Taxpayer Action Board

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The TAB Proposal and the County Budget

The county has published their initial budget package for the June 13 workshop. It is a flat millage budget, with cuts of $13.6M from county departments and $22M from PBSO over FY2011, and would seem at first reading to be in line with the first two points of the TAB Proposal, “Don’t raise the millage” and “take more of the cuts from the Sheriff”.

Upon further reading, it is clear that many of the cuts are intended to provoke a response from the user community. If you remember the horde of lifeguards and community recipients of FAA (charity) funds that showed up last year to protest, you can expect the same from the proposed $4.8M cut to Parks and Recreation which will close pools and reduce lifeguards, and the $1M cut to the FAA funds. Not to mention who will turn out to protest the $2.4M increase in Palm Tran fares.

In his cover letter, Administrator Weisman says: “I recommend the Board set a millage rate at rollback, which is currently estimated to be 4.922 mills. This would allow the Board to reinstate some of the less desirable budget cuts.”

Rollback represents a 3.6% increase in tax rates. Unless TAB partners and like minded citizens turn out to support the TAB proposal and ask the board to accept the submitted flat millage budget as stated, we can surely expect the special interests to push it to the rollback rate or beyond.

To recap, the TAB proposal is:

Maintain the county-wide millage at 4.75

Take the majority of cuts from PBSO, not the county departments

Take action to reduce the inventory of county property and reduce the debt

We also want to see a charter amendment for a county version of “Smart Cap” placed on the 2012 ballot. Detailed arguments for each of these can be found later in this article.

Background

Last year, TAB was formed in July, after the county budget process was well underway.

After researching the growth in county spending for the period 2003-2011, we concluded that it had grown 11 times the population growth and 3 times the rate of inflation. For FY2011, the proposed budget raised the millage by more than 9% on top of an increase of more than 15% in the previous year. Although the ad-valorem equivalent (and the total amount of collected taxes) declined in the 2011 fiscal year with the steep decline in property valuations, those with homestead properties saw their taxes go up. Overall spending, propped up by state and federal stimulus funds, continued to increase in 2011. (See chart below).

With the weak economy and double digit unemployment in the county, we thought another tax rate increase was wrong, and argued for keeping the millage flat at 4.344. As part of the proposal, we went through the staff’s “green” and “blue” pages, and made specific spending cut proposals totalling over $50M, argued for deferring raises in Fire/Rescue and PBSO, and listed $100M in capital projects that could have been deferred.

In meetings with the individual commissioners, we made our case and had a productive dialogue, but were not persuasive enough to carry the day against the hordes of special interests (including PBA members supporting the Sheriff’s budget) that flooded the meetings and lobbied the commissioners to keep the taxpayer money flowing. The final budget passed with a 9.3% rate hike on a 4-2 vote, with commissioners Abrams and Santamaria voting against, and the district 2 seat vacant after the resignation of Jeff Koons.

This year we are starting earlier and have focused on educating community groups about the budget history, preparing them to join the discussion armed with the proper facts. The actual budget has just been released to the public and we are just beginning our analysis. These are some aspects of the environment in which it is being created:

The county administrator submitted a 4.75 flat millage budget as directed by the BCC, yet he is really asking for a rollback rate of 4.922 which would be a 3.6% increase over 2011, “to reinstate some of the less desirable budget cuts.”
The Sheriff submitted a budget request with spending that is 4% higher than last year, mostly to cover raises under the collective bargaining agreements in place until 9/2012. In the flat millage budget, he is being asked to cut 5% more than he saves with FRS.
The property appraiser, who had been projecting a 6% decline in valuations this year, has softened his outlook to a 2.3% decline.
FRS reform, passed by the legislature and signed by the Governor, will result in savings to the county departments, PBSO and Fire/Rescue of $15.4M, $20.6M, and $11.6M respectively (by our calculations). Note: The county shows the PBSO savings to be $18M.
Adam Playford’s article in the Palm Beach Post on May 21 gives some indication of the direction various players would like to go. Administrator Bob Weisman would like to see rollback millage to prevent any cuts in service. Commissioner Shelly Vana suggests we have not properly determined our priorities. The county is “saddled with debt”. The interest payments take 14% of what the county collects in property taxes according to Budget Director John Wilson. “Some of the county’s current fiscal squeeze is because it didn’t save enough earlier in the decade when tax money was flooding in” (during the boom) according to Clerk and Comptroller Sharon Bock.

The following is an outline of the “TAB Proposal” for 2012:

The 2012 TAB Proposal – preliminary

Maintain the county-wide millage at 4.75
- County-wide property tax rates have risen 25.6% in the last two years alone
- Although the total taxes collected have declined over the same period, those with homestead properties saw double digit increase in their county taxes
- This year, the reduction in valuations has slowed from an expectation of -6% to a more modest -2.8%, reducing the pressure on the budget and millage rate
- TAB estimates that reforms to the Florida Retirement System (FRS), passed by the Legislature, will result in a $48M savings to the county this year ($20.6M in PBSO, $15.4 in county departments, and $11.6M in Fire/Rescue). This should be used to hold or reduce the millage, not for new spending on programs or salary increases.
- The commissioners directed the County Administrator to submit an initial budget with no change to the millage rate and he did. Bob Weisman’s request for rollback at 4.922 (a 3.6% increase) would seem to exceed his guidance.
- The county is still experiencing double digit unemployment and slow economic growth. This is not the time to be raising taxes.
- We expect the Fire / Rescue and Library MSTUs to also avoid a rate increase, but that has already been included in the submitted budget and so far no one has asked to exceed it.
Take the majority of cuts from PBSO, not the county departments
- County-wide ad-valorem taxes pay for the county departments and the constitutional officers, including the Sheriff. In the last 8 years, PBSO has grown from 46% of the budget to 59%.
- Most of the growth in the PBSO budget has been in personal services costs (salary and benefits), and PBSO deputies are now compensated more than 30% above the national average for similar positions.
- Measured against a hypothetical population+inflation cap since 2003, county departments are now comfortably under the cap (although they exceeded it in the boom years by a cumulative amount of $50M). PBSO has greatly exceeded the cap in each year, with a cumulative overspending (versus the cap) of $500M in the 8 years. (See charts below)
- The Sheriff provides only the statutory minimum of budget data to the county (and the public) so it is difficult to see where the money is being spent. Through Chapter 119 (open records law) requests, TAB has determined that almost all the spending growth has been in salaries and benefits for employees covered by collective bargaining agreements, not in operating costs.
- The reduction to PBSO from $470M to $448M in the submitted budget would meet our criteria if allowed to stand.
Take action to reduce the inventory of county property and reduce the debt
- Florida TaxWatch is conducting a study funded by the PBCA and others, that will inventory underutilized land and other property owned by the county, and compare our debt and capital programs to our peer counties. This study can be used as a blueprint for action to reduce the debt (currently $1600 per county resident with interest costs estimated at 14% of taxes collected) and make plans to sell off assets like Mecca Farms.
- The Clerk and Comptroller has identified the debt as being significant already, and it is about to be increased even further with the building of the waste to energy facility by the Solid Waste Authority and the convention center hotel.
- During the boom, windfall tax receipts were used to start projects that committed the county to long term debt that is difficult to justify now that the boom has ended. We need a plan to correct the problems caused by earlier bad decisions.
- TAB has obtained a list of vacant properties owned by the county and has begun comparing the current value of these parcels to what was paid for them. As long as these properties remain on the books it is a double liablility – there is a carrying cost associated with them and they are held off the tax rolls. Many of the over 2400 properties listed in the PAPA database as belonging to the county should be sold, even at a loss.

Separate from the TAB Proposal for the FY2012 budget cycle, but important for long term budget restraint is a charter amendment to bring the state level “Smart Cap” proposal (SJR958) to the county. This will be a separate track, aligned with the charter review process, but if you agree with it, please mention it in the context of the budget discussion.

Adopt a “Smart Cap” charter amendment for county government

The state-wide “Smart Cap” (SJR958) will be on the ballot in 2012. What is good for the state is good for the county.
“Smart Cap” limits the revenue that can be collected to last year’s cap plus an adjustment factor that reflects inflation (change in Consumer Price Index) and population growth – an objective measure of “appropriate spending”.
Although the decline in valuations has currently dampened the large increases in county spending that occurred during the boom, spending has continued to rise, even last year. When “normal” returns to the real estate market, a cap could prevent the out of control spending that occurred during the bubble.
Unlike Colorado’s Taxpayer Bill of Rights (TABOR), a smart cap is based on last year’s cap, not on last year’s revenue. That prevents the “ratcheting down” of the cap that caused problems in that state during a recession.
A well designed Smart Cap can provide emergency override (Supermajority BCC vote) and exemptions for unfunded mandates and other areas identified by the League of Cities as as problematic.

This year’s TAB Proposal is really not asking that much. With the smaller decline in valuations and the large savings from FRS reform, there should be very little difficulty in making the modest cuts that will be necessary to avoid an increase in the tax rates.

Growth in ad-valorem equivalents compared to hypothetical “Smart Cap”

June 6, 2011 | Filed Under Blog, Featured, General Budget, News | Leave a Comment

Conversation with a Firefighter / Paramedic

Throughout our analysis of the county budgets, we have been somewhat critical of Fire / Rescue. We observed that the growth of their budget (even adjusted for service area size) was significant over the last 8 years, and the firefighters in the county are compensated more than 50% above the national average from the Bureau of Labor Statistics.

How much should we be paying for a well equipped Fire and EMS service though? This and related issues formed the basis of a recent dialog between a county firefighter from south county and TAB in a comment thread attached to one of last year’s postings.

Our correspondent argued that “bringing the emergency room to the patient” is expensive, and successful outcomes require multiple vehicles and staff to respond. Fighting fires or dealing with medical emergencies is skilled and dangerous work, deserving of pay and benefit premiums. Comparisons with the private sector are unfair, given the unique nature of the work, and so much has changed in the last 8 years in both equipment and expectations, that growth in unit costs are justified.

For our part, we considered the dangers inherent in some private sector jobs and how those are compensated, aspects of the 48 hour work week versus private sector expectations, and the studies we have performed comparing PBC Fire/Rescue to peer groups.

Both points of view have compelling aspects, and we thought the TAB readers would find them interesting. The threads are reproduced here – you be the judge. Are we being unfair to PBC Fire/Rescue?

The thread begins with a response to the conclusions in “Palm Beach County Pay and Benefits – How Much is Enough?“.

May 10, 2011 2:10 pm	Split the two careers (Firefighter / Paramedic) into two separate careers. Paramedic Firefighters are what’s known as “Dual Function” positions. Across the country there are fire rescue agencies that are not Advanced Life Support – Paramedic / Transport capable services. So when doing an analysis / comparison across the country, are you comparing apples to apples? And for the sake of argument, if your one sided / prejudiced bar graphs and charts are correct, after having digested all of the factors such as the one above: ….. When you’re comparing salaries and benefits in South Florida to the rest of the country and you’re asking “Why are we paying more?” …. Could one also interpret that to mean: “Why are we taking better care of our first responders, than the rest of the country? … They should be following our lead” ????
May 11, 2011 12:32 am	These are all good questions, but comparisons to other jurisdictions can be misleading. For example, the Town of Palm Beach just settled a contract with their firefighters. What was arguably the best pension deal in the county (3.5% accrual compared to 3% in FRS) is now one of the worst. Will that change their level of service? How important is a pension plan in retention and hiring in this economic environment? I guess we will see, but since there are few if any jurisdictions hiring at present it may take a while. That town took this action because the current plan was not affordable. All around the country are examples of county and municipal contracts that promised more than could be delivered, even with a good economy. Now we have FRS reform, but the deal is still very much better than in the private sector. Palm Beach Gardens is about to renegotiate their Police and Fire contracts. While the outlook is not as severe as in Palm Beach, it will still mean take-aways. How much should a firefighter be paid? Compared to what? Should it be 4 times what a teacher makes and one and a half times a Sheriff’s deputy? Why is that? Is a deputies job less dangerous or less skilled? Are teachers not contributing as much as firefighters? How do you answer questions like these? In the private sector, the worth of a job is easier to determine. An employee contributes to the bottom line of the company in a measureable way and can be compensated directly. Salesmen earn commissions based on sales. Professionals are compensated for the intellectual property they create. If the company gets into trouble the workers are laid off. The company’s earnings depend on the performance of their employees. In the public sector, everything and everyone is a cost center. Public sector employees create no wealth or generate profit. They use resources taken from the private sector to deliver services to the public. In the case of local government, police and fire are important, basic functions, but the proportion of available resources spent on these services are not spent on others (like teachers or bus drivers or accountants). One could argue that we need police more than we need parks or streetlights. Should all the resources be used for public safety? The average compensation (salary and benefits) for a private sector worker in Palm Beach County is somewhere around $60K, and that worker is not likely to have a defined benefit pension. County staffers make a little more than this, teachers a little less, but both have good pension and health plans. In PBSO the average compensation is about $100K, but for Fire/Rescue it is $150K. Either special risk employee can retire at an early age on a high percentage of their salary, and then go start a different career. That private sector worker is paying some of that $60K to fund the salaries of the public sector workers who have better job security, higher pay and benefits, and likely work fewer hours. Is that an equitable arrangement? Will it last? Public sector employees, particularly those in strong unions, have had a pretty good run in the last decade, and it is not likely that they will lose too much in the retrenchment that is coming. It took the current economic crisis to shine light on where the tax dollars are going. Perhaps now there can be an open dialog about pay and compensation. Florida is is much better shape than other states. By looking at states like California or New York (or countries like Greece or Ireland), we can get a glimpse of where this is going if we don’t come to grips with it.
May 13, 2011 1:01 am	I’m sorry, I guess I’m just having a hard time digesting the assumption that the Town of Palm Beach is in, or headed towards dire financial straights. And when you’re talking about a “Arguably best pension deal in the county” one has to remember that it was just a few short years ago that the town of Palm Beach pay and benefits for their firefighters was below that of the city of Riviera Beach firefighters. Compare the socio-economic make up, and property values between these two municipalities, and explain how this could happen? So …… coming from that type of history, then going to what you describe as the best pension deal in the county, for s short period of time, and then they pull the rug out from under them, it’s a hard pill to swallow. Your argument / comparison between Police, Firefighter, Teacher, and asking why aren’t the Teachers and Police making what the Firefighters make, is somewhat pitting two blue collar careers against the one. My answer to that would be that the teachers and the police should be brought up. 10 Police officers in Florida have been killed this year alone, and we’re only 1/2 way into 2011. If you can show me a private sector job in Florida that’s as dangerous, and they’re not making what Police officers and Firefighters are making with pay and benefits, then I’d have to say that that private sector employee is getting screwed. There’s a reason why the two careers – Police Officer and Paramedic Firefighter are called “High Risk” ….. Aside from the obvious high risk as far as physical injury / trauma / death, there’s the long term health – high risk, with regards to disease exposure, hazardous material exposure, and finally physical and mental stress exposure. So, think about that when you find yourself wanting to continuously compare the Private Sector – Low Risk, to the Public Sector – High Risk. The Firefighters work a 48 hour work week. (Town of Palm Beach’s imposed contract, tacks on an additional 8 hours, forcing them to work a 56 hour work week now) …. So when you’re comparing the high risk workers to the private sector, and you’re saying that the high risk workers “Likely work fewer hours” and ask is this “Equitable” ?? ….. I believe that the private sector is still putting in a 40 hour work week, so how does one derive 56 Vs. 40 as “Fewer Hours” ?? ….. If you’re working off the assumption that Paramedic Firefighters work one day on, two days off, you’re mislead. 24 hr shifts mean that you start at 07:00 A.M. on Monday, and at 12 midnight you begin working your final 7 hours on Tuesday. So, you’re working two days on, one day off. And once again, you’re working a 48 hour work week. (8 hours more than the 40 hour worker) The Town of Palm Beach also referred to what you describe above regarding Firefighters retiring at a young age, and can go on to work another job. I will ask you this …… Do you think that it’s fair that you ask your high risk employees to put in 30 years, and pay them a salary and benefits that are built on the premise that they should find themselves another job after they’ve retired from a 30 year career faithfully serving their community in a high risk position? Lets talk about the job a little. Paramedic Firefighters today, are not exposed to what Firefighters were exposed to years ago. Firefighting equipment and procedures have gotten a lot safer and more advanced over the years, but the amount of firefighter fatalities has stayed steady. This is because the materials used in modern day construction, and furnishings, are not made with the “Ordinary Combustibles” of yesteryear. Buildings and furnishings today, burn hotter, faster, and give off more toxic fumes / gases, than ever before. So …. even if we’re fighting fewer fires than yesteryear, reciprocally the decrease in quantity, is made up for in the increase in quality. The town of Palm Beach’s town manager used the 90% Vs. 10% ammunition. (90% Emergency Medical Service Vs. 10% Fires) ….. I forget what point he was trying to make, if in fact he even had a point, but if he was trying to discount the dangers / the risks, think about what I just described above. Also think about the dangers and risks that the Emergency Medical Service part of the equation entail. This is the part where most likely your private sector workers will tell you “You can’t pay me enough to do that !!”. And that includes blood, feces, urine, saliva, vomit, ect. …… Diseases with many syllables. You get the drift right? ….. We deal with this stuff in an uncontrolled / unsterile environment. It’s when we get to the Emergency room at the hospital, that’s where it gets sterile, and de-conned. So …… 25 / 30 years of working on 2 year olds who jump up and down on their bed at night and get caught up in the window shade cord and strangle them self to death, but not right away because we pull out all the stops, and go the extra mile to try and revive them, with the distraught mother bouncing off the walls behind us. Or trying to revive them after they’ve been pulled out of the backyard pool where they were submerged for over 6 minutes and not breathing, or trying to revive someones 90 year old grandmother, pulling people out of twisted car wrecks, out of canals, lakes, ponds …. Pulling people out of landscaping shredding machines after they’ve been torn to pieces, the drug over doses, the psychologically impaired, the suicides, the domestic disputes, the false calls, and on and on and on. Yes, 25 / 30 years of that ……. And then thank them for their service and tell them to go get another job. Nice
May 14, 2011 11:05 am	You have several main themes here, so let’s address them one at a time. First there is risk, comparing public sector “high risk” to private sector “low risk”, and the wage and benefit premium that is “fair”. There is no doubt that being a firefighter involves risk – as a matter of fact, most analysis considers that job as the 13th most dangerous in the nation, with 7 deaths per 100,000, right behind police officers with 16 per 100K. I am not in any way minimizing the risks you mention. However, the most dangerous 11 jobs in the country are all in the private sector, from fishing (#1, 129 deaths per 100K, $30K/year), logging (#2, 116 per 100K, $31K/year), on through farmer/rancher, structural construction worker, sanitation worker, pilot, roofer, coal miner, merchant mariner, miller, and power line installer. If you check the BLS numbers you will see that most of these occupations make considerably less than firefighters in PBC. Then of course there is the military. As a veteran I can tell you that most soldiers and sailors are not in it for the money. The special-risk class in FRS originally had a specific purpose. At inception it was intended to provide an equivalent pension at 25 years that a regular-class employee would get at 30, reflecting the physical demands of the job. This was achieved with the initial special-risk accrual of 2% / year (compared to 1.6% for regular-class). About 10 years ago, this was upped to 3% and made retroactive, and parity was replaced with significant premium. The current system, combined with 3% COLAs and the ability to spike the final earning years with overtime and bonuses allows many in that class to soon make in retirement, more than they made when working. Not a bad deal, wouldn’t you say? From your comments, you are not painting an accurate picture of the “private sector”, where the norm now is a 401(k) plan rather than defined benefit one, if you get a pension at all. If you are one of the 21% who do have a conventional pension, typically you can retire at 65 or after 30 years with about 1/3 of your salary. If the position is salaried (also known as “exempt”), which applies to most management, professional and clerical jobs, you don’t get overtime but are expected to work more than 40 hours a week to stay competitive. Most people in high tech jobs (my experience) routinely work 60 hour + weeks under significant stress and typically need to be available 24×7. There are very few jobs in government (except at very high levels) that expect this of their employees. The private sector is also at a disadvantage in job security, health benefits, sick time, vacation, and other aspects that are routine in government jobs. Regarding the 48 hour workweek – yes, two 24 hour shifts do add up to 48 hours, but having 5 out of every 7 days off provides flexibility that most jobs do not offer. It is not unusual for firefighters to spend their off-shift time working another job or running a business. Nationwide, I think Kelly days are the exception and most shift rotations result in 56 hour work weeks. You raise the issue of the 90% EMS versus 10% Fire. (I think the county number is 87%). What is relevant here is not the risk involved on the call but the economics of how the call is answered. In jurisdictions with separate (and/or private) EMS, a medical call is answered with a single unit with the relevant equipment and trained staff. In the county, it appears that EMS calls are answered by both EMS and Fire equipment. I don’t know if this is policy or not, but I have observered that calls are answered with multiple vehicles. Each has a minimum 3 person crew, including a Lieutenant (EMS) and a Captain (Fire). There may be a valid reason for this, but it is not the way a private EMS company would respond. There is a national debate over the size and scope of government, and the recession has been shining a bright light over the advantages that government employees now have over the rest of us. There was a time that lower salaries were the price of absolute job security and better than average benefits. No longer. Compensation in the public sector has made great advances over the last decade and is now considerably superior to similar work in the private economy, reaching almost double at the federal level for equivalent positions. Where salaries have not advanced, benefits – particularly pension benefits have lept ahead, placing burdens on the future cash flow of state and local governments. This is partly due to the private sector losing ground in the recession while government has stayed the course, but that is about to end, as governments are also going broke. Watch California for a glimpse of what may be the future. Florida and PBC may be in better shape than most, but it is time that these matters were discussed openly.
May 14, 2011 4:12 pm	Good information. But I’m still having a problem understanding your point. Let’s start with your first paragraph that lists occupations that you say are more dangerous than the career of a Paramedic Firefighter, and then you list their salaries, as comparatively much lower than a Paramedic Firefighter in Palm Beach County. Once again, your point? …. I’m assuming that you’re suggesting that the salaries for these “Higher Risk” jobs, are fair. That a logging company, or roofing company that turns a pretty good profit, should in turn be able to pay their employees $15.00 an hour? And out of that $15.00 and hour, that employee should be expected to carve out their own pension investment, their own medical insurance, and get small incremental raises that do not keep up with the cost of inflation? …. There is most likely a lot of statistical data that would either skew your numbers, or possibly show that there’s maybe a logical explanation why the number of fatalities in these professions are so high. Like maybe the turnover rate because these workers go on to find better / higher paying jobs, which increases the revolving door – turn over rate, which increases the lack of experienced workers who’ve been on the job longer and the safety value of this, I don’t know. I do know this … I grew up on Long Island, and there’s a Merchant Marine Academy in Kings Point, Nassau County. You make mention of Merchant Marines above, in your list of comparative occupations that are as you infer, more dangerous than that of a Paramedic Firefighter, and are making less. Before I left New York in 1982, Merchant Marines were making somewhere in the area of $90,000.00 a year. Not too shabby, wouldn’t you say? …. I also would say that FP&L linemen are making a pretty good living as well. Just to mention a couple. I won’t even get into the amount of continuing education credits, and continuous ongoing training required for the Paramedic Firefighter, after the training and education required to get certified in both disciplines, Vs. other private sector occupations that you’re making comparisons to. I have a high respect for veterans. Thank you very much for your service to our country. My father was Army. The Korean theater. After he was released from the service, he was able to buy a nice home for our family with his V.A. loan, and for the rest of his life there were other various benefits that my father was afforded because of his 4 year stint in the military, including V.A. health care benefits. That 4 year stint also included room, board, clothing, and food. I am in no way discounting his commitment, and his service to our country. So there is obviously a little more to a military salary than what some people leave out, when they’d like to pit the military against first responders with regards to pay and benefits. And once again, the argument that first responders should be brought down to military is somewhat backwards. Some would argue that the military should be brought up to what first responders make. And when you do a cost comparison between the two, with regards to all of the other benefit costs aside from just salary, I’d be interested to see how far off the two really are. Your comparison between the private sector and the public sector with regards to hours worked, and that your high tech job requires you to put in 60+ hours, and is high stress. Much respect from me to you. But my question is this, what are the risks of your high stress tech job, putting in that many hours? …. What I mean by that is, what’s the worst that can happen if you fail at any given time in your high tech position because of fatigue or stress? …. (On the job) …. The profession of a Paramedic Firefighter requires getting it right 100% of the time. Failure can mean the difference between living or dying, both for the Paramedic Firefighter, and / or the customer. Surely you can agree. Once again, your reference to 48 hours, and defining that as two days, is misleading. It’s 2 days on, one day off, and a total of 48 hours = 6 – 8 hour days. A Paramedic Firefighter must stay in a government building for 24 hours, subject to an emergency call at any time during that 24 hour period. Yes, some do have side jobs, or teach on the side, or own a business on the side. Is your point that no one in the private sector works another job, or has a business above and beyond their base employment? Your reference to the way a call is answered in Palm Beach County regarding the usage of multiple vehicles and personnel, that you compare to the private sector, as if this is a waste. What you’re failing to understand is that the level of Advanced Life Support service in Palm Beach County dictates that certain procedures are followed, and certain tools, equipment, and supplies are used to provide this advanced service. The modern day Emergency Medical Team is basically bringing the Emergency Room to the patient. This requires man power. Years ago, Paramedic Firefighters were not carrying 12-Lead EKG’s, weren’t carrying Glucometers, or using the advanced airway adjuncts, and various other tools / equipment, or performing the myriad of tests that they’re performing now. And the customer demands this level of service. If the private sector will promise you that they can do it with less, I would venture to say that they’re misleading you. A Cardiac Arrest patient who requires CPR, Electro-Shock therapy, Intraveneous lines, Airway intubation, Medication administration, and someone to document this all, with the time line, along with all other pertinent information needed for the hospital could be handled by one private sector vehicle? …. I guess that might be possible. But their shouid be at least 5 or 6 people on that vehicle, with all the necessary equipment. That would make it a pretty big vehicle. Your statement about supervisors on the different rigs (Lieutenant / EMS – Captain FIRE) ….. And how a private company doesn’t do it this way. I beg to differ. The private provider ambulance companies that operate in Palm Beach County have supervisors on most if not all of their trucks. You’re treading down a slippery slope when you compare “For Profit” against not for profit, regarding emergency services. If you really want to get into a “Waste” discussion, lets talk about municipalities that have borders against each other, and 3 fire stations all within a mile or two of each other. Each fire station covering their municipality only. How many municipalities in Palm Beach County have their own emergency services, separate equipment, separate communications, separate maintenance and supply facilities, separate purchasing contracts with weaker purchasing power, ect ect ect …… And this wouldn’t be the fault of the Emergency Service Providers themselves. This would most likely be more of a league of cities – autonomy – what’s ours is ours – identity thing. Ending question – What percentage of the Florida State Retirement system, is part of the over all state budget ?
May 14, 2011 5:35 pm	Comparison of dangerous job categories can be found at various places, including The Daily Beast, Forbes, and Business Insider among others. My rankings came from the first of these which lists the salary of a merchant mariner as $61,960 and a firefighter as $45,700 (which is approximately the Bureau of Labor Statistics national average, and much less than the $71,800 average of Palm Beach Fire/Rescue in 2009). BLS is the source for much of the information, including fatalities per 100K. The point of this is not to argue which jobs carry more risk, but to suggest that risk alone does not correlate strongly to compensation. You would hope that in a free country where both employers and employees constitute a labor market and can make free choices, that compensation would correlate strongly with the perceived value of the services provided. Risk would be a part perhaps, but not the major driver. Perhaps the PBC Fire/Rescue provides a service that is truly worth the 52% premium it gets over the national average, I don’t know. You make a good case that it is expensive to bring the emergency room to the patient, and if I was having the emergency I would be grateful for the service. In jurisdictions where the equipment and training level is less than this, (many parts of the country, presumably, given their costs), then I assume more people die before receiving treatment. It would be interesting to gather those statistics as a way of bolstering the case. I do know that in the 8 years since 2003, the Fire/Rescue budget has grown 82% when its service population only grew 26% and staff only grew by 36%. Most of the budget growth was in personal service costs, not equipment and infrastructure. The IAFF is a very good bargaining unit and deserves the appreciation of their members. It is both appropriate and expected that the union should negotiate the best deal, that is not the problem. It is the county administration and commission who sit on the other side of the table (and are supposed to represent the taxpayers) that should explain to us why our services cost more than others. This applies to PBSO as well as Fire/Rescue. County staff spending growth has been somewhat restrained in the last few years. The municipalities that still have their own Fire/Rescue services (37% of the county at present), have made their choices for various reasons. Cost would be one – the budget growth in the county Fire/Rescue exceeds that of the cities whose budgets we have examined. At the state level, as at the county, the 2011 employer contributions for FRS were 9.63% of payroll (regular class) and 22.11% (special risk). This falls to 3.77% and 12.96% respectively, for 2012 if the governor signs SB2100.
May 14, 2011 10:57 pm	Your comparison of the career “Firefighter” vs. Merchant Mariner as it relates to a national average. Is your BLS data comparing “Paramedic Firefighters” … Or just Firefighters, as you’ve written above? ….. As I’ve said up above, one has to view the service provided as a “Dual Service”. And to get a true value based comparison between salaries of these occupations, you’d need more data than what these website’s you’re using, are providing. For the last 25 years, the fire rescue budget has been run quite fiscally responsible. Everything’s been basically paid off, without the need for bond issues and the like. This would relate to your equipment and infrastructure data. I don’t know if the municipalities can lay claim to the same. I’m assuming that the municipalities that came into the county system must have come in for a fiscal savings component. The city of Boca Raton has used their fire rescue system as a marketing tool for annexation. They promised the citizens of Boca Raton big increases in level of service, with less taxes. If you’ve read the local newspapers in the last few years, I don’t think their taxes have remained stagnant. Your right about health / life risk data not being the only analysis that should be made. Your numbers regarding population and staff growth, as it relates to this discussion prompts me to ask you, has “Demand” remained stagnant? Has the call volume gone up or down? …… In an area that has a population fluctuation that widely goes up and down as it relates to tourism and snow birds, and the population that travels through the major highway arteries of Palm Beach County, can you get a true picture of how many human beings are physically in this county and need to be protected at any given time, and does your data reflect this? All of the occupations you use as your safety / salary comparison, how many of them require college credit training? ….. I believe the pilot, and merchant marine categories are pretty much the only ones. So yes, there’s more than just the safety factor to consider. Have you done any studies that would show that if the municipalities that represent the 37% which have kept their own fire rescue services, would benefit as a whole by consolidating into one department? ….. Do you have any charts that would possibly show over lapping with regards to fire stations from several different agencies, that are basically on top of each other? Several agencies with their own multi-million dollar communications set ups? Their own multi-million dollar training facilities? …. You say that these municipalities have made these choices for various reasons. You’d probably be best served by examining those reasons first, before going after the lively hood of your first responders and their families. Your last statement didn’t answer my last question above. What is the FRS percentage of the total state budget?. Another question: What is the median price of a home in Palm Beach County at this time?
May 14, 2011 1:36 pm (Edit)	So many questions. I sense our world views are so divergent that any agreement on these issues would be improbable. So here is an offer – make your case that the 52% premium is justified, or that it is misleading or incorrect. Or make the case that the extra spending saves lives and that the PBC EMS performance far exceeds the peer group. We will run your article as a feature story and distribute it to the TAB mailing list. But be forewarned – it is a tough crowd that leans towards the view that county spending has been excessive. But we are rational people and will give it a fair hearing. You can send it to: info@pbctab.org
May 15, 2011 6:04 pm	Yes, lots of questions, and lots of factors to be considered before making informed opinions / informed decisions. As far as tough crowds go, there are a few here in Palm Beach County. One of those is a crowd that is probably the biggest demand of the Fire Rescue / E.M.S. system. That would be our elderly population here in Palm Beach County. And the odd thing about these customers, as it relates to your argument here, is that a lot of these people are “Homesteaded Out” …. Which means they pay little to no taxes, yet use the system extensively. One can almost draw a comparison with your argument of why are we paying the Paramedic Firefighters X amount of dollars, and what are we getting for our money? … With … Why are we paying for this system, yet the people who use it the most, are not? ….. But I seriously doubt you’d wanna go up against that crowd, no matter how tough your crowd is. And the ironic twist here? —> I would venture to say that there’s a strong possibility that a lot of these elderly residents of Palm Beach County, are parents of the tea party people who would attack the first responders as over paid.
May 16, 2011 5:50 am	Making my case is easy. Include everything I’ve talked about above, with this ……. In the past 25 years, I can personally assure you that there are at least 4 human beings, 4 tax paying citizens in Palm Beach County, that went into what’s called “Ventricular Fibrillation”, which is a cardiac condition where the heart stops beating and begins to “Fibrillate”, (Which means that the heart that normally has one dominant natural “pacemaker” of it’s own, fails to be the dominant one, and little pacemakers all over the heart begin vying / competing to take over and become the dominant one – Basically.) that the Paramedic Firefighters who immediately applied the EKG monitor and made the diagnosis of this life threatening heart problem, applied the defibrillation paddles to the patients chest, performed the defibrillation, which basically sends a large electric shock and depolarizes all of those little pacemakers in the heart at once, with the hopes that the dominant pacemaker will take back over and lead the heart into beating normally again … worked … and got the heart beating normally again, the Paramedic Firefighters were then able to quickly administer medications through an intravenous line that they initiated / established, and were able to administer medications carried in their box to sooth / relax the heart (It’s gone through a traumatic event here, and is still irritable and could quite possibly go right back into ventricular fibrillation), administer oxygen to the patient for the very same reason, and these 4 human beings regained consciousness before arriving at the Emergency Room, and were released back to their families several weeks later, with no residual, neurological deficits. So there’s at least 4 human beings in Palm Beach County, (That I personally know of) that I would challenge you to ask they and their families: “Are Paramedic Firefighters worth what we pay them?” Now those are just a few examples of people that have been brought back “After” crossing the thresh hold of deaths door step. (That I personally know of) ….. Let’s talk about the hundreds, if not thousands that I personally know of, who have been stopped “Before” crossing the thresh hold of deaths door step, by Paramedic Firefighters in Palm Beach County. A few of these conditions would include, but not limited to ……. The heart conditions that are extremely dangerous, and require other intravenous medications, or electro-shock therapy, to treat the problem and either stabilize it (With Oxygen), or correct it, prior to entering the Emergency Room. The condition known as “Congestive Heart Failure” or simply “C.H.F.” … (This is where the side of the heart that is relied upon for dispensing the oxygenated blood from the lungs, to the rest of the body, begins to slow down / fail, which then causes the blood to back up into the lungs, basically causing the patient to now drown in their own fluid.) where the Paramedic Firefighters quickly apply oxygen, initiate an intravenous line, administer a medication they carry in their box called “Lasix” which works in the kidneys to drain the fluid that is built up in the lungs, thus allowing them to breathe normally again, prior to entering the Emergency Room. The Diabetics who are in what’s called “Insulin Shock”, this is where their blood sugar levels are dangerously low, and the Paramedic Firefighters would know this because they have equipment that immediately tests their blood sugar level, and are able to immediately establish an intravenous line, and administer a medication in their box called “Dextrose” which is a medication that is basically brings their blood sugar level back up to non life threatening levels before entering the Emergency Room. The drug over doses (Accidental or Intentional) where Paramedic Firefighters are able to immediately establish an intravenous line to administer a medication they carry in their box called “Narcan”, which treats Narcotic over dose and brings the heart back to a normal rate / rhythm, brings the blood pressure back up, brings the patients level of consciousness back up, …. once again, before entering the Emergency Room. Just these three examples, which are just three of many other life threatening conditions that Paramedic Firefighters are trained and equipped to handle, are examples of hundreds if not well over a thousand, that I can personally attest to, that your Paramedic Firefighters have saved from crossing over the thresh hold of deaths door step in the last 25 years. So ….. If you were to gather up all of these patients and their families, and ask them if Paramedic Firefighters are worth the money they’re paid, I would venture to say that the majority of them, if not all of them would say yes. Well worth it, and then some. There are just a few examples. Then, as part of your analysis / as part of your information gathering, to make an informed / balanced / non biased opinion, and advice to your elected officials, I would challenge you to ask Paramedic Firefighter peer groups (Both private and Public providers) around the country basically the same question, but slightly modified. ………. “Do you think that Paramedic Firefighters in Palm Beach County Florida, are paid a fair wage that’s equitable to the cost of living / cost of buying a home in Palm Beach County?” …… Sorry …. A lot of questions, a lot of information. But the web page here says: “Speak your mind, tell us what you’re thinking.” ….. Please feel free to share all of this with your tough crowd. Thank you for your time. Over and out.

May 17, 2011 | Filed Under Blog, Featured, Fire/Rescue, News | 1 Comment

Pension Reform – the Final Bill

On Friday May 6, the conference committee put the final touches on FRS Reform and sent SB2100 to the Governor. Although it is not as far-reaching as the Governor wanted, it is significant, both in the precedent it sets (employees must now contribute to their pensions) and in the budget savings for both the state and the counties that participate in FRS.

The conference staff analysis summarizes the highlights of the bill as:

All FRS members must now contribute 3% of their earnings to the system.
For pension dollars accrued after July 1, 2011, the Cost of Living Allowance (COLA) of 3% is eliminated. (This is grandfathered in the bill in 2016, which leaves it up to a future legislature whether it will be restored. Sort of like the “Bush Tax Cuts”.)
For participants who enter DROP after July 1, interest accrues at 1.3% instead of 6.5%.

Additionally, for those who enroll in FRS after July 1, 2011:

“Average Final Compensation” (AFC) is the average of the highest earning 8 years (not 5).
Vesting occurs after 8 years (not 5).
Age and service requirements change to age 65 / 33 years (not 62/30) for regular class and to age 60 / 30 years (not 55/25) for special risk class.

To calculate the budget impact to the county, we must refer to the “employer contribution” section of the bill that starts on page 180 of the final conference amendment. The contributions are 3.28% of gross compensation for regular class, and 10.21% for special risk. (This compares with 9.63% and 22.11% this year).

That’s not the end of it though – the final amendment adds a section to “address the unfunded actuarial liabilities of the system” with an additional employer contribution of 0.49% and 2.75%, starting July 1 for regular and special risk, respectively. This amount then bumps up to 2.16% and 8.21% in 2012.

Taking these figures and applying them to our database of county employee compensation, finds that the county-wide savings in the first year would be $48M ($98M including the schools) and $26M in the next year. The first year savings breaks down as follows: $15.4M in county staff, $20.6M in PBSO, and $11.6M in Fire/Rescue.

The Florida Association of Counties has done a similar analysis state-wide and calculated that the savings for all counties would be $615M in the first year.

May 9, 2011 | Filed Under Blog, Featured, Fire/Rescue, General Budget, News, PBSO | Leave a Comment

Legislative Update – 5/5/11

As the Legislature winds down the session, there has been much progress on the bills we have been tracking that relate to county budget issues. The following is a status:

Pension Reform

SB2100/HB1405 having emerged from conference on Friday May 6, has been sent to the governor. From the House bill, the plan adopts the 3% employee contribution and retirement eligibility of age 65 / 33 years for general class and age 60 / 30 years for special risk. From the Senate bill it eliminates cost-of-living adjustments for accruals accumulated after July of this year. The DROP program, eliminated in both underlyihg bills, was retained in the compromise, but the interest rate was reduced from 6% to 1.3%. One feature that appears to be new is the redefinition of “average final compensation” from 5 years to 8 years, which will reduce the base upon which a pension amount is calculated. The provision in the House bill to restrict new hires to a defined contribution plan only did not survive.

We estimate the savings for the county to be about $48M in the first year, based on the “employer contribution” section of the bill. See Pension Reform – the Final Bill for the details of the analysis.

Smart Cap

CS/JSR958 State Revenue Limitation, also known as “Smart Cap”, was sent to the Governor on May 4. Placed on the 2012 ballot will be a constitutional amendment that replaces the state’s current cap based on personal income growth, to one based on population and inflation, similar to Colorado’s TABOR. It differs from TABOR in one important respect however – the cap is based on the previous year’s cap, not on revenue. This has the effect of preventing the “ratcheting down” effect that can happen when revenue declines in a recession, and prevents unanticipated or undesired reductions. The cap can decline though, if inflation is negative or population shrinks.

Smart Cap applies only to state revenue, but we think it is time to examine a potential Smart Cap for the county budget – implemented as a charter change and also on the 2012 ballot.

Local Government Accountability

One bill that has been under the radar for most people is CS/SB224 – Local Government Accountability. The bill does several different things, but most notably for Palm Beach County, it will require the Sheriff to disclose more of the PBSO budget to public scrutiny, and give the County Commissioners more authority to obtain line item detail for this and previous budget years. Currently, only a Chapter 119 (open records) request has been able to obtain this level of detail on the Sheriff’s budget. Among other things, the bill says:

“The sheriff shall furnish to the board of county commissioners or the budget commission, if there is a budget commission in the county, all relevant and pertinent information concerning expenditures made in previous fiscal years and to the proposed expenditures which the such board or commission deems necessary, including expenditures at the subobject code level in accordance with the uniform accounting system prescribed by the Department of Financial Services.”

This bill was sent to the Governor on May 4.

Additional Homestead Exemption

HJR381, “Additional Homestead Exemption; Property Value Decline; Reduction for Nonhomestead Assessment Increases; Abrogation of Scheduled Repeal”, was sent to the Governor on May 4. This bill places a constitutional amendment on the 2012 ballot that will have several effects if approved by the voters, including eliminating the unfortunate circumstance that can cause your assessed valuation to increase while your actual market value is decreasing on a homesteaded property. It also caps the increase for non-homestead property to 5%.

Labor and Employment

SB830, “Labor and Employment”, also know as the “Thrasher Bill”, would prohibit state or local governments from deducting from wages, funds for political activity, primarly union dues. It also prohibits labor organizations from collecting dues, assessments, fines or penalties for the purposes of political activity without written authorization from the collectee. This is similar to measures being pursued in other states this year.

This bill was never brought up on the floor before the session ended and therefore died from inaction.

As things change with these bills, we will update this post to reflect the current status.

May 5, 2011 | Filed Under Blog, Core Services, Featured, General Budget, Government Structure, News | Leave a Comment

Palm Beach Civic Association Sponsors TaxWatch Study

The Palm Beach Civic Association, in conjunction with the Town of Palm Beach County Budget Task Force (CBTF), is engaging Florida TaxWatch to perform a study of Palm Beach County capital expenditures, debt and reserves, and inventory of underutilized land and buildings. Funded half by the Civic Association with the other half being raised by task force member Jere Zenko, the project is scheduled to start shortly and be completed in time for use in the budget workshops during the summer.

TAB participated with TaxWatch and the task force (a TAB Coalition Partner) in defining the project scope.

Read the article on the subject in the Palm Beach Daily News: Civic Association helping town task force fund Florida TaxWatch study of Palm Beach County budget

The Florida TaxWatch Center for Local Government Studies conducts research projects and performs contract research of Florida City and County Governments and is located in Tallahassee. They performed a similar study under the auspices of the PBC Economic Council in 2006 which is available from their website HERE.

April 30, 2011 | Filed Under Blog, Capital and Debt, General Budget, News, TAB Partners | Leave a Comment

Smart Cap – Good for the State, Good for the County

The Florida Legislature is moving forward on a constitutional amendment for the 2012 ballot to limit state spending to a “growth factor” tied to inflation and population growth. A previous attempt in 2009 had included county and municpal governments in its scope, but that has been omitted this time.

We think it is still a good idea however, and could be implemented for Palm Beach County as a Charter Amendment. TAB plans to argue both for and against the various proposals coming forward during the charter review process. Since a Smart Cap is not likely to be proposed by the Board themselves, we want to raise this proposal now so it can be discussed and perhaps gather momentum.

This article examines the effect a smart cap would have had on the county if it were in place since 2003. The conclusions are:

The FY2011 ad-valorem equivalent for the county-wide departments is 15% less than a cap would have allowed. This is good and reasonable. It was achieved however, by significant reductions over the last three budget cycles, coming off a peak in 2008 that was 7% over cap, and a record of exceeding the cap in all but the last two years.
It would have greatly restrained the growth in PBSO and Fire/Rescue, as their FY2011 ad-valorem equivalent exceeds what the cap would have allowed by 32% and 19% respectively. Since both of those organization’s budgets are primarily personal service costs, the existence of a cap would have limited the salary and benefit enhancements that were granted in the lucrative collective bargaining agreements that are now such a drag on the county budget.
If a cap were to be imposed, it could be crafted in such a way that emergency overrides are possible.
Although we are not enthusiastic about the overuse of federal grants for local projects, a county “Smart Cap” would not interfere with the use of such funds.
There is precedent – both Duval and Brevard counties (and possibly others) have caps in place today.

For these reasons, we would very much like to see a county version of Smart Cap on the 2012 budget as a result of the Charter Review.

What is Smart Cap?

Senate Joint Resolution 958, introduced by Senator Ellyn Bogdanoff and approved by the Florida Senate on March 15, would place a constitutional amendment on the 2012 ballot to limit the growth in spending at the state level. House Joint Resolution 7221, an identical bill, has passed out of committee and is pending a floor vote.

Unlike a previous attempt at a Florida “Smart Cap” (SJR1906), introduced by now Senate President Mike Haridopolis in 2009 and applying to county and municipal governments as well, the current iteration would apply only to the state budget. It’s provisions (summarized in the staff analysis) are:

Replaces the existing state revenue limitation based on Florida personal income growth with a new state revenue limitation based on changes in population and inflation
Requires excess revenues to be deposited into the Budget Stabilization Fund, used to support public education, or returned to the taxpayers
Adds fines and revenues used to pay debt service on bonds issued after July 1, 2012 to the state revenues subject to the limitation
Authorizes the Legislature to increase the revenue limitation by a supermajority vote
Authorizes the Legislature to place a proposed increase before the voters, requiring approval by 60 percent of the voters

It should be noted that the “revenue” that is capped is subject to some exclusions. It does not apply to Medicaid funds, revenue necessary to meet bond requirements, federal grants and some other revenues. The amendment would replace the current cap which is based on personal income. Currently, 32 states have some kind of statutory cap on spending.

Palm Beach County Smart Cap

On the county level, a “Smart Cap” could be instituted through a Charter Change amendment on the 2012 ballot. Would this have much effect on the budget?

TAB has pointed out that the county budget overall has grown “11 times population growth and 3 times the rate of inflation” from $1.2B in 2003 to $2.1B in 2011. This tracks spending growth though, and is partly funded by revenue that under the state rules would be exempt such as federal grants. It also includes “fee for service” revenue that varies with the services requested, and other revenue that is department specific. For simplicity, we have chosen to look at the effects of a “Smart Cap” by analysing the “ad-valorem equivalent” amount at the department level. This number is the difference between the spending proposed by a department (appropriations), and the revenue it receives from specific sources like grants or fees, and is paid for by a combination of ad-valorem taxes and other “ad-valorem equivalent” revenues such as the sales tax.

The revenue cap at the state level is based on a “population and inflation” model, and sets the cap at last year’s revenue limit plus a growth factor. The growth factor is computed by combining inflation represented by the consumer price index (CPI) and the state population as used in other measures. In other states, most notably Colorado’s “TABOR”, the Taxpayer Bill of Rights, the cap was applied to the previous year’s revenue. Since revenue declines during a recession, this caused the cap to “ratchet” down and caused more spending reduction than was anticipated or desired. It was suspended for a period of time by the legislature to allow the economy to equilibrate. The Florida proposal does not have this problem since the growth factor is applied to the previous year’s cap – not the revenue collected (after a multi-year startup phase).

To see the effect had Smart Cap been in effect in 2003, we can compute the growth factor from that year’s budget forward to 2011, and compare it to the actual budget growth that occurred. The results show that while PBSO, Fire/Rescue, and the Supervisor of Elections all grew much faster than a cap would have allowed, the countywide departments are now comfortably 15% under what the cap would require. Bob Weisman has always maintained that his growth was “less than TABOR”, – and it was, if you only look at the endpoints. You just have to separate his budget from the others to see it clearly. The 8 year trend is shown in the following chart. Unfortunately, the overspending in the early years resulted in a cumulative overspend of about $50M.

County-wide Departments ad-valorem equivalent compared to a “smart cap”

The following table illustrates what the FY2011 budget (ad-valorem equivalent) would have been had Smart Cap been in place since 2003. The “Growth Factor” is computed by combining the change in CPI and the change in service population for the period 2003-2011, and is 28.4% countywide. Fire / Rescue has expanded their service area during the period from 641,000 to 807,727 by taking over municipal departments, so their growth factor of 52.5% reflects that change. Likewise, the Library system has grown their population by about 13% during the period, now providing service to 28 of the 38 municipalities for a growth factor of 37.2%.

The Sheriff has also grown the PBSO service area during the period by taking over law enforcement duties in Pahokee, South Bay, Belle Glade, Royal Palm Beach, Wellington, Lake Worth, Mangonia Park and Loxahatchee Groves. We did not adjust the PBSO growth factor however, because unlike Fire/Rescue, they are funded from county-wide ad-valorem taxes and the change in service area is offset by specific contract revenue from the towns and cities that have been absorbed. Corrections, court protection and law enforcement infrastructure (crime lab, SWAT, etc.) are funded by all county taxpayers.

	2003 Ad-valorem Equivalent	Growth Factor	2011 Cap	2011 Ad-valorem Equivalent	Exceeded Cap By
County-Wide Departments	$208M	28.4%	$267M	$226M	-15.4%
Fire / Rescue	$113M	52.5%	$172M	$205M	19.2%
Library System	$26M	37.2%	$36M	$38M	6.4%
Constitutional Officers
Sheriff	$236M	28.4%	$303M	$400M	32.0%
Clerk *	$31M	28.4%	$39M	$12M	-69.2%
Property Appraiser	$14M	28.4%	$18M	$18M	0.0%
Supervisor of Elections	$5M	28.4%	$6M	$11M	83.3%
Tax Collector	$4M	28.4%	$5M	$4M	-20.0%

Note: The large reduction in the Clerk’s budget is a result of conversion of some ad-valorem items to a fee basis in 2005.

The eight year growth in spending has shown that portions of the county, including the county-wide departments and the constitutional officers (except the Sheriff and SOE) have been responsible in adjusting their budget appropriate to the size of the county population and consistent with price inflation. It should be noted however, that until the valuations began to decline after 2008 there was not much evidence of restraint.

We will examine the relationship of spending to the cap on a year by year basis in an upcoming article.

PBSO and Fire/Rescue on the other hand have grown way out of proportion, and most of the increase has gone into salaries and benefits for those covered under collective bargaining agreements. It is time to rein this in, and a Smart Cap Charter amendment is a way to do it.

Put Smart Cap on the ballot in 2012 and let the people decide.

April 28, 2011 | Filed Under Blog, Featured, General Budget, Government Structure, News | Leave a Comment

The 2012 Budget – a Very Preliminary Analysis.

Although the first budget workshop is a couple of months away, and the department rollups won’t be done until next month, there are some inferences that can be drawn from the environment in which the budget is being prepared.

Property values are expected to decline by 6%, but some new construction will offset that and the county is using a 5% decline as a working number. Since the 2011 valuation was approximately $127B, the 2012 number would then be $120.7B.
The record $522M of intergovernmental (federal and state) revenue in the 2011 budget will likely be less this year – grants to local governments are under pressure both in Washington and Tallahassee.
Expenses are rising in some areas – particularly in personal service costs. Step raises, longevity bonuses and other aspects of the existing collective bargaining contracts will add to the budget this year, even if most staff do not get raises.
Revenue from non-ad valorem sources (eg. sales, bed, gas taxes) could also decline given the level of economic activity.

County staff expects to see about a $60M shortfall from these factors if the millage is not raised. Currently, county-wide millage is 4.75, yielding $603M, and the Fire/Rescue MSTU millage is 3.4581, yielding $179M. County Administrator Bob Weisman has signaled on several occasions (at the commissioners “off-site” retreat, and again at the 4/12 BCC meeting) that he would like to see rollback millage adopted, which by our calculation would be about 5.00 county-wide, a 5.3% increase. Achieving rollback would require about a $30M cut from the expected rollup. No millage increase, as previously noted, requires $60M in cuts.

At the off-site retreat, a majority of the commissioners requested that the first pass at the budget have no millage increase and directed staff to provide the list of cuts that are necessary to achieve it. TAB has some ideas in this area.

What is “realistic growth” in spending?

First, it is necessary to say that we believe holding the countywide millage at 4.75 (and the Fire/Rescue MSTU to 3.4581) this year is the proper decision. We have tracked county spending and tax collections from 2003 through the current year, and compared it to changes in county population and inflation – an objective measure of “appropriate” spending growth. During that time, gross spending (appropriations) has grown 11 times the population rate and 3 times the rate of inflation, and it continues to rise – an unsustainable trend. Ad-valorem requirements on the other hand, declined slightly in FY2010 and fell by about 6% in FY2011. This spending increase at a time of decining tax collection was possible because the spending was propped up by large infusions of intergovernmental revenue, including the federal “stimulus” known as the “American Recovery and Reinvestment Act” (ARRA). The $522M infusion in FY2011 compares to $239M in FY2009, a 218% increase in 2 years!

Note that we expect a reduction in intergovermental revenue this year – reflecting new realities in Washington and Tallahassee. County estimates of these amounts are overly optimistic however (see graph below taken from the Final FY2011 County Budget assumptions).

From 2003 to 2011, inflation measured by the consumer price index was about 21%. Population growth was about 6% overall. Combining those numbers would imply that a “realistic growth” figure for the county budget would have been 28.4%, not the 65% that spending grew, or the 40% increase in ad-valorem requirements. These numbers are the combined requirements of the county-wide, fire/rescue, and library taxing units, and aren’t completely fair since Fire/Rescue in particular serves only about 63% of the county and saw its service population grow 26% over the 8 year period. The Sheriff provides primary law enforcement to about 56% of the county, but any variations in PBSO service area is accounted for in the revenue received from those areas, and the entire county foots the bill for the Sheriff’s ad-valorem requirement. We are refining our P&I model and will have a better analysis as the budgets are developed.

It should be noted that for most of the last 8 years, the adopted tax (millage x valuation) was considerably less than ad-valorem requirement (see graph below). This reflects a spending down of reserves. As this is a management action divorced from either spending or taxation, we are using ad-valorem requirements for analysis, except where millage is discussed.

So from where would the $60M in cuts come? Much would come from Tallahassee in the form of FRS reform, courtesy of Governor Scott. Although the legislature has fallen short of where the governor wanted to go, the bills (HB1405 and SB2100) require an average of 3% contribution by participants in the FRS pension system (which includes all county employees). Pension reform is a complex area, and there are many differences in the bills (see Pension Bills Ready for Conference), but each bill contains the 2011 employer contribution as a percent of salary, which allows an estimate of the potential savings to the county. By our calculations, using employee salary data, this reform will save between $23M to $40M for the county ($16M – $30M against county-wide ad-valorem requirements alone). It also will save $28M-$39M for the school system.

Group	Number of employees	Average Salary	Scott Proposal Savings	SB2100 Savings	HB1405 Savings
County Staff	5,731	$45.9K	$13.2M	$11.9M	$8.5M
PBSO (general risk)	1,808	$53.0K	$4.8M	$4.4M	$3.1M
Fire/Rescue (general risk)	208	$85.0K	$0.9M	$0.8M	$0.6M
Schools	20,986	$41.3K	$43.3M	$39.3M	$27.9M
TOTAL (contr.)	28,733		$62.2M	$56.4M	$40.1M
			Governor 2% accrual
PBSO special risk	2111	$77.7K	$20.3M	$13.6M	$6.5M
F/R special risk	1303	$88.6M	14.3M	$9.6	$4.6M
TOTAL (accr.)	3414		$34.6M	$23.2	$11.1M

TOTAL (both)	32,147		$96.8M	$79.6	$51.2M

Schools Only	20,986		$43.3M	$39.3M	$27.9M
County Only	11,161		$53.5M	$40.3M	$23.3M
Copyright 2011, Palm Beach County Taxpayer Action Board

Further cuts could come from the areas identified last year in the “blue pages”. TAB had identified approximately $31M in cuts that could have been taken in these programs. Since PBSO is a larger (and growing larger) part of the county-wide budget, we believe that the Sheriff should match any cuts taken by county staff, perhaps even exceeding them as our preliminary calculations of population and inflation measurements show PBSO has grown much faster than the growth of their service population would require.

As the budget develops, we will be refining the TAB position.

April 22, 2011 | Filed Under Blog, Featured, General Budget, News | Leave a Comment

SWA Board Selects Babcock and Wilcox

The Taxpayers won again – just barely.

After a 9 1/2 hour marathon meeting at the Solid Waste Authority auditorium on Jog Road, the SWA board upheld their selection committee’s choice of Babcock and Wilcox to build and operate the $600M waste-to-energy plant that is the biggest taxpayer-funded project ever undertaken in the county.

This was good news for the taxpayer since on the “future value” method of comparison by SWA consultant Malcom Pirnie, Inc., the $500M B&W bid was considerably lower than Wheelabrator ($626M or 25% more) and Covanta ($779M or 56% more).

But the day was not without drama, ending as it did with a 4-3 squeaker that had Commissioners Marcus, Vana and Burdick seemingly acting counter to the evidence presented, to spurn the low bidder in an attempt to “renegotiate” a price with their preference – Wheelabrator – currently at $126M (25%) over the B&W price.

This curious move by the three would have repudiated the unanimous decision of the selection committee that was led by County Administrator Bob Weisman, their high priced consultant Malcom Pirney, Inc., and the entire SWA staff – all of which worked for months to evaluate the very complex proposals. Why would they do this? Some in the audience seemed dumbfounded as what seemed a clear decision was suddenly thrown into chaos. It came down to a union issue for Vana and Marcus – they made it clear that they didn’t like Babcock and Wilcox partner BE&K very much, having been unsuccessful in the past in trying to force the company into signing a collective bargaining agreement with a local union. It was not clear why Paulette Burdick voted this way and she offered no comment or explanation. Their motion was quickly questioned by Commissioner Aaronson who did not see the wisdom of rejecting advice of consultant and staff.

The day began with a sizeable protest on Jog Road in front of the facility, and the road was parked in for a mile from the site. The red-shirted protesters, banging on drums and waving signs in front of the facility entrance, all wore identical shirts indicating that they didn’t like B&W partner BE&K, and they “wanted jobs”. When asked which of the bidders they wanted to win, some of the protesters told us they didn’t know or care – just wanted jobs with as much pay as possible. They couldn’t tell us who the bidders were – even though their shirts clearly had the letters BE&K in a circle with a slash through it. They would not tell us if they belonged to a union – they just “wanted jobs”. Another with whom we waited in line to enter the facility, an experienced pipefitter, was more knowledgeable. He was protesting the BE&K practice of hiring skilled labor from out of state. “They are owned by Haliburton” he said – “and you know what they are like”. (Editor’s note – this was repeated by several speakers at the meeting but to our knowledge was never true. B&W was spun off last year from parent McDermott International, which has participated in some joint ventures with Haliburton.)

In the meeting, the morning was consumed by a challenge to the B&W selection raised by Wheelabrator. The Wheelabrator legal consultant presented a polished, well argued accusation of B&W bid process violations, largely a repeat of the points made (and rejected) in the selection committee meeting in March (Today, the Taxpayer Won), followed by B&W rebuttal and an hour long exposition of the finer points by SWA attorney. This was resolved after much discussion on a 5-2 vote for Commissioner Abrams motion to deny the challenge.

In the afternoon, the public comment session heard from about 50 speakers at 2 minutes each. There would have been more but word spread that the deputies at the entrance to the facility were turning people away, saying the meeting and parking lot were full. Chairman Vana asked the SWA staff to get that stopped and allowed latecomers to talk, even if they had not submitted a card. The speakers fell in several main groups – 16% wanted to stop the project altogether, 18% opposed BE&K, 29% supported BE&K, and 37% “just wanted jobs”, without indicating a preference for bidder.

Each vendor was then given 15 minutes to present, followed by questions by the board members. Some of the morning’s session was rehashed, but much time was spent on the local hiring issue, and the amount of skilled and unskilled positions each company had committed to fill with local labor. Commissioner Aaronson pressed them all for much higher numbers, much to the delight of the crowd. Commissioners Vana and Marcus challenged the BE&K representative to confirm or deny that their “business model” precluded them from hiring union labor, and referred to discussions relevant to another project. The answer was that they will hire anyone with the requisite skills, they just will not sign a collective bargaining agreement that prevents them from hiring non-union from the same trade. Commissioners Marcus and Vana did not feel that was sufficient and implied that failure to sign a bargaining agreement was equivalent to rejecting union workers. (There is clearly more to this story but a fuller explanation could not be discerned from the public statements.)

Commissioner Aaronson found the concept of renegotiating the price (the only attribute that can be discussed under the terms of the RFP) as unfair as it allows another trip to the well. He questioned Covanta on why their bid was $279M higher than B&W and received “we made a mistake” for an answer. Indeed. Commissioner Taylor drilled in on some of the issues raised earlier in the challenge, particularly the partnership relationship between B&W and BE&K, and their insurance arrangements. Commissioner Santamaria pointed out that very few environmental organizations were objecting to the plant, including some he had specifically contacted. Commissioner Abrams on several occasions brought perspective to the discussion, reminding the others that the technical differences between the proposals were slight, the costs differences vast, and the local hiring percentages in the bids actually favored B&W over Wheelabrator.

It was a thorough and long session, and when it came time for a vote, Commissioner Taylor moved that B&W be “conditionally” awarded the bid, subject to firmer statement on local hiring. SWA Attorney pointed out that the terms could not be renegotiated, so Commissioner Abrams introduced a motion for outright award and Taylor seconded. It was at this point that commissioners Vana and Marcus said they could not support that motion and introduced their own – to award Wheelabrator and renegotiate the price. There was some surprise at this, both on the board as well as in the audience. After some additional arguments on all sides, Commissioners Aaronson and Santamaria joined Abrams and Taylor and voted to adopt staff recommendation for Babcock and Wilcox and the deed was done.

Another win for the Taxpayer.

April 13, 2011 | Filed Under Blog, Capital and Debt, Core Services, Featured, General Budget, News | Leave a Comment

County Votes to pay 35% of cost of Convention Center Hotel

This morning, the Board of County Commissioners voted 4-2 (Marcus/Aaronson/Vana/Burdick in favor, Abrams/Taylor against, Santamaria absent) to “conceptually approve” a county subsidy of $27 Million to The Related Companies to build a 400 room Hilton next to the convention center. They also approved $200,000 from the General Fund Contingency Reserves to fund consultant and legal services to further develop the proposal.

While most would agree that a hotel is needed to support the viability of the county-owned convention center (The Marriott across the street is considered too small to support large gatherings), the fact that no private entity was willing to take on the project without this large subsidy should be a red flag. The $27M is in addition to another $8M that the planners hope to get in the form of federal “New Market” funds (which may have to come from the county also) which together make up about 35% of the total cost of the $101M project.

So what does the county get for putting up 35% of the cost of the project and the use of the county owned land?

An ownership stake or revenue sharing? NO.

Jobs? – Yes, 350 construction jobs for 2 years and 300 permanent, low-wage hospitality sector jobs. (In other words, $35M buys 300 jobs at $117K per job – and those jobs will pay about a quarter of that.)

Ongoing tax revenue? – Yes and no. The annual $2.2M bond interest on the $27M ($2.7M if on the hook for $35M) is to be a recurring expense drawn from the ad-valorem funded General Fund, while bed tax revenue from the hotel would be restricted to non-ad valorem TDC programs.

Commissioner’s Aaronson and Marcus raised the issue that they were not able to bring the Florida Association of Counties convention to PBC because the convention center support infrastructure is lacking. This may be true, but Commissioner Abrams pointed out that the much larger Florida League of Cities has come to the county many times – although to Boca Raton instead of West Palm Beach. Both Commissioner Abrams and Taylor raised issues with adding this additional burden on the budget every year at a time we are striving to reduce spending, and pointed to the drain that the Scripps subsidy is to our current budget. Of course they were not on the commission when the convention center decisions were made. Commissioners Aaronson and Marcus on the other hand (who were) have invested their reputations in those decisions and of course want to spend more money to vindicate the original move.

Many people came forward to speak in favor of this project, particulary those in West Palm Beach who will clearly benefit. The Mayor was absent, but it was said she “supports the project”. I would hope so – having all the county taxpayers fund what will mostly benefit her city is quite a boon.

The decision is for “conceptual approval” and commits only the continuance of the planning, yet it is a clear ‘GO’ signal for the project.

We believe that for the county to have a successful convention center, a nearby hotel large enough to service a capacity convention is necessary. That said, for the county to contribute 35% of the construction costs and get no direct return on investment sounds like compounding an error. You may recall that the original proposal for the convention center never projected a county subsidy for a hotel, assuming that it would be a profitable project for the private sector. We would have preferred a smaller subsidy by the county, some contribution from the City of West Palm Beach, and a return to the General Fund of some of the subsidy, perhaps by converting a portion into a loan. Although some of the $1M in annual subsidy for the convention center itself could be reduced by an improvement in business, there are no guarantees.

The Taxpayer did not win today. Thank you Commissioners Abrams and Taylor for having the courage to try to stop this train.

April 12, 2011 | Filed Under Blog, Capital and Debt, Core Services, Featured, General Budget, News | Leave a Comment

Pension Bills Ready for Conference

Much has happened to the two pension reform bills winding their way through the Legislature this week. Both Senate Bill SB2100 (replacing SB1130) and House Bill HB1405 have survived a vote (mostly along party lines) in their respective chambers. As there are differences between the bills, a conference committee will attempt to resolve them, probably starting next week. Although they do not go as far as the Governor’s original proposal (no change to special risk accrual for example), the changes are significant and it is expected that Governor Scott will support the result.

HB1405 requires an across the board 3% contribution from plan participants, increases the retirement age (for those entering the system after July) from 62 (or 30 years service) to 65 (or 33 years service), and terminates the DROP program starting in July. Special risk classes would see the retirement age go from 55 or 25 years of service, to 60 or 30 years. It does not change the 3% COLA. Employer contribution rates are set for 2012 at 6.16% for regular class and 16.95% for special risk, with a “surcharge” of .25% and 1.17% respecively to address the unfunded actuarial liability. Click HERE for the details of HB1405.

SB2100 requires an employee contribution that is tiered, starting with 2% for income under $25,000, 4% for income between $25,000 and $50,000, and 6% above that. Cost of living adjustments (COLA) are eliminated on a pro-rata basis, eliminating any COLA for accruals after July of this year. Like the house bill it ends the DROP program, but not until 2016. Retirement age is increased as in the house bill for all except the special risk class which is unchanged. The Senate bill also addresses the calculation of “Average Final Compensation” (AFC), excluding all but 300 hours of overtime from consideration, and allows only 500 hours of accumulated leave time that was earned prior to July of this year. Employer contribution rates are set for 2012 at 5.09% for regular class and 13.8% for special risk, with no “surcharge” for unfunded liabilities, although there is a section in the bill that allows for this to be added. Click HERE for details of SB2100.

From a Palm Beach County Perspective, both of these bills will result in significant savings. By using the stated employer contribution rates (compared to the current 9.63% and 22.11% special risk), we calculate savings between $23M and $40M in the county budget, and $28M to $39M to the school system.

The county is facing a significant budget hole this year with rising costs and decreasing revenue from non-ad valorem sources (including state and federal grants) and a projected 5% decline in property values. These FRS savings could go a long way to offsetting the need for a millage increase in the 2012 budget year.

For some analysis and political perspective on these bills see House Backs State Employees’ Pension Reform on Party Lines Vote and Florida Senate moderates public employee pension bill

The following table illustrates the differences between the Original Scott proposal and SB2100 / HB1405 in their current state.

	Current FRS	Rick Scott Proposal	SB2100	HB1405
Accrual Rates	3% special risk 1.6% general + 3 others	2.0% special risk 1.6% all others	NO CHANGES to current plan	NO CHANGES to current plan
Participant Contributions	None	5% across the board	Tiered 0-$25K, 2% $25-$50K, 4% $50K+, 6%	3% across the board
Defined Contribution Plan	Offered, with few takers	Only option for new hires	Only option for new hires after July except special risk class	NO CHANGES
COLA	fixed 3% / year	Eliminated for accruals past July 2011 (protects current retirees and accumulated benefits)	Eliminated for accruals past July 2011 (protects current retirees and accumulated benefits)	NO CHANGES to current plan
DROP Program	Continue working for 5 years while pension accumulates, then lump sum	Eliminated after July, 2011	Eliminated after July, 2016	Eliminated after July, 2011
Retirement Age	age 62 / 30 years age 55 / 25 years (special risk)		age 65 / 35 years age 55 / 25 years (special risk)	age 65 / 35 years age 60 / 30 years (special risk)
Copyright 2011, Palm Beach County Taxpayer Action Board

The following chart illustrates the effect the Scott proposal would have on the county budget, compareed to the Senate and House bills. Maybe it is time for the taxpayers to remind our legislators why they were elected.

Group	Number of employees	Average Salary	Scott Proposal Savings	SB2100 Savings	HB1405 Savings
County Staff	5,731	$45.9K	$13.2M	$11.9M	$8.5M
PBSO (general risk)	1,808	$53.0K	$4.8M	$4.4M	$3.1M
Fire/Rescue (general risk)	208	$85.0K	$0.9M	$0.8M	$0.6M
Schools	20,986	$41.3K	$43.3M	$39.3M	$27.9M
TOTAL (contr.)	28,733		$62.2M	$56.4M	$40.1M
			Governor 2% accrual
PBSO special risk	2111	$77.7K	$20.3M	$13.6M	$6.5M
F/R special risk	1303	$88.6M	14.3M	$9.6	$4.6M
TOTAL (accr.)	3414		$34.6M	$23.2	$11.1M

TOTAL (both)	32,147		$96.8M	$79.6	$51.2M

Schools Only	20,986		$43.3M	$39.3M	$27.9M
County Only	11,161		$53.5M	$40.3M	$23.3M
Copyright 2011, Palm Beach County Taxpayer Action Board

NOTE: Assumptions are: 1) contribution savings = total payroll x contribution rate, 2) special risk accrual going from 3% to 2% would drop employer contribution from 23.25% to 15.5% over time (2/3). 3. Payroll is projected from 2009 data. Employer contribution rates from bill text used if available.

April 9, 2011 | Filed Under Blog, Fire/Rescue, General Budget, News, PBSO | 2 Comments

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