Another Attempt to Raise the County Sales Tax

December 11, 2013

12/13/13 Update: This proposal now seems to be in disarray – the School District has requested the county administrator to remove any reference to them in the proposal. In a letter to County Administrator Bob Weisman, Superintendant Wayne Gent said:

So that there is no misunderstanding, I am taking this opportunity to clarify the School Board’s position at this juncture on the subject of a joint referendum.

We have not taken any formal action; however, from the discussion on this matter during informal Board Workshops, it appears unlikely that the School Board would support a joint referendum.

To the extent that the attached County Board Item suggests otherwise may place the School Board in an awkward position.

Please take appropriate steps to delete any reference to the School Board in the item.

As a result, the Tuesday agenda item has been revised: See Item 5A2-Revised The Palm Beach Post reports that many of the Commissioners are skeptical of the proposal, and the business community and watchdog groups (including TAB) are organizing to oppose it. See Schools want out of sales tax hike

At next Tuesday’s 12/17 BCC Meeting (time certain 10:30), staff will propose raising the sales tax to 6.5%, projected to raise $110M per year starting in 2015 and running until the end of 2020. Unlike a preliminary proposal that would have competed with the School District which also seeks higher taxes, this revenue would be shared. 40% ($44M/year) would flow to the Schools, 36% ($40M/year) to the county, and 24% ($26M/year) to be divided up among the 38 municipalities. The tax would generate $660M over the six years it would be effective, if approved by the voters next fall.

What is the stated need for this additional revenue? The proposal states “County, School Board and municipal staffs have identified significant facility and infrastructure needs to maintain and enhance our public quality of life.”

The county alone has identified $197M in wish-list projects, divided equitably among the seven districts so everyone gets some of the “goodies”. These are mainly road projects and new spending for Parks and Recreation.

It should be noted that both of these areas are funded in the current county budget at the level of $53M/year for Public Works and Engineering, and $64M/year for Parks & Rec, so the county windfall that this represents would be an increase to that spending by 34% in the first year alone.

Some would say that sales taxes are preferable to property taxes because the burden is shared by all, including visitors, and that is true as far as it goes. But keep in mind that this proposal is NOT revenue neutral – it is net additional taxation. The county ad-valorem taxes rose over $23M this year and the county forecasts overall property taxes to go up over 20% in the next four years. They have plans to spend every penny.

Historically, sales tax hikes have not gone down easy. In 2010, a Fire/Rescue sales tax was defeated before it got on the ballot. The predecessor to this proposal that was brought to the commission in 2012 was rejected as “half baked”. This time, there is an attempt to “sweeten” the deal by distributing some money to the cities and spreading the largess around the commission districts. Presumably an orchestrated collection of speakers will come forward to talk about the “need” for these projects. We will be told that our sales tax is “too low” as other counties have higher.

Don’t be fooled. This is an attempt to significantly increase government spending in Palm Beach County, at a time when valuations (and likely ad-valorem taxes) are expected to climb. It should be rejected before it gets to the November ballot, and now is the time to voice your opposition.

If you oppose raising the sales tax, make your voice heard. Call or email your commissioners prior to next Tuesday’s meeting, and attend the meeting if you can. And let us know your thoughts.

Some talking points:

The proposal is a net increase in taxation of $110M/year – about $100 per resident.
Parks&Rec and Engineering / Public Works are already funded at $117M – the sales tax would support a 34% increase in spending every year for the next six years.
Sales taxes have a negative effect on business, driving sales to lower tax counties or the internet and stopping incoming business from counties with higher taxes.
Neither of our neighboring counties (Martin, Broward) have a discretionary sales tax.
The county has shown restraint in recent years regarding increases in ad-valorem taxes – this proposal is an end-run around the scrutiny that the millage rate gets on a yearly basis.
A sales tax is a fixed rate that grows automatically with rising prices and economic recovery and is not subject to yearly adjustment like property taxes.