Real Estate Blog

Time for Palm Beach County to go on budget diet

September 26th, 2011 12:46 PM by Sherry Lee

By John R. Smith, September 21, 2011

The task before us in Palm Beach County is finding a permanent way to force County Administrator Weisman to be more concerned about the taxpayer than about broadening his fiefdom. And the best way to make that happen is to prod his bosses — the county commissioners — to sit him down every year and instruct him to show serious concern for taxpayer interests.

Here's why. Each year, county citizens must endure the Weisman ritual. It's always the same; the administrator spends the early part of each year concocting a county budget that ends up proposing a serious increase over the previous year. Then the folks who want to reduce taxes have to strap on the battle gear and go to combat. Most years, they can't count on a county commission that will help them.

It's the same merry-go-round this year. Weisman, in June, amidst a landscape of citizens enduring economic hardships, proposed a budget with about a 4 percent increase. This impelled responsible groups, like the Taxpayer Action Board, to spend months trying to lead county government toward accountable behavior. It prompted citizen groups to pay highly reputable tax watchdog Florida TaxWatch to come here, again, and point out the correct way to prepare budgets.

TaxWatch analyzed aspects of the 2011 county budget, and made 17 recommendations. They found that the county has hoarded excessive levels of reserves over the years, reserves that could be used to reduce the current tax burdens. Palm Beach County has set aside reserves that are 50 percent of total expenditures, while the standard for reserve funds is between 15 percent and 25 percent. The percentages are hard to determine because many fund balances are hidden and shifted within a myriad of individual funds.

Whenever anyone suggests tapping into reserves, Mr. Weisman lapses into his "sky-is-falling" routine, warning that the county might lose its AAA bond rating if it uses its reserves. That's bunk.

For example, Hillsborough County has maintained its AAA ratings even though its equivalent reserve funds as a percentage of total expenditures are only about 20 percent. The TaxWatch report concluded, "Palm Beach has the highest level of unreserved fund balances as a percent of combined balances compared to its peer counties."

The county's debt is staggering, with a substantially higher debt burden per citizen than counties of similar size. The only county with higher long-term debt is Miami-Dade. Here's how high the county debt is: next year, $87 million will go toward paying the interest on the debt, and that doesn't count the debt load that voters agreed to in referendums. The county owes so much money that each resident would need to pay $1,625 just to pay off the $2 billion debt.

Further, the county owns huge amounts of vacant land and buildings, much more than necessary. Selling just 25 percent of those properties could generate over $50 million in revenue.

The TaxWatch report goes on to list several recommendations they made to the county in 2006 that were ignored. The report concludes that "specified improvements are needed in Palm Beach County." The county needs to respond formally to TaxWatch's findings.

After vehement opposition to spending any reserves at all (his budget initially increased some fund balances), Mr. Weisman "found" $7 million during the commission meeting last week, and left with direction to spend it.

Local business leaders have long known that it is nearly impossible to understand the County Administrator's budget. The documents created by his office are not prepared in a way that is uniform with Florida's standard financial reporting, and TaxWatch has never been able to reconcile the county's budget documents with the uniform standard specified by the state. The Commission, at a minimum, needs to set policy and start holding Weisman accountable, to insist on an audit of the entire budget process (but not by the internal auditors) and an annual reconciliation between Florida's specifications, and the County's budget documents.

My personal belief is that there are only three or four people in the county who truly understand the county budget, most of them work for Bob Weisman, and that's the way he likes it.

John R. Smith is chairman of Palm Beach County's BizPac and owner of a financial services company.

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Reprinted from The Sun Sentinel.



Posted in:General
Posted by Sherry Lee on September 26th, 2011 12:46 PM



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