Palm Beach County is well on the road to recovery after wallowing for almost a decade in the economic doldrums, Palm Beach County Clerk & Comptroller Sharon Bock said during her 2016 Comprehensive Annual Financial Report to the Palm Beach County Commission on Tuesday.
“The theme of this year’s state of the county indicates that recovery is truly here,” Bock said. “From record-setting property taxes, a record-setting property tax revenue to record-breaking tourist development dollars, now more than ever it is important to know that you have the tools to lead the way to future success.”
The county’s financial health as represented by total revenues has now surpassed revenues of the years prior to the recent recession, she said. Total government revenues were almost 5 percent greater than in the previous year.
Chief Operating Officer Shannon Ramsey-Chessman said one of the primary economic indicators of the county’s economic health is the governmental fund balance, which includes the general fund, where most of the day-to-day operations are accounted for, as well as special revenue funds, capital project funds and debt service funds.
“Fund balance or unspent revenue is an important indicator of the county’s financial health because changes over time can indicate an improving or weakening financial position,” Ramsey-Chessman said.
The total 2016 fund balance was just over $1.1 billion, a $67 million increase over fiscal year 2015.
“After significant declines since 2008, the one major factor that contributed to the turnaround is that revenues are on the rise,” she said.
Revenues include a broad mix of taxes, licenses, permits, grants, investments and user fee income.
Economically sensitive revenues include property, sales, gas and tourist development taxes, as well as investment income.
“These revenues traditionally reflect how well the economy is doing and have the greatest impact on the county’s finances,” Ramsey-Chessman said. “Overall, the county realized a $95 million or 5 percent growth in governmental revenues from fiscal year 2015.”
The largest growth was in ad valorem property taxes, which are driven by the real estate market.
“Fifty-five percent of the county’s governmental revenue is tied directly to real estate, [and] the local real estate market continues to thrive,” she said. “The median price of a single-family home in Palm Beach County is up an impressive 59 percent since 2011.”
Property taxes in 2016 set a new record high of just over $1 billion. Although the property tax rate did not increase, the county received $85 million or 9 percent more in property tax revenues.
“It’s important to point out that the increase in property tax revenue was primarily due to the thriving real estate market,” Ramsey-Chessman said. “The county’s operating millage rate has remained the same for the past five fiscal years. However, due to the increase in property values, the revenues have increased.”
Property tax revenues in 2016 surpassed the county’s 2007 record high, which is evidence that the housing market has recovered and is remaining strong, she said.
While property taxes represent almost half the county’s revenue, they are only one source. Another revenue source that also set a record in 2016 was the sales tax, which increased almost 4 percent. Almost $88 million in sales tax was collected in 2016.
“Although the voters approved a 1-cent infrastructure sales tax in November 2016, that revenue is not included in this figure, as it was effective in January 2017,” Ramsey-Chessman said. “The surtax is expected to generate a total of $2.7 billion in the next 10 years, with the county receiving 30 percent of this revenue.”
Gas tax revenues increased by 2.2 percent in 2016, amounting to almost $51 million for the county.
“Because these revenues are typically driven by consumer spending, these increases indicate that consumer confidence continues to grow,” she said. “Tourism as the county’s No. 1 industry has experienced a year-over-year growth trend for the last decade, and continues to support the strength of our Palm Beach County economy.”
In fiscal year 2016, Palm Beach County again collected a record-breaking $47 million in tourist development taxes.
“This represents an astonishing 10 percent increase over the previous year, demonstrating that Palm Beach County is a premier travel destination,” Ramsey-Chessman said. “Through the use of public/private agreements, Palm Beach County has developed capital assets, including the Houston Astros baseball park and the convention center hotel, which should continue building on this legacy of growth.”
The clerk’s office holds and manages a portfolio of about $1.6 billion invested by its professional management team and governed by both Florida Statutes and the county’s investment policy.
“As tax dollars are invested, they adhere to three priorities,” Ramsey-Chessman said. “The first is safety of principal. Our primary focus is preserving 100 percent of the taxpayers’ dollars. The second is liquidity. We guarantee that sufficient cash will be available at all times to meet the county’s financial obligations, and lastly, earning a market rate of return.”
Investments are limited to high-quality fixed income securities and cash equivalents, she said. Despite years of historically low interest rates, the clerk’s portfolio management strategies have resulted in $574 million in cumulative investment income over the last decade generated at minimal cost to taxpayers.
The Comprehensive Annual Financial Report is the county’s most comprehensive financial document produced by the Clerk & Comptroller’s Office, Bock said. It is professionally and independently audited by the certified accounting firm of RSM US LLP.
ABOVE: Palm Beach County Clerk & Comptroller Sharon Bock.
