Local Budgets and Taxes Across Florida

These describe many local actions taken on 2010 budget for municipal and county governments.  In short, few cities were able to avoid increasing property taxes and fees.  Many are suffering from unfunded pension liabilities.  Many public employee unions are resisting, to the very last, any changes in their salaries and benefits.

There are some local governments that have been well managed as evidenced by strong reserves, acceptable labor costs and slowly rising or constant property taxes–but these are the exception.  In fact, one might say that Coral Gables is an example of a city that has had poor financial management as reflected in practically no reserves, rising taxes and high employee benefits.

PALM BEACH COUNTY

Outsourcing government jobs and consolidating long-standing departments are among options being considered to head off Palm Beach County’s $100 million budget shortfall.
Layoffs, cuts to county services and another property tax rate increase are among the measures being considered to close the budget gap.
County commissioner Steven Abrams is also calling for Palm Beach County to follow the lead of its neighbors to the south and consider hiring private companies to take over more of its work.
Abrams points to Pembroke Pines, which last week agreed to outsource 200 city jobs from more than a dozen departments by contracting with a private company. The city plans to use a private contractors for jobs such as landscaping and accounting.

ORLANDO

Orlando is set to adopt a budget that freezes property taxes, sheds employees for the third consecutive year and eliminates pay raises for workers — while also increasing a host of “user fees.”

The City Council granted preliminary approval Monday to a budget of $356.4 million for day-to-day operations next year, about $2.8 million less than the current year.
But the council was unwilling to try to control spending by nonprofit groups and quasi-governmental agencies that are funded by city taxpayers.

The city’s spending plan closes a budget deficit once projected as high as $49 million. To do so, Mayor Buddy Dyer’s administration offered buyouts to encourage employees to retire early, cut services and dipped into emergency reserves.

Unions representing most city workers also agreed to set aside their labor contracts and give up pay raises for the next two years. Two groups of supervisory employees — Fire Department district chiefs and police lieutenants, a total of 48 workers — refused to give up their raises.
Commissioner Patty Sheehan called that decision “disgusting,” noting that the city might have to lay off lower-paid workers to cover the raises.

Although the City Council kept the property-tax rate unchanged, it also adopted a slew of fee increases,

CITY OF MIAMI

The Miami City Commission voted unanimously to cut employees salaries, healthcare and the city’s contribution to employee pension plans, to fill a $100 million budget deficit and balance the budget for the 2010-11 fiscal year. But the firefighter and police unions promise to put up a legal fight.

The plan, dubbed the nuclear option, includes: pay cuts ranging from 5 to 12 percent, on a sliding salary scale; changing health care providers, adding deductibles and co-pays for doctor visits and prescriptions; and reforming the city’s pension problem.

The pension reform that was approved will see the retirement age get raised, annual benefits will be capped at $100,000, and the city will alter how it determines pension amounts. The entire plan will see around $77 million in cuts.

Ranking among the city’s top 10 earners, the average salary for a Miami firefighter is around $90 thousand; add in benefits and that number can jump to $300 thousand a year, according to CBS4 news partner the Miami Herald. Police officers in the city, on average, make $74 thousand a year while general services workers average $66 thousand.

The proposed salary cuts would range from about five percent to workers making around $40 thousand a year, up to 12 percent for any worker, union or non-union, making over $120 thousand annually.

PIMBROKE PINES

It took a five-month balancing act, but Pembroke Pines city commissioners tentatively OK’d a spending plan rife with soaring property taxes and utility rates for residents.

Officials approved 4-1, with Iris Siple the sole commissioner dissenting a $296 million spending plan plugged, after a nearly 27 percent water and sewage rate hike and heavy labor union concessions.

City officials hiked property taxes from $5.12 per $1,000 of assessed property value to $5.68, or about an 11 percent increase, said City Manager Charles Dodge.

The property tax rate, said Dodge, injects a surplus of $1.02 million into the city’s reserve coffers and drops property tax revenues from $46.8 million in 2009 to $45.8 million come Oct. 1, the outset of the 2010-11 fiscal year.

All summer long, commissioners stared down a staggering $10.7 million budget deficit tied to plummeting property values and pension increases. Rising employee pension costs and workers’ compensation last June – which contributed to the deficit – pushed Pines into heated negotiations with the Federation of Public Employees, a labor union representing 300 city workers.

After concessions, Pines saved roughly $7.25 million by shedding 26 part-time and full-time jobs and forced union employees to accept four percent wage cuts, frozen merit-based increases and pension reductions, according to budget documents.

NAPLES

Naples City Council approved the city’s $114 million budget and corresponding tax rate Wednesday evening, ensuring that most city property owners will see a decrease on their property tax bills next year.

Those tough, late-hour (in budget year terms) decisions included countering a $714,710 drop in tax collections that would result from keeping the tax rate the same by laying off two employees and dipping into reserves that could have been used to stave off future tax increases.

“We need to be careful for next year,” Heitmann said over concern for using up reserves. If the reserves are depleted, Heitmann said “that’s when the city will be in major trouble.”

At the end of fiscal 2011, about $56 million in reserves will remain, much of which is already selected for other purposes or is required to be saved for emergencies by city policy.

MARCO ISLAND

Marco Island City Council struggled to get the five votes necessary to pass a tax rate increase before reaching a compromise to increase the tax rate by about 15 percent.

Council passed a 2010-11 rate of $1.89 per $1,000 of taxable property value, as well as an additional approximate $0.11 per $1,000 of property value to pay for the purchase of the property now named Veterans’ Community Park. The total is $1.99 per $1,000 of property value.

SOUTH FLORIDA MUNICIPALITIES

Miami Lakes is the gold standard. The tree-lined town of 30,000 on the county’s western edge made out so well this budget season of horrors, it is lowering its property tax rate — and considering refund checks to homeowners.

At the other end is Surfside, a small Northeast Dade community with few commercial businesses that was hit so hard by plunging real estate prices it had to close the only library in town.

Somewhere in between is Miami. Leaders of Dade’s largest city closed a mammoth budget hole after battling city unions, and eventually slashing salaries and pension costs. Taxes stayed basically flat, but only because the city invoked a rarely used state statute that allowed for a one-year fix.

A peek behind the curtain shows Dade and Broward’s 66 cities navigated the 2011 budget year using every tool available: Cutting services and raising tax rates while dipping into rainy day funds. Fee hikes ran the gamut, from the late return of library books, to ambulance rides, to visits to the garden in Pinecrest.

There are commonalities: Most of the cities that took the hardest hits had to deal with skyrocketing pension payouts caused by rising salaries with hefty multipliers. And most cities that did well don’t have many employees. Those who do belong to the state’s pension plan.

NORTH MIAMI BEACH

The overall city tax rate and water fees will go up slightly, but North Miami Beach’s pools and library will have extended hours.

While the city lowered its tax rate by one cent, the bond tax — which residents voted for and approved in 2000 and 2002 to fund neighborhood improvements and the expansion of the police station — jumped from $.96 per $1,000 of taxable value to $1.20 because of a decrease in assessed property values.

That drove up the tax rate to $7.80 per $1,000 of taxable property — up from $7.57.
Some property owners may see a decrease in their tax billis because of a drop in property values.

But longtime homeowners who have benefited from Save Our Homes, which capped assessment increases at 3 percent a year, may see their taxes rise. Under Save Our Homes, increases must continue annually until they are equal to the market value of the home.
The budget news wasn’t all bad. The city’s library will now be open Sundays, and municipal pools will be open on weekends and holidays, once the new fiscal year begins.

JACKSONVILLE

For the second year in a row, the Jacksonville City Council approved a property tax rate increase after failing to reduce the city’s $1 billion budget enough to avoid it.
But it wasn’t enough for citizens groups, who said the economic downturn was stretching their pockets thin while the city asked for more. Council-approved fee increases, including a doubling of the garbage fee, also contributed to the frustration.

The First Coast Tea Party and Concerned Taxpayers of Duval County, along with shopping center developer Toney Sleiman, organized protests leading up to Tuesday’s meeting.

PALM COAST & FLAGLER BEACH

Palm Coast and Flagler Beach officials held final budget hearings this past week, setting the final property tax rate and approving fiscal year budgets.

In Palm Coast, the City Council unanimously approved a tax rate of $3.50 per $1,000 of taxable property value. At that rate, the owner of a $125,000 home with $50,000 in homestead exemptions will pay $262.50 in taxes. Council members also approved a city budget of $188 million for the coming year.

City Manager Jim Landon said the city staff reductions allowed officials to keep the property tax rate at the $3.50 per $1,000 level, along with other measures.

Flagler Beach City Commissioners, meanwhile, had an even easier time Wednesday approving the final budget and property tax rate.

Commissioners approved a final property tax rate of $4.20 per $1,000 of taxable property value, which is the same as the rolled-back rate. The tax rate for the current year is $3.46 per $1,000. While the rate is higher than this year’s, it’s not considered an increase under state law because it isn’t higher than the rolled-back rate, which generates the same amount of revenue as the previous year, minus new construction.The new rate will generate $2.3 million of the city’s annual budget of $9.6 million. The owner of a home valued at $125,000 — minus homestead exemption of $50,000 — will pay $315 in taxes.

The good news was that the tax rate was at the rolled-back rate.

“The bad news is in this budget we lost another $140 million in valuations,” he said.

Murphy said there were also some things in the budget that the city had little control over, including police and fire pensions, health care costs and legal costs.

Murphy also said to make ends meet capital programs were cut, but that is not a sustainable policy.”We have cut back on capital expenditures but that cannot go on forever,” he said.

TAMPA

No cost-of-living raises for city employees, no property tax increase for city residents and millions of dollars earmarked for citywide neighborhood upgrades.

To plug a projected $32 million deficit in fiscal year 2011, the city laid off dozens of workers, cut spending and consolidated several departments in the past fiscal year, which saved an estimated $19.5 million. The remainder of the deficit will be filled with reserve funds.

Although city workers won’t receive cost-of-living raises, about half of them could see their biweekly paychecks increase under the city’s merit and step programs.

Meanwhile, the city’s contributions to the police and fire pension funds will increase by $11 million, to $19.5 million, in fiscal year 2011. And the parking division deficit will skyrocket in the next fiscal year from $2 million to $6 million, primarily the result of outstanding debt.

Payroll and benefits, including pension contributions, make up the largest percentage of the city’s general fund expenditures, projected at more than $278 million.

About Stephen E. McGaughey
International consultant in economic development programs and projects

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