Palm Beach County faces another tough budget year despite a recovering economy, County Administrator Bob Weisman told the Palm Beach County Commission during a budget workshop Tuesday.
During the first budget workshop for fiscal year 2014-15, Weisman said his goal is to produce a county budget that delivers necessary services, while minimizing tax requirements.
The proposed countywide budget is balanced at the current tax rate of 4.7815 mills, which will generate $663.9 million in property taxes — $40.7 million more than the current year.
Weisman pointed out, however, that the county’s property tax revenue is still $24.8 million, or 3.6 percent, below fiscal year 2007, when property tax revenue was highest before the economic downturn.
At the same time, the county has been dealing with rising costs beyond its control.
“A number of issues happened over the past two years, which culminated in an unusual budgetary impact of a kind we haven’t had before,” Weisman said. “Among these, and in no particular order, we had a shortfall in our Palm Tran employees’ pension fund. By state law, it is not part of the Florida Retirement System. That shortfall required three payments by us of more than $3 million each. We will be completing that payment this fiscal year. This is an $11 million hit on our cash balances.”
Other issues included reduced investment income $5.7 million below budget and at least $10 million over the past two years. Also, the Palm Beach County Sheriff’s Office excess fees for 2013 were $4.5 million less than estimated.
“A year ago, the sheriff came over with a large budget increase involving capital expenditures, and we did not have money to fund that increase,” Weisman said. “There were two concepts that were used to help us get through that budget year. The first one was that we bonded his capital requirement. That was a $10 million debt that we incurred. The second one was that we estimated, in accordance with historic results, that we expected to get $10 million in excess revenues and fees in 2013. It was almost cut in half. It was $4.5 million less, so we were almost $4.5 million short at that point in time. We had also estimated $10 million in excess fees for the current year.”
Weisman explained that with a budget as large as the PBSO, half of the county’s total budget, the county would also have to finance another $5 million for the coming year.
“The effect of this came to about $12 million,” he said. “The sheriff has indicated that in this current year, we should expect to get back additional excess fees, and we have made $2 million extra, so we are projecting $7 million to come back this year.”
Weisman added that there is some disagreement, but the overall PBSO budget is between $22 million and $40 million larger than last year at $526 million, or 47 percent of the total general fund budget.
Also contributing to the budget strain, the county has reduced the amount of carryover from the end of the previous year.
“When things were looser, not every dollar was spent,” he said. “We had more vacancies, things of that nature. We have squeezed our budget very tightly, and when we come to the end of the year, the excess funds just aren’t there.”
In the general fund budget of $1.117 billion, $297 million, or 26.6 percent, will go to county departments; $85 million, or 7.6 percent, to reserves; $82 million, or 7.3 percent, to debt service; $79 million, or 7 percent, to capital and non-departmental funds; and $48 million, or 4.3 percent, to constitutional officers other than the sheriff.
Weisman noted that the PBSO budget has increased 68 percent since 2005, from $274 million to $462 million, compared with property tax-financed county departments, which have grown 14 percent in the same period from $270 million to $308 million.
“In 2005, we were about even, and now the sheriff is about $160 million larger,” Weisman said. “This will probably continue to occur, and it feeds on itself, because the larger the sheriff’s budget is, the larger the dollar volume will get. It is also symptomatic of the sheriff’s budget, where compensation is the number-one factor in both the general county and the sheriff’s budget, but the sheriff’s budget typically has a much higher level of compensation than we have in the general county budget.”
The sheriff has about 3,900 employees, and that number is slowly growing, while the county has 3,400 employees, which has been cut back over the past several years due to budget constraints.
The county commission is scheduled to set the property tax rate at its meeting July 22. Public hearings on the budget are set for Sept. 8 and Sept. 22 at 6 p.m.
More information about the budget is available at www.pbcgov.com.