By: R. Michael Brown, Civic Association Communications Director
PALM BEACH, FL – The Town of Palm Beach Civic Association announced today that it will recommend to the Town Council to vote ‘No’ on the sales tax referendum to finance fire-rescue services. The Town and other county municipalities have been asked to approve putting the referendum on the August 24 Primary Election ballot.
“The Civic Association is deeply concerned about the 1 cent sales tax referendum that could appear on the ballot.” said J. Patterson Cooper, chairman of the Civic Association Tax and Finance Committee and a director in the organization. “We believe each municipality should determine the services it offers its own citizens and have the ability to decide how it will pay for those services.”
From a letter sent to the Town Council, “We urge the Palm Beach Council not to ratify the inter-local agreement required to place the proposed sales tax referendum on the ballot.” Civic Association Tax and Finance committee members participated in Palm Beach County meetings and met with the Town Finance Department to learn about the issue. The committee met this week to decide on the recommendation to the Town.
In 2009, the Firefighters union supported legislation at the State level which called for a sales tax to replace ad valorem taxes used to finance fire/rescue services throughout the State. This legislation passed in July 2009 and is only now evident to many citizens in Palm Beach County (the “County”) as the Palm Beach County Commission (the “Commission”) has indicated it will attempt to place this issue on the 2010 ballot in the primary elections to be held on August 24th. Prior to placing this on the ballot, a series of “inter-local agreements” must be executed between the County and the independent services such that a majority agrees to the measure.
Palm Beach County
There are eleven independent fire/rescue services in the County in addition to the County’s own service. [This includes Palm Beach Shores which is somewhat of a hybrid, as I understand it, and whose inclusion is being debated.] A majority of these independent services would be required to ratify and execute an inter-local agreement with the County in order for the sales tax referendum to be placed on the ballot.
The timeframe is short as the deadline, as set by the Supervisor of Elections, for any issue to appear on the August ballot is in June. Prior to that, the Commission must have two readings (May 18th and June 8th are the two regularly scheduled Commission meetings) which suggest there is approximately one month to complete the process of getting responses to the many questions surrounding this proposal and finalizing agreements with the seven municipalities.
Sales Tax Pros and Cons
The sales tax concept would at first glance appear attractive from a number of points of view, including:
- It would theoretically reduce property taxes by the amount collected from the sales tax proceeds
- It would collect tax from a wider group of citizens (including visitors to the county) not just property owners
- The full increase would be blunted by the “sunset” of the school sales tax of ½% at year end 2010
- It would benefit municipalities that have no other funding options
Many of the above positives are out-weighted by the following issues:
- By raising the sales tax to 7%, the County would have a higher sales tax than either Broward (6%) or Martin (6.5%) counties thereby jeopardizing the County’s competitiveness in retail and wholesale commerce
- Sales tax is a volatile revenue source. During the time period the school sales tax has been in effect, revenues have vacillated from $80 million to $120 million. This would lead to large reserves being created to make up shortfalls
- A myriad of serious questions have not been addressed including: each municipality’s current funding dynamics as a result of demographic differences, accounting assumptions, equipment purchase and maintenance, training levels, insurance ratings, etc. As of now we are being told to ignore these issues and simply have each town or city execute the agreement and certify that its financials are true and accurate.
“Based on studying the issue with the information currently available, our committee came to the conclusion that this sales tax would not be in the best interest of the Town of Palm Beach.” said Mr. Cooper. As part of the statement issued by the Civic Association:
“A fundamental element of municipal governance is a community’s ability to choose its own service level through their elected representatives. Elected officials use direct input from its citizens and impose a tax that corresponds to that level. Using a County-wide sales tax to fund fire-rescue services dilutes Town residents’ ability to influence the process and severely limits the power of Palm Beach and other municipalities to have effective direct input on decisions being made. To whom does the Town complain when other municipalities begin to compete for a larger portion of the revenue source?
It has taken decades to reach the current level of fire-rescue service enjoyed by the Town of Palm Beach citizenry through prudent and conservative budget allocation. Ultimately, should the County-wide sales tax be placed on the ballot and passed by a majority of County voters – in an election that is expected to see a very low voter turnout – the Town’s department will eventually look just like every other department in the County.
Given the available information, the Civic Association strongly recommends that the Palm Beach Town Council not ratify the inter-local agreement for the proposed sales tax referendum.
For further information on this and other tax and finance issues in Town, we encourage Palm Beachers to go to the Civic Association website: www.PalmBeachCivic.org
or call 561-655-0820.