Joel EngelhardtThe toll could climb by $400 million when local agencies set final tax rates in September.
In initial budget calculations, most taxing bodies in Palm Beach County are not proposing to raise their tax rate. But new construction and rising property values mean many property owners will pay more while local governments collect more money than ever before.
The big three taxing bodies — cities, the county and the school district — account for 86% of the $6.9 billion to be generated countywide next year by property taxes. That’s $402 million more than last year, Stet’s analysis of preliminary tax rates submitted to the Palm Beach County Property Appraiser’s Office shows.
The figures buttress the statewide push to reduce property taxes on homesteads. Florida’s unrestrained growth drives property tax collections higher and higher even when cities pride themselves on holding the tax rate steady.
This year, property values went up less than in previous years, and the rise in collections slowed slightly from 7% to 5.8%.
But to those supporting Amendment 3, the routine rise in tax money flowing to local governments is too much. Amendment 3 is the Legislature’s proposal on the Nov. 3 ballot to increase the homestead exemption to $250,000 from $50,000 over two years.
If it passes, the new rules would apply to next year’s tax calculations, not this year’s. In two years, the statewide measure could cut $12 billion from local budgets.
But governments can simply raise tax rates to make up for revenues lost to Amendment 3.
For instance, Palm Beach County could collect $2.2 billion next year, as it plans to collect this year, by raising the tax rate to shift the burden onto non-homesteaded properties — such as office buildings, stores, seasonal homes and rental apartments. Also hit would be homesteaders whose homes are valued at more than $250,000.
While the owner of a homestead valued at less than $250,000 would pay no taxes in the second year under Amendment 3, the owner of a $2 million homestead would still pay taxes on $1.75 million of the property’s value.
Few local governments are rolling back tax rates
Few cities avail themselves of the Legislature’s remedy to combat rising tax bills. They refuse to lower the tax rate to what is called the rolled back rate to bring in about the same amount of money from one year to the next.
Anything above the rolled back rate, under state law, is a tax increase.
The idea is that property owners would pay roughly the same amount, or even less, from one year to the next instead of paying a constantly rising toll.
In Palm Beach County, only one of 37 cities that collect property taxes, South Palm Beach, is proposing to go to the rolled back rate. South Palm, a barrier island town of about 1,500 residents, is entering final budget hearings with a plan to raise $73,000 less this year than last.
Five other towns are proposing a slightly lower tax rate this year: Boynton Beach, Westlake, Haverhill, Lake Clarke Shores and Loxahatchee Groves.
In 26 cities, elected officials go into the September budget hearings considering no change in the tax rate but with the option to lower it.
In five towns — Jupiter, Palm Beach Shores, Delray Beach, Royal Palm Beach and Highland Beach — the tax rate is positioned to go up. The largest increase is in Jupiter, which is absorbing fire-rescue services formerly covered by the county.
The shift will increase the town’s tax rate by two-thirds to $3.58 per $1,000 of assessed valuation, giving Jupiter a $26 million revenue bump. But it eliminates a $1.72 county fire-rescue tax rate that raised $31.9 million from Jupiter taxpayers last year.
The county and the Palm Beach County School District are proposing no change in the tax rate. But the separate levy set by the Legislature for Palm Beach County schools would go to the rolled back rate, a drop to $3.03 per $1,000 of valuation from $3.07.
Even so, that tax alone would raise $1.2 billion, which is $53.4 million more than the tax raised last year.
The rise occurs because the rolled back rate does not apply to new construction and Palm Beach County remains in a boom phase, recording more than $5 billion in new construction for the third year in a row.
If all 37 cities went to the rolled back rate, instead of raising about $1.23 billion, they would raise $1.13 billion, a reduction of $93 million or 7.5%.
Under the proposed tax rates, the county’s overall take, including separate levies for fire-rescue and libraries, would rise to $2.27 billion from $1.9 billion two years ago, a gain of 15%.
The taxing bodies will vote on the tax rate twice at public hearings in September. They are blocked by state law from raising it beyond the rate sent to property owners in their Truth in Millage notice last month, but they can still lower it.
All property owners pay the tax to the county and the school district, but only city residents pay city taxes and only to the city in which they live.
Compare this year’s tax rates to last year’s here.
