County Administrator Bob Weisman’s Outlook for 2014 Budget

On Thursday March 28, the County Budget Task Force of the Town of Palm Beach, a TAB coalition partner, chaired by Mayor Gail Coniglio, hosted County Administrator Bob Weisman, OFMB Director Liz Bloeser and Budget Director John Wilson for some insight into the coming budget cycle.

After several years of increasing millage, last year was significant in that the millage was unchanged, and the slight (0.7%) uptick in valuations after 5 years of declines yielded a few million more in revenue. Although it is still early, the departments have not done their budget estimates, and the Sheriff (2/3 of the ad-valorem county-wide budget) will not make his request until May, Mr. Weisman intends to seek flat millage once again. (Note: With the property appraiser’s early forecast at + 1.5%, that could generate an additional $9M in property taxes.)

In a wide-ranging presentation, the Administrator highlighted some situations that have bearing on the 2014 budget:

• The communications workers and transit workers (Palm Tran) unions were offered a small increase for September but are holding out for more. The county does not plan to change their offer.
• The Palm Tran worker’s pensions are in a separate plan from FRS (Florida Retirement System) used by the rest of the county, and are underfunded. The county is on the hook for $9M ($3M per year for three years) to increase its funding level.
• His general instruction to staff departments is to hold the line – no refill of vacant positions again this year.
• The Sheriff (as usual) is the biggest variable, spending $400M (mostly on employee pay and benefits), compared to $270M for the county staffs.
• Fire Rescue is about to conclude a new contract next month, for two years with no increases and 3% in the third year. New hire salaries will be reduced going forward, although there have been no new hires in four years. The contract will be less expensive than the previous period.
• Clerk Sharon Bock, who is in charge of the county investment portfolio has shifted much of the balance from relatively high performing instruments (primarily mortgage backed Frannie Mae securities) to short term bonds. This reflects a changing outlook on the future economy (presumably higher interest rates), but will present a shortfall in portfolio earnings this year.
• The Mecca Farms deal with the South Florida Water Management District appears to be dead. The $30M offered is less than the property is worth, and conditions have changed in two years. With Vavrus likely to be developed next door, Mecca may be worth something closer to the $60M that was paid for it, and several developers have approached the county to discuss options.
• Overall debt levels (and carrying costs) are declining.
• Supervisor of Elections Susan Bucher has under spent her budget and returned a million or so.
• The sequestor will affect the county in two areas – Head Start and Senior Services (meals, etc.) By eliminating bus service for the Head Start students, they can absorb the cuts without reducing the program.
• A relatively new expense going forward is $5M per year for the Homeless Resource Center, off-budget at inception but strongly supported by the Board of Commissioners.

The meeting was upbeat and provided a good snapshot at this point in the cycle, and was much appreciated by the task force members.

Some dates to keep in mind: On May 1, the Sheriff will deliver his budget request. On June 1, the Property Appraisor will have his estimate of valuations. Then on June 11, the first budget workshop will take place at 6:00pm in the commission chambers, 301 North Olive.

Florida TaxWatch Report on County Reserves, Debt, and Property Utilization

At the request of the Palm Beach Civic Association, the Palm Beach County Taxpayer Action Board, and the Town of Palm Beach County Budget Task Force, Florida TaxWatch conducted a study of several aspects of Palm Beach County Finances.

In addition to an analysis of the county debt and reserves compared to our “peer” counties – Miami/Dade, Broward, Hillsborough and Orange, updated from their similar 2006 report, they also investigated the quantity and status of unneeded or underutilized property owned by the county.

The complete report is available HERE. What follows is a summary of the major findings.

Major Findings

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1. County Fund Balance (“money in the bank”) is excessive

• The commonly accepted fund balance levels (unreserved) as a percent of expenditures for a government entity is 15%. Locally, 25% is considered prudent for hurricane preparedness. Palm Beach County has maintained a balance exceeding 50% over the last six years. Bringing this level down to even 40% would free up $188M of “excess reserves” that could be used for current spending, thus avoiding a tax rate increase through several cycles to come.
• Peer counties retain AAA bond rating with considerably less reserves

NOTE: This finding supports point 4 of the TAB Proposal – Cover any remaining shortfall from current fund balances (reserves) which are excessive compared to peer counties.

2. The County owns vast amounts of “Vacant” Property

• Of 2500 parcels owned, 353 parcels totaling 6200 acres are “vacant” – either unused or used for something other than their intended purpose
• Selling 25% of this vacant property would generate $54M in revenue and return $270K/year (unimproved) to the tax rolls
• Property record-keeping is unreliable and formal definitions and classification procedures are needed

NOTE: This finding supports point 3 of the TAB proposal – Take action to reduce the inventory of county property and reduce the debt.

3. County Office Space Allocation is overly generous

• Office size for executives and supervisors greatly exceeds state standards
• Reducing to standard could save $400K / year

In addition to these (and other findings), the TaxWatch team also made specific recommendations. Six were carried over from the 2006 study and are still relevant in 2011. The others are new and relate to the land and buildings aspects of the study.

Florida TaxWatch Recommendations

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Recommendations from 2006 study that were not implemented:

1. Establish a fixed cap on reserve funds as done elsewhere
2. Implement a priority based budget process with performance metrics
3. Adopt a budget reporting system that follows accepted standards and can be understood by the public
4. Implement a Sunset Review process with automatic repealers
5. Periodically rank all unstarted capital projects (partially implemented)
6. Centralize services for constitutional officers

New Recommendations regarding property and buildings

Property

1. Work with commercial realtor to plan and execute marketing plan to sell surplus properting over the next 18 months
2. Institute formal definitions and procedures to identify “vacant”, “improved”, and “surplus” property
3. Dispose of “strips” of land to adjacent property owners or bundle for sale
4. Fully implement County Owned Real Estate (CORE) database and make available to the public
5. Implement online marketplace to dispose of surplus property
6. Apply full sunshine to property acquisition, exchange and sale process and separate from consent agenda
7. Engage consultant to suggest utilization of surplus “right of way” property
8. Incorporate vacant land disposition as part of County Comprehensive Plan

Buildings

1. Require occupancy and vacancy rates of county assets be tracked
2. Revise office space guidelines to align with Florida space allocation standards
3. Make list of county owned buildings easily accessible to the public

Conclusion

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TAB has argued that in this time of economic distress, tax hikes of any kind are counter productive. As the real estate bubble has deflated, the county has been increasing the tax rates in an attempt to prevent a decline in tax revenue. An alternative (in addition to the obvious – cut spending) is to buffer the shortfall with reserves accumulated during the “good” times. Not all government entities have that option as their reserves have been depleted.

The TaxWatch study points out that Palm Beach County is flush with reserves. Additionally, the county is carrying a significant quantity of unused or underutilized property that could be sold off over the next year or two, and the proceeds used to replace reserves spent to cover current spending.

It is our hope that the commissioners will agree and use this information to reject a tax rate increase for 2012.

Two TAB Coalition Partners Organize Phonebank to oppose Tax Rate Increase

Is there really a swing vote who will decide if our tax rates are increased this year? It is possible.

During the July budget workshop, the vote to raise the maximum millage to rollback (4.8751) was 4-3. Commissioners Abrams, Marcus and Burdick voted no to the increase and all had good reasons to avoid a third hike in so many years. Commissioners Aaronson, Santamaria, and Taylor voted for the hike. They also gave reasons that are not likely to change in September.

Which leaves District 3 Commissioner Shelley Vana. Her votes on tax increases have been mixed, voting against the 14.9% hike in 2009 but supporting the 9.4% increase in 2010. This year, she voted to raise the maximum millage to keep “options open”, but suggested that there were more savings to be had and she would like to keep the tax rate unchanged when it comes up for the final vote in September.

After the July budget hearing, TAB sent the following in an email to Commissioner Vana:

In response, and to her credit, she got in touch with us and made a convincing case that there was another $12M to be had and she just might “.. be the fourth vote ..” for flat millage in September.

We found this encouraging, but we also know that there are powerful interest groups in the county for continuing programs and taxes that speak very loudly to the commissioners. Those who do not want to see a tax rate increase are rarely heard. More to the point, it is the citizens of District 3 that should matter the most to the Commissioner, not any of the special interests, or even TAB.

Along these lines, two of TAB’s coalition partners have decided to reach out to the constituents of District 3 and educate them on the 2012 budget, and their Commissioner’s role as the potential “swing vote”.

The recently formed Palm Beach County Tea Party, with chapters in Jupiter, Wellington and Boca Raton will join forces with the South Florida 912 which meets in Palm Beach Gardens, Wellington and Lantana. Each of these groups is organizing a phone bank to contact District 3 citizens and ask them to make their wishes known to Commissioner Vana. They believe that many of the citizens would oppose a third year of tax rate hikes. If so, perhaps they can help the Commissioner find the additional $12M in cuts it will take to not raise our taxes again.

TAB applauds this effort and believes it is a new approach to broadening the county budget discussion beyond the commission chambers and the pages of the Palm Beach Post. It may turn out more attendees at the budget hearings who oppose another tax increase. At a minimum, it will have educated a larger group of county residents about the way their taxes are set.

If you would like to assist one of these organizations in their effort, you can contact them as follows:

Palm Beach County Tea Party: action@palmbeachcountyteaparty.org

South Florida 912: action@southflorida912.org

New County Grassroots Organization becomes TAB Coalition Partner

TAB welcomes its newest coalition partner, the Palm Beach County Tea Party. The group, formed by past leaders of SFTP that want to go in a new direction, was announced on Tuesday, June 21, and will initially have chapters in Jupiter and Wellington.

Local issues will have a more prominent role with the new group, including the county budget. In a question and answer video, group founder Pam Wohlschlegel said regarding the county budget: “We need to be fiscally responsible and part of that is budget cuts. Our founding group feels very strongly that the TAB proposal has a lot of good things in it and hope that our commissioners will accept it.”

For more information about the newest TAB partner, click HERE.

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.

TAB Partner Seeks Help from Cities and Towns

The town of Palm Beach County Budget Task Force (a TAB coalition partner), hosted a meeting of elected officials of towns and cities throughout the county yesterday, asking them to join with the task force and TAB to advocate against another year of tax increases on the county level.

The attendees were given a presentation of the TAB work on budget trends, and the prelimnary “TAB Proposal” for the 2012 budget which includes no tax hike, probably requiring about $60M in spending cuts or dipping into reserves. The proposal is preliminary because the county has not published a budget estimate and doesn’t expect to have one until May, prior to the first budget workshop on June 13.

The proposal also includes suggestions for Charter changes (including a county “Smart Cap”) and has analysed the likely savings possible with FRS reform requiring employee contributions. See the chart package for details on the proposal.

See Mayor Gail Coniglio asks help to pressure Palm Beach County to not raise taxes for the Palm Beach Daily News Story by William Kelly.

Coalition Partner Defines Mission

The Town of Palm Beach County Budget Task Force, a TAB coalition partner, has adjusted its goals under new chairperson Mayor Gail Coniglio. Members Carla Cove, Erica Elliot, Bobbi Horwich, Bruce McAllister and Jere Zenko reached consensus on 4 areas of focus:

• Continue working with TAB on county budget issues
• Create position papers to disseminate to media and civic groups
• Reach out to like-minded municipalities, particularly the coastal towns, to join in a common cause.
• Establish a presence for the task force at county budget hearings and in meetings with commissioners and staff

TAB has been involved in discussions with the task force and Florida TaxWatch to define a TaxWatch study of county spending that will bring an independent perspective using their respected methodology to the table in time for the June workshops. As part of the work, TaxWatch would present their findings to the Board of County Commissioners, and promote it through their website and media contacts. TAB will work to firm up the proposal while members of the task force pursue the needed funding.

For a complete synopsis of the meeting, see the David Rogers article in the Palm Beach Daily News: Town’s county budget Task Force sets priorities, mulls Florida Tax Watch study