Tax relief for some: Gardens council trims tax rate

For city property owners with a homestead exemption, this year’s Palm Beach Gardens tax rate amounts to a tax cut.

For the rest, about 40 percent of city taxpayers, the rate set in September by the City Council means paying more in taxes to the city.

That’s because rising property values hit non-homesteaded properties far harder than those protected by the state’s 3 percent Save Our Homes cap. 

So, when the city reduced its tax rate for the first time in eight years, a 4.1 percent reduction, the move spelled relief for homesteaders, whose values rose by just 3 percent, but not for snowbirds, commercial property owners and landlords, whose values likely rose by 10 percent as real estate skyrocketed. 

The new tax rate of $5.32 per $1,000 of valuation, down from $5.55, is expected to raise $79.5 million for the city, 11 percent more than the previous year.

The money allows the city to hire 39 new employees, including 21 firefighters to run a new station in Avenir, while maintaining its high reserves. The city also is giving raises starting at 5 percent for its nearly 600 employees, including a new three-year police contract that calls for an average increase of 9.73 percent for officers and 21 percent for sergeants, with a 7 percent across-the-board increase the following year.

The city tax base grew by 15 percent to $15.6 billion, far above last year’s 3.5 percent rise, setting the stage for the reduction in the tax rate. 

The Gardens Mall, the city’s biggest single taxpayer, regained the value it lost during COVID, jumping from $340 million last year to $363 million.

How much you pay

For city taxpayers protected by the homestead, the good news extends to the total tax bill since two of the three largest taxing agencies — Palm Beach Gardens and the Palm Beach County School District — lowered their rates by more than 3 percent. The other large taxing agency, Palm Beach County, lowered its rate only slightly.

Still, for those without homestead protection, city, school and county tax payments will go up.

The owner of a $650,000 homestead whose value increased by 3 percent to $669,500 would pay $34 less in taxes to Palm Beach Gardens and $95 less to the school district but $50 more to Palm Beach County, for a combined cut of $79.

That’s because the school district reduced its tax rate by 5.1 percent but the county reduction, mostly stemming from debt reduction, amounted to just 1.5 percent.

The combined tax payment to those three agencies would add up to $10,346.

The value of a non-homesteaded $650,000 property could have gone up by as much as a state-imposed 10 percent cap, putting the value at $715,000. That property owner would pay an extra $196 to Palm Beach Gardens, $262 to Palm Beach County and $192 to the school district, for a total tax hike of $650 on a bill of $11,857.

How Jupiter compares

Jupiter held its tax rate steady but its residents will be charged more by Palm Beach County for fire-rescue services, resulting in an overall rate increase in Jupiter of 1.45 percent. The owner of a $650,000 homestead in Jupiter would pay $126 more in town taxes and the owner of a similarly valued non-homestead would pay $333 more.

As a result of its unchanged tax rate, Jupiter expects to collect about $27 million in property taxes, a 13 percent increase over the previous year.

To assure “truth in millage,” the state requires cities and counties to calculate a rollback rate, which is the rate that would raise the same amount as the previous year, not counting extra money from new buildings. Any amount above rollback is considered a tax increase. 

Rollback must be calculated  but it’s rarely enacted.

That Palm Beach Gardens homeowner saving $34 with the current tax rate would save $282 if Gardens had cut its tax rate by 11.3 percent to hit rollback. And in Jupiter, the homeowner paying an extra $126 would have saved $205 with the 10.5 percent cut dictated by rollback.

For the county, rollback would have turned a $50 tax increase into a $295 tax cut for the homesteaded property owner. 

Marciano: Don’t just ‘be the bank’

Mark Marciano, a Gardens council member, has argued in past years to reduce the tax rate but never so far as rollback.

“I’ve never really been a believer in trying to hit rollback because it’s an impossibility as costs go up,” he said at the city’s Sept. 8 budget hearing, in which no members of the public raised issues about the budget. 

The rollback rate gives residents a clear idea of how much a city is raising taxes, an important step toward transparency, but most cities ignore it, said Dominic Calabro, president and CEO of Florida TaxWatch.

“A lot of the local governments are tone deaf to the predicament of a lot of middle class and hard-working property taxpayers,” Calabro said. “They (taxpayers) have to cut back. Governments don’t.

“Spending is the driving factor for the property tax increases,” he said. “They want to spend more money than they have.”

Marciano, in his final budget after six years on the board, urged future councils to keep a tight rein on spending.

“We’re at a very good place as a city. We have a lot of strong favorable economic outlooks here. That doesn’t mean that we should take that responsibility lightly and say “Great. I’ll just be the bank for the residents and spend it as we want,’” he told council members.

The climb in the city tax base doesn’t mean the city can overspend, Mayor Chelsea Reed said.

“We kind of won a lottery this year. And we earned it,” she told the council. “But we’re not taking it and going on a fabulous vacation. We’re taking it and we’re buying an insurance policy.” 

Rising salaries built in

The additional tax revenue of $7.8 million is insufficient, the city noted in its budget message, to cover increased personnel and operating costs of $8.9 million. 

Personnel costs alone, which make up two-thirds of the city operating budget, are up 8 percent to $78 million. 

Firefighters are in the middle of a three-year agreement paying them 5 percent more in 2023. Unionized general employees are getting a 6 percent raise in the final year of a three-year deal and non-union general employees are getting an 8 percent raise.

The council approved the new police contract Sept. 8, receiving praise from police officers who voted 112-11 to accept it. 

The goal was to keep city police pay in the top quarter of its market, staff told council members.

The result is that by October 2024, the minimum pay for a police officer would be $64,500 and the maximum would be $110,000, with sergeants paid between $101,846 and $134,000 and communication operators between $56,120 and $86,600.

The city’s unassigned reserve balance of $26 million is 22.6 percent of total spending, meeting a policy to maintain reserves at no less than 17 percent, staff wrote in the budget message. 

If the tax rate remains the same for the next 10 years even as the tax base grows, staff expects unassigned reserves to remain at $26 million and budget stabilization reserves to hit $8 million.

The city also introduced a new way of viewing the budget online, paying $70,000 a year for software from Opengov.com. The amount is less than payments to consultants in past years who helped build budgets on Excel spreadsheets, city Finance Director Allan Owens said.

The budget year begins Oct. 1 and tax bills go out in the fall.

© 2022 Joel Engelhardt. All rights reserved.