparency. During the discussion it was stated that since Hillsborough is already using this standard, it was not possible for TaxWatch (or anyone else apparently) to compare the currently reported Palm Beach County reserves to theirs. John Wilson mentioned they have had numerous discussions with TaxWatch on the subject since the budget hearings and that TaxWatch now “understands” their reserves, but the county is going back and looking at each capital project balance in more detail.
- Adoption of a “target” debt limit of $1200 per capita (which we are very close to at the present time). This is county only, not including SWA bonds. Additionally, debt service payments, exclusive of general obligation and self-supporting debts, will be no more than 5% of governmental expenditures.
- A policy proposal to consider voted General Obligation bonds over non-voted revenue bonds for future borrowing. As you might expect, this was not very popular but Steve Abrams suggested that projects could be “bundled” to make them more attractive to the voters. Karen Marcus indicated that was done in the past for Parks and Recreation.
- A non-specific proposal for departmental “Performance Measures” that could be used to compare to outsourcing alternatives and aid in evaluating department requests for increased funding. Bob Weisman suggested that there already were measurements in place but several commissioners were outright skeptical. Commissioner Vana thought that we can only take “baby steps” in this direction, but that measurements could also be used to consider “in-sourcing” tasks where the county can do it much better than a vendor. No examples were given.
2012 Millage set at 4.7815
Click HERE for Channel 20 Video of the meeting.
In a relatively short meeting last night, the County Commission approved a 2012 budget by a 4-3 vote. Setting the county-wide millage at $4.7815 per $1000 valuation, the rate is an increase of 0.66%.
TAB has been working over the last few months to avoid any increase, but this outcome is acceptable, given it is a lot closer to our $4.75 target than the rollback rate proposed in June at $4.922. We would have liked to see more restraint in the Sheriff’s budget (it is actually increasing when pension reform savings are taken into consideration), but four of the seven commissioners were hard over on not cutting his budget at all. The Sheriff did pony up $1M in excess fees that helped them bring the millage down ever so slightly.
This was the closest budget vote in recent years – many thanks to commissioners Abrams, Burdick and Marcus, who kept to their position from the beginning of the process back in March to the final vote not to raise the rate. The others did exhibit some flexibility this year, even Burt Aaronson who has rarely argued for lower tax rates. Commissioner Taylor thought that the result was a compromise that had something for everyone and we would agree.
It can’t be proved whether our efforts in TAB have affected the outcome, but given the starting proposal of 4.922 and the significant progress towards the goal, we would like to think so. Almost all of those who spoke at the meetings in opposition to the tax hike were associated in some way with TAB.
Special thanks to those who spoke at the final meeting: Janet Campbell, Mel Grossman and Laura Henning of PBC Tea Party, Mayor Dan Comerford and Commissioner Chip Block of Jupiter Inlet Colony, Matthew Leger, Dionna Hall and Christina Pearce of RAPB, County Commission candidate Albert Key, State Senate candidate and 912 member Mike Lameyer, South Florida 912 members Dennis Lipp, Victoria Thiel and Nancy Hogan, and Barbara Susco, Mark Dougan, as well as Fred and Iris Scheibl of TAB.
Next year will be particularly challenging for the county budget, with an increase in pension costs expected as well as continued pressure on valuations. Be assured that TAB will continue our watchdog role going forward.
Call to Action – September 27 Budget Meeting
TAB Members,
Tomorrow evening, September 27, is the final county budget hearing at 6:00pm in the County Building at 301 North Olive, WPB. You should arrive by 5:30 if you want to be assured of a seat in the main meeting room.
On the table is the 4.79 millage carried over from the last meeting, along with a 4.784 “alternate” proposal that shaves another $700k off the first. If they were able to find only $5M (less than 0.25% of the proposed budget) then the tax rate hike would be unnecessary. Although the commissioners like to talk about “only pennies a day”, it is useful to remember that county spending has grown 10x population growth and 3x inflation since 2003. A line needs to be drawn in the sand. Now. This year.
Currently three of the seven commissioners have voted to avoid the rate increase and consider further cuts to the Sheriff’s budget. We agree, yet the other 4 have been unwilling to challenge the Sheriff, and can block any action in this area. On the bright side, that is the smallest majority we have seen to date, thanks to the courage of commissioners Abrams, Burdick and Marcus. Maybe we are making progress.
Please attend the meeting tomorrow, fill out a comment card, and speak, or send emails to the commissioners. Nothing has changed that makes the TAB proposal any less appropriate, and it remains:
- 4.75 millage – don’t increase the tax rates
- Take the remaining cuts from the Sheriff
- Sell off unused property
- Use reserves where necessary
For some useful background, see
- Tax Rate Proposal Still Too High on the TAB website
- Jennifer Sorentrue’s piece in the Post: Divided Palm Beach County Commission finds compromise increasingly tough on budget cuts
- Andrew Marra’s Editorial in the Post: To serve and protect budgets
- John R. Smith’s Op Ed in the Sun Sentinel: Time for Palm Beach County to go budget diet
- The TAB synopsis of the last meeting: A Surrealistic Budget Hearing
Fred Scheibl
Taxpayer Action Board
Tax Rate Proposal Still Too High
The current proposed millage on the table for the 2012 budget is $4.79 per thousand dollars of valuation, up 0.8% from the $4.75 of last year. With declining valuations, that millage would collect $596M in taxes, $7M or about 1% less than last year. An “alternative” offered by Bob Weisman differs by about $700K – hardly worth mentioning.
At the September 13 preliminary hearing, commissioners Abrams, Burdick and Marcus voted against the rate increase and were in favor of further reductions in the Sheriff’s budget. At $467M, it is down slightly from last year, but not as much as the estimated $19M he is saving from pension reform which requires contributions from employees for the first time. The other four commissioners (Aaronson, Santamaria, Taylor, Vana) declined to challenge the Sheriff in any way, and thus there were not enough votes to even discuss this prospect.
There are three major components to the county budget – county departments, Fire/Rescue, and the Sheriff’s Office.
In the last 9 years, the county departments grew fat on the rising real estate bubble, but have cut their tax requirements significantly since the peak in 2007 and are now only about 3% over what they were in 2003.
Fire Rescue grew and stayed high (up 70% since 2003) but this year they are not increasing the tax rate and have reduced spending by about $4M. They are also negotiating in good faith with the IAFF to avoid across the board raises in the next contract and reduce starting salaries 22%.
PBSO on the other hand, at almost $400M, is almost twice the county department’s ad-valorem requirement, up from close to parity a decade ago. (See graph below) There is very little the commissioners have been able to do about this balloon in public safety spending. At the first hint of cuts, the Sheriff threatens neighborhood groups with reductions in patrols or the closing of a substation and they bring enormous political pressure on the individual commissioners. As an independently elected constitutional officer, the Sheriff has autonomy in how he spends his budget, but the county commissioners are empowered to set his bottom line. Typically, no commissioners have seriously challenged the Sheriff, but this year we see a change. Newly elected commissioner Paulette Burdick does not seem to be afraid to ask the right questions and suggest that the Sheriff share the cuts with the county. Neither does commissioner Abrams. Commissioner Marcus, not too much of a PBSO critic in the past, has joined the other two in challenging the PBSO budget this year, to her credit. What is the matter with the other four? If there ever was an economy that called for across the board cuts, including in PBSO, this is it.
We call on Commissioners Aaronson, Santamaria, Taylor and Vana to think about the Taxpayer this year and show a little spine.
Only $5M in additional cuts are needed to avoid a rate increase. Cut the $5M from the Sheriff’s budget (1.25%) and you will be done. PBSO has become unaffordable at the current level.
We stand by the TAB Proposal for 2012:
- Don’t increase the tax rates
- Take the remaining cuts from the Sheriff
- Sell off unused property
- Use reserves where necessary
Budget Diet?
On today’s opinion page of the Sun-Sentinel, BizPac chairman John R. Smith takes the county to task over its budget process, from what he calls the “Weisman ritual” – proposing a budget that always seems to out of step with conditions, to the arcane and obscure way that the budget is prepared by OFMB. Mr. Smith cites the recent TaxWatch report which concludes the county is holding too much in reserves, owns too much unused property, has too much debt, and does not prepare their budget “in a way that is uniform with Florida’s standard financial reporting“.
He concludes:
For the full article see: Time for Palm Beach County to go budget diet
A Surrealistic Budget Hearing
Click HERE for Channel 20 Video of the meeting.
At about 11:00pm Tuesday evening, the County Commission voted to set the county-wide tax rate at $4.79 per $1K valuation. This is up 0.84% over last year – a small increase, but an increase nonetheless.
After the last meeting, the rollback rate of 4.8751 was on the table, intended to collect $607M in countywide taxes, $4M more than last year. The new rate will collect $596M, an $11M difference and $7M less than 2011. That is some progress, but going another $5M to flat millage would have sent a signal that the commission “feels your pain”. Any increase, no matter how small, sends the opposite message and all good will is lost. Thank you to Commissioners Abrams, Marcus and Burdick for trying to do the right thing.
The real story is how the dynamics of the meeting played out and the bizarre behavior of some of the commissioners. What played out was a perfect example of why people are losing confidence in government at all levels. It was sad to watch.
The five and a half hour meeting started with a brief overview presentation by Administrator Weisman that contained a strangely petulant rant against the recent TaxWatch study on county reserves. It was if his integrity was being questioned by a Tallahassee interloper that had no business telling lies about his stewardship of the county purse. TaxWatch claims that Palm Beach County has excessive reserves when compared to objective measures or peer counties. Nyet, says Bob. Move along, nothing to see here.
Next we had “public comment”. By TAB’s count there were about 80 speakers. 75% were very much opposed to any cuts in “their” programs, including all the usual suspects – Palm Tran Connection riders, directors of Financially Assisted Agencies with their hands out, the minions of COBWRA and others from the West Boynton area reacting to the Sheriff’s threat to close their substation, advocates for Victim’s Services, the blind, lifeguards and swimmers, Animal Control, and the eloquent (even poetic!) supporters of the Green Cay Nature Center.
Speaking for the taxpayer and greatly outnumbered were about 20 citizens opposed to the millage increase – almost all associated in some way with TAB. The other 1.3 million residents of the county stayed home last night and get the government they deserve.
When the public portion of the circus was over, the meeting “returned to the board” where the real show began.
In a motion that had jaws dropping throughout the chamber, Commissioner Aaronson proposed funding EVERYTHING on page 8 of the package (the list of programs they would like to restore above a flat millage benchmark). This would be done by adopting a 4.80 tax rate, then funding the additional $7M or so in additional items (Sheriff adders, BDB, Cultural Council, Film Commission) by “taking the money from the roads programs”. If the $7M required would be too difficult for that department (it had been previously discussed with staff), then take the money from “reserves”.
Wow – an admission that we can spend reserves. (TaxWatch?, TAB?) Most striking was the hanging question, finally asked by Commissioner Marcus – how come we are just learning that this $7M is available? Couldn’t we have dispensed with stirring up all the constituent groups by just using this from the get go?
Steve Abrams said this was going in the wrong direction. Instead of funding everything on the page, why not use this “found money” to fund some of the programs while keeping the millage at 4.75?
It has been a long standing tradition that when cuts are made, the county departments and the Sheriff share them dollar for dollar. On the table was an additional restore for the Sheriff of $5M, not matched by the county. Steve Abrams wanted to see the tradition continue and Chairman Marcus polled the board to see if it could be maintained. No. Aaronson, Santamaria, Taylor and Vana will vote to give the Sheriff everything he wants. Case closed. The other three did not like this but there was nothing to be done. Chalk one up for the impressive Ric Bradshaw political operation. This was clearly a done deal before the meeting as there was no discussion on the topic.
The meeting then became a horse trading session – Shelley Vana would delete the mediation program that Priscilla Taylor wanted as well as letting Animal Control close one day a week until it was pointed out that there could be more euthanized cats and dogs (oh my!), prompting Vana to look horrified and say “oh no, we can’t do that!” and Taylor to say “if you restore that then give me back my mediators!” Finally, Vana threw up her hands and said “OK, Just fund EVERTHING!”. Now there is leadership! Karen Marcus around this point made the observation “..we’re not looking too good up here right now..”.
Someone then threw out an arbitrary number – “Why don’t we set the millage at 4.79?” It was after all, getting late. One number is as good as another I guess. Chairman Marcus regained control of the meeting at this point and called a 20 minute “time out” to let staff calculate what 4.79 and “funding everything” would mean.
At the end of the break, staff reported that this would require an additional $7.9M, which would come from the roads program and/or reserves. Since there were not 4 votes to revisit the Sheriff’s share, Mr. Weisman was directed to identify this amount before the final meeting on 9/27, “taken from programs that have no constituency, like engineering or buildings and land”, and the meeting wrapped up with the formal votes on the millage rates.
So what are the take-aways from this meeting?
- The millage was set at 4.79 or below, at most a 0.8% increase over last year.
- The Sheriff got everything he wanted and was not required to match cuts with the county departments, breaking a long-standing tradition.
- About $7M in surplus or deferrable program funds were mysteriously “found” after threatening all the programs with vocal constituencies that could have been satisfied with less.
- After claiming TaxWatch was wrong and our reserves are too low to use, Mr. Weisman reversed course and offered $7M to fund the programs.
In summary, this was not too bad an outcome given where we started, but the cynical way the process was conducted by staff and some commissioners was not government’s finest hour.
Call to Action – 9/13 Budget Meeting
This is a call to action for next week’s county budget hearing, Tuesday evening, 9/13/11 at 6:00pm. The meeting is in the county government center, 301 North Olive in West Palm Beach. Come early as the meeting is expected to be crowded.
As you prepare for the meeting, here are some resources that may be useful:
- September Talking Points
- Sample email and 3 minute remarks
- The 2012 TAB Proposal – September Update
- September Budget Hearings – Some Background
Also check the “News Articles” tab on the TAB website for the latest budget stories from the Palm Beach Post, Sun Sentinel, and others.
Those on the “receiving” side of the budget will be out in force. Those of us on the “paying” side must also have their voices heard. If you can’t attend, send an email. Addresses for the commissioners and administrator can be found on right side of the TAB website, or you can email all at once at: BCC-AllCommissioners@pbcgov.org.
For some specific details about this meeting, see the 9/9 TAB email.