FY-2010 Budget: Dark Day$ Ahead

By Commissioner Jeff Koons

Preparing a county budget that delivers quality services at the lowest possible cost to taxpayers is always a challenge, and this year my fellow commissioners and I will face our most difficult task ever. More state-mandated revenue reductions and cost-shifts are looming, and property tax revenues are way down. Add to that a poor housing market with record foreclosures and rising unemployment, and we’re seeing greater demand than ever before for public programs and services. The cost of providing them keeps going up, while our revenue sources keep going down. Something has to give.

Last year, we lost $45 million due to new state restrictions on property tax revenue collection and passage of Amendment 1, which doubled the homestead exemption. The state didn’t absorb those losses – local government did. Somehow, we managed to balance the budget with only minimal job losses. But this year will be a lot different because there is no more low-hanging fruit to pick. Easy fixes such as eliminating vacant positions, canceling capital projects and tapping into reserves were one-time options.

The property appraiser is telling us Palm Beach County will likely experience overall property valuation decreases on the order of 15 percent this year. That’s a much steeper drop than had been anticipated, and the final figure may be even worse. The owners of more recently purchased homestead, rental and commercial properties will be the primary recipients of the lower valuations. Longer term homesteads will see essentially no change (+.1 percent catch-up) in their evaluation. This will serve to correct some of the imbalances between the groups of taxpayers.

It also means that in order to generate the same overall property tax revenue (rollback) or any other revenue level for that matter, we will have no choice but to raise the millage rate, something the Board of County Commissioners hasn’t done since 1998. With no increase in the current 3.78 millage rate, we’re looking at a budget deficit of around $150 million. Even if the millage rate is raised to the rollback rate, it will still leave a deficit of $62 million.

So, how do we address this shortfall? It’s the same as any business: find more revenue and/or cut expenses. All county departments have already been ordered to trim their budgets by 10 percent. Most of our employees will receive no salary raises this year, and a hiring freeze remains in effect. Divisions that are funded by the fees they collect, such as permitting, have seen substantial job layoffs. Boaters will soon have to pay a $10 trailer parking fee at county-owned boat ramps to help pay for maintenance. All of these things will help close the gap, but additional layoffs and reductions in public services and programs appear inevitable.

To ensure that we fully understand what programs and services are most important to you, the taxpayer, the BCC will again be holding a series of budget workshops and public hearings. The first workshop is June 8 in the sixth floor commission chambers. A second workshop is set for July 13, and there will be two public hearings in September, on the 8th (preliminary adoption) and the 21st (final adoption). We will do everything we can to make it easier for residents to be involved in the budget process, understand the difficult choices we have to make, and let us know what is important to them. As always, I welcome your comments and questions. Please feel free to contact me or my staff at 355-2202.