September Budget Hearings - Some Background

September 5, 2011

At the end of September, the 2012 budget will be in place.

In spite of 4 years of decline in real estate values, the county keeps raising the tax rates to prevent any decline in tax revenue. If the private sector worked like government, all you would need to do to maintain your standard of living as a business owner would be to raise your prices. Everyone would have to pay it, whether they could afford it or not. Of course in the real world your customers would leave.

According to a national research group, tax-rates.org, Palm Beach County is in the top 8% of all the counties in the country for the tax on the median priced property. When measured compared to the median income in the county we are in the top 6%. It wasn’t always this way, but as the housing bubble inflated, local governments (including the county) collected more and more taxes, and now are trying to maintain that high level after the bubble has burst.

The total tax burden varies with the municipality (or unincorporated area) in which you live, but is typically about 2.2% of the value of your property each year when you include school taxes, municipal taxes, and a variety of special taxing districts. On top of that, there are non ad-valorem taxes on utilities, communications, gasoline, etc. It may be worse in New York or California, but few would say the taxes in Palm Beach County are low.

So what can you do about it?

First we have to stop the increases. The county commission voted 4-3 in July to set the “maximum millage” at “rollback”. This means the most that they can levy this year will collect about the same revenue as last year. Even though valuations have declined again, many properties are under water, and the county unemployment rate is in double digits, the county would like to continue collecting what it did last year.

TAB believes that county spending in some areas continues to be excessive, and the first step in turning things around is to refrain from raising the tax rate again this year.

The Legislature has done its part by passing pension reform, estimated to save the county between $26M and $35M depending on how you calculate it. Upwards pressure on costs though, including contracted pay raises for employees of the Sheriff’s Office make it hard to restrain the spending. It should be noted that during the time the county departments have trimmed back substantially, PBSO has not. The Sheriff’s budget now consumes 58% of the county-wide ad-valorem tax revenue, up from only 36% in 2003. Clearly that agency should be doing more to help the county balance their books at flat millage.

TAB proposes a plan with four actions:

  1. Maintain the county-wide millage at 4.75
  2. Take any further cuts from PBSO, not the county departments
  3. Take action to reduce the inventory of county property and reduce the debt
  4. Cover any remaining shortfall from current fund balances (reserves) which are excessive compared to peer counties.

The 9/13 meeting will be well attended by those who benefit from county programs and oppose any budget cuts. Typically, those who oppose tax increases are fewer and less vocal. You can help change the equation this year if you show up at the meeting and let the commissioners know you oppose a rate increase. TAB will provide specific arguments you can use on the website after we review the coming budget package. In the meantime, here are some references that may help prepare you to support the TAB proposal at the September 13 budget hearing: