Bock: Continued Economic Improvement, But Problems Remain

Palm Beach County Clerk & Comptroller Sharon Bock gave her annual report on the fiscal state of the county to the Palm Beach County Commission on Tuesday. It was a retrospective of the financial position of the county for the year ending Sept. 30, 2014.

Bock explained that the state mandates checks and balances for the spending of tax dollars.

“Our position at the clerk’s office is to protect, preserve and maintain the public funds with integrity and accountability,” she said. “While you, as elected commissioners, decide the tax rate and how taxes are budgeted and spent, as an independent office, I am elected to receive, audit, adjust and pay all of the monies, contracts and bills.”

As the county’s chief financial officer, Bock said she is responsible for keeping accurate financial records and reports.

Bock said her current report is a retrospective because it shows how the county spent its money during fiscal year 2014, as opposed to the county budget, which reflects how it plans to spend the money. The budget is prepared by the county’s Office of Financial Management and Budget.

She said the annual budget for 2014 was about $1.63 billion, with expenditures of $1.69 billion, a difference of about $60 million.

“By law, we must have a balanced budget,” Bock said. “Even though we brought in less than we spent, this is not the whole picture.”

The Government Finance Officers Association and Government Accounting Standards Board examine four components when examining a government’s financial health, she said.

“They are net position, revenue and investments, fund balance, and debt and spending,” she said.

Shannon Ramsey-Chessman, Bock’s chief operating officer for finance, said the county’s net position is one of the most important indicators of its financial health because changes in the county’s net worth over time show either a growing or weakening position.

“Net worth shows your bottom line,” Chessman said. “Just as personal net worth grows when the value of what we own is greater than what we owe, so does the county’s. Decisions to increase or decrease tax rates have a direct effect on the county’s net worth.”

Although net worth has many components, the clerk’s office specifically focused on government activities’ net position, as it is composed primarily of property tax revenue and the cost of day-to-day expenses, she said, explaining that airport and utility operations were not included because they function more like businesses.

At the close of 2014, the county’s governmental net position was $2.2 billion, a decrease of $99 million from the previous year. Three major factors contributed to the decrease: $19 million in additional long-term debt due to a bond issuance, the $33 million loss from the sale of the Mecca Farms property and a $46 million increase in day-to-day operating costs, most notably due to increases in public safety expenses.

The county saw an overall increase in revenue of about $5 million, or 0.03 percent, largely from an increase in property tax income, along with gas, sales and tourist taxes.

“Looking at real estate is essential, as 50 percent of the county’s revenue is directly tied to the real estate market,” Chessman said. “We can see the local market’s turnaround is in its fourth consecutive year, beginning in 2011. In 2014, there were more than 16,000 property sales, an almost 16 percent increase from 2013.”

The median sales price for single-family homes rose to $275,000, a 4.2 percent increase from 2013, and up 42 percent from the low in 2011, she said, adding that the sales price for condominiums and townhomes rose by 16 percent to $130,000, but the number of sales declined 7 percent from 2013.

The millage rate did not increase in 2014, but there was a $29 million increase in revenue due to the increase in property tax assessments. Although it was a significant increase, property tax revenue is still down $83 million from its peak in 2007.

Sales tax revenue increased 7.2 percent for a total of $79 million for the county, and gasoline sales tax increased 3.1 percent, amounting to almost $47 million.

The county collected a record $33.8 million in tourist development taxes in 2014, representing a 10.9 percent increase from the previous year. “Tourism has continued to strengthen over the last decade,” Chessman said.

The county’s investment portfolio, which is managed by Bock’s office, has also increased consistently over the last decade, for a total of $645 million in cumulative investment income since 2005, although interest rates in recent years have made it difficult, leading them to focus more on investment risk management.

The county’s return continues to be greater than peer counties such as Broward, which had half the return of Palm Beach County, Chessman said.

Darlene Malaney, director of financial services, said the county’s decision to issue debt has had a profound effect on future spending.

“Just as revenue has an impact on the county’s financial health, obligations to pay, or debt, also impact the bottom line,” Malaney said. “While revenue might be unpredictable, debt is within the county’s control.”

The county’s total debt was $975 million for fiscal year 2014, which was down slightly from the previous year, she said, which amounts to $661 per person in the county. In 2014, the county’s debt service reached a historic high of $180 million, although it is expected to taper off in ensuing years. “These high levels of debt service come at a time when the economy is recovering, and it also contributes to a reduction in our net worth,” Malaney said, explaining that a comprehensive debt management policy would assist in providing guidance for the future issuance of debt.

In 2014, the county issued $13.2 million for Max Planck, $10.7 million for new sheriff’s vehicles and equipment, $28 million for the convention center hotel and $17.8 million for new vehicles for the Palm Tran paratransit service, for a total of about $70 million in new debt obligations.

The general fund balance has been decreasing overall from its high in 2007 of $248 million to $161 million in 2014.

Bock’s county recommendations for 2015 included developing a strategic approach to align the budget with board priorities, adopt comprehensive debt issuance reserve and fund balance policies, continue the use of technology for financial management, and expand its partnership with the clerk’s office. The complete report is available online at www.mypalmbeachclerk.com.

1 COMMENT

  1. Can you guess what OUR County Commissioners’ answer is to this monetary dilemma?

    Yep, they are going to ask the public to approve an INcrease taxes.

    And not far behind are OUR School Board Members who are also talking about asking the public to approve an INcrease to our school taxes.

    Sorry, my financial position hasn’t improved to such an extent that I can continue to pay higher food costs, higher gasoline costs, higher property taxes and shoulder an INcrease in School AND County taxes!

    OUR elected leaders are out of touch and poor managers of our money.

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