Another sales-tax hike? Start sounding the alarm

Itwas a terrible, unworkable idea for Palm Beach County seven years ago. It remains a terrible, unworkable idea. But it’s back.

The idea is a half-cent sales tax for emergency services, meaning firerescue. County CommissionerMelissaMcKinlay wants the staff to review the proposal and report back.

McKinlay justifies her action by noting the Legislature’s approval for next year’s ballot of a constitutional amendment that would add $25,000 to the $50,000 homestead exemption for property taxes. When the amendment passes, the main source of revenue for counties and cities will shrink if tax rates don’t change.

“I don’t do this lightly,” McKinlay said. “We are going to have to get a little creative about diversifying our revenues.” Creative? No. Thiswould be thewrong tax at the wrong time for the wrong reason.

For starters, county voters raised the sales tax fromsix cents to seven cents last November. Adding another half-centwould make Palm Beach County’s the highest sales tax rate in the state. Since Broward County voters rejected a two-part, one-cent sales tax plan six months ago, that extra half-cent could drive, say, potential car sales in Delray Beach to Deerfield Beach.

In addition, this half-cent increasewould amount to a political favor for the firefighters union. The taxwould be less about improving public safety than about protecting salaries and benefits for county firefighters. Given the opioid crisis, fire-rescue services matter more than ever. The county could meet that need, however, by raising the tax rate to cover the drop fromthe higher homestead exemption or by cutting the overall budget.

Finally, this tax is based on a scheme that no county has tried. Even the tax collector’s office isn’t sure whether itwouldwork.

In theory, the taxwould be revenueneutral. Offsetting the increase in the sales taxwould be an equal reduction in the property tax. County CommissionerHal Valeche calls it “a substitute tax.” See? That sounds as easy as cold fusion. But howdo you get there?

Specifically, what if you live in Boca Raton, Delray Beach, West Palm Beach or other cities that have their own fire departments and don’t contract with the county? Seven years ago, six of the11 cities with fire departments had to approve before the half-cent tax could make the ballot. That didn’t happen.

But let’s assume that the proposal made the ballot and passed. The Palm Beach CountyTaxCollector’s Office has prepared a flowchart for implementing the tax. The chart makes quantum physics look easy by comparison.

Essentially, however, the problem is how to divide the revenue fromthe new sales tax and redistribute it for the supposed property tax offset. In 2010, Tax Collector Anne Gannon doubted that implementationwas possible. Continued skepticism seems proper.

The lawin question allows counties to impose the surtax— with voter approval— for several purposes. Palm Beach County voters approved a half-cent tax in 2004 for school construction. It lasted until 2010. As noted, voters approved a full cent inNovember, with half of that going to the school district. But there are key differences between those tax plans and whatMcKinlay proposes.

Most important, with that half-cent increase in 2004 came a list of projects the taxwould finance. Whenthe tax ended, a citizens oversight group concluded that the school district had built 98 percent of the projects, having discarded the rest because of changing needs.

Asimilar list with similar oversight accompanied the one-cent increase. Like the 2004 plan, the one-cent increase will last only for a set period— 10 years, ending earlier if the revenue reaches $2.7 billion before then. The half-cent fire-rescue tax likelywould be permanent. Thatwas the approach in 2010. The fire-rescue tax also would come with no specifics. Just trust us.

McKinlay got help fromthe firefighters union when shewent fromcounty staffer to county commission three years ago. Valeche, who opposed the one-cent increase, received $1,000 donations from several firefighter unions for his re-election campaign last year.

County Commissioner Steven Abrams predicts “a lot of technical problems” if voters enacted this “nebulous” tax. “I don’t foresee it” happening. Substitute taxation? Thiswould be more like double taxation. There’s nothing “creative” about that. Just deceptive.

Randy Schultz’s email address is randy@bocamag.com.