8.8% Tax Increase in 2020 Proposed Budget
September 11, 2019
The proposed 2020 PBG Budget raises $5.5M in new taxes, up whopping 8.8% over last year. See the Proposed Budget here.
With the millage flat at 5.55 since reduced to that level in 2016, this is the fifth year that increases in property valuations and new construction have flowed money into the city coffers without having to say they “raised taxes”. In 2015, ad-valorem revenue was $49M. This year’s $67M is a 38% increase in tax haul over 5 years.
If you add in the effect of the 10 year 1% sales tax surcharge which gives the city about another $3M per year, the increase over 2015 is actually 67%.
You may recall that prior to the passage of the sales tax surcharge in 2016, PBG staff had said they didn’t need any additional sources of funds, and if it passed, would return some to the taxpayers in a millage reduction. That too changed of course when the full 10 year revenue stream was captured in a bond and allocated to projects starting immediately, including $11M for a new park.
Assuming the flat millage budget is passed, the 8.8% tax increase compares to an increase in population of about 2.3% and about 2% inflation, so the increase is about twice what economic conditions would expect. A token decrease in millage to 5.50 suggested by Mayor Marciano (representing about $600K), would still produce taxes far above what population and inflation would suggest.
TABOR
In 1992, the state of Colorado amended their constitution to restrict the growth of taxation. Under the “Taxpayer Bill of Rights” (TABOR), state and local governments could not raise tax rates without voter approval and could not spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. The results of this Colorado experiment are mixed, and TABOR has its pros and cons. (For background on TABOR, see: Taxpayer Bill of Rights ) Population growth and inflation though, would seem to be a way of assessing the appropriateness of the growth of a city budget, at least as an initial benchmark.
Since 2005, the population of Palm Beach Gardens will have grown by about 34% (BEBR estimate – see below) to its 2020 level of 56K. Inflation, measured by the consumer price index, will be about 35%. Taken together, TABOR would suggest a growth in city spending and taxation of about 80%. (see graph below).
Over the same period (2005-2020), ad-valorem taxes grew 91% and total expenditures (budget less debt payment, capital and transfers) grew 75%. Spending closely follows the TABOR line, and ad-valorem taxes is not widely divergent (although exceeding TABOR since 2014) suggesting spending and taxation appropriate to a growing city.
It should be noted that ad-valorem taxes fund only a part of city expenditures, the rest made up from impact fees, fees for services, other taxes, intergovernmental grants, etc. and have varied from 66% of the total in 2005 to about 73% now. That is why taxes and expenses do not track each other on the chart.
Another useful measurement is taxes per capita – Ad valorem taxes divided by population and then inflation adjusted. By this measure, in 2005 we paid $1,101 per person to our city and in 2020 it will be $1,122 (2019 dollars). Although not too far above the 2005 level, tax per capita was as low as $994 in 2014 after a millage reduction. It should be noted that as property owners, we pay taxes to other entities besides the city – county, schools, health care district, etc. In 2019 the Palm Beach Gardens portion of the amount on our TRIM statement is about 27% of the total.
The chart below shows a steady growth in per-capita taxation, yet there is reason to believe the BEBR population estimates have missed some of the city’s growth (see below). If the numbers are adjusted to match the growth in voter registrations since 2016 for example, the curve is much flatter since there are more people to pay the taxes.
So if you trust TABOR, or per-capita as measuring sticks, is this growth in taxation appropriate? You be the judge.
A word about population estimates.
Estimates of the Gardens population vary. The numbers used in the preceding two charts are based on the University of Florida’s Bureau of Business and Economic Research (BEBR) data. By their measure, we have grown 33.6% since 2005, and 2.3% in the last year. The US Census has a different set of numbers and they claim 37.3% and 1.4% respectively. BEBR says we will have 56,302 residents next April, the Census says 57,860.
I have reason to believe that both of these estimates are too low. In 2017, the city annexed Osprey Isles and Carleton Oaks (about 650 residents) and in 2018 Bay Hill and Rustic Lakes (aobut 1340 residents). It is not clear that either BEBR or the census adjusts for annexations between census decinnials. Also, certain areas of the city are growing rapidly, such as Alton.
If you look at voter registration data, assuming that the population as a whole was growing at the same rate as the voter rolls, you see more rapid growth. In 2016 there were 37,878 registered voters in the Gardens, 74% of the population based on BEBR. By 2019, the voter rolls had grown to 44,847, up 18%. A similar ratio applied to population would yield 61,013 residents in 2019, and by extension, 65,028 in 2020. Precinct 1190 (which includes Alton) now has about 4300 voters. In 2014 it had about 2500.