Budget Year Analysis

by Commissioner Karen Marcus

May 16, 2008

As a result of the voter mandated property tax cuts passed in January  and the sluggish economy, Palm Beach County, like all local governments in the State of Florida, will face difficult decisions affecting our budget for the upcoming fiscal year, which begins on October 1, 2008.

County budget staff anticipates an overall drop in taxable property values of about 10%, which includes the second $25,000 homestead exemption, passed as part of the property tax amendment.  In addition, many of the County’s major sources of income, such as the sales, utility, communications and gas taxes is expected to generate $10 million less than previously expected.  Fees generated from new construction generated  $17.4 million in 2007, but that revenue is expected to be half that amount this coming budget year.  Interest generated from financial investments have also fallen due to the sluggish economy.

For the first time, Palm Beach County is utilizing a modified, zero-based budgeting process, which matches spending levels to services performed.  In doing so, the departments were required to build an operating budget that supported their objectives.  All County departments have been asked to trim nine percent from their budgets.  In order accomplish this goal, elimination of positions may be a possibility.  Some departments are looking at new sources of revenue and are evaluating increasing existing fee structures charged for programs and services.

Palm Beach County is the only county in the State with a AAA bond rating from all three rating agencies.  This designation is given based on the County’s sound budget practices,  and in part because of the large amount of reserves we have on hand, in the event of an emergency, such as a hurricane or other natural disaster.  The County Commission will have to make a decision about whether to draw down those reserves to cover the revenue shortfalls and what impact that will have on our bond ratings, which could potentially affect the amount of interest we pay on outstanding bond debt.

The County Commission will hold a series of budget workshops in the coming months to determine how these numbers will affect county services and what, if any, capital projects may be impacted.

As always, I welcome input from residents.  You can reach my office by calling 355-2201 or via e-mail at kmarcus@pbcgov.com.