Officials: City faces $6.4 million budget gap

Despite rising property values that will increase tax revenues, West Palm Beach officials say health care, pension and pay increases have left them with a $6.4 million budget gap to resolve.

The city commission on Monday unanimously approved a “not-to-exceed” property tax rate that would bring in 8.82 percent more money than last year, thanks to rising property values across West Palm Beach.

That rate, $8.3465 per $1,000 of taxable value, is a tentative number that could be reduced in coming months but under law cannot be raised. But estimates from city Finance Director Mark Parks project city expenditures will rise to $166 million — $6,363,003 higher than expected revenues — meaning that a significant reduction of the tax rate is unlikely.

Property taxes, though home values are increasing, account for only 40 percent of city revenues, Parks said. Overall revenues will rise by an

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estimated $3.4 million for the next budget year, while expenses will rise by $9.8 million.

Among the largest contributors to the increase in expenses are a 3 percent pay increase for city employees, an increase in health care costs, and a $1 million payment toward police retirement pensions, Parks said. Several city departments, from police to fire and public works, also are anticipating substantial increases in fuel costs.

Personnel costs account for 68 percent of city expenditures, or about $112 million of the city’s projected $166 million budget. And public safety — police and fire — take up more than half the budget.

Police services represent 37 percent of the city’s annual budget; fire, 20 percent.

The police budget proposed for the 2015-2016 budget year is $61.8 million, or $5.3 million more than the current budget, a 9.32 percent increase.

The proposed fire department budget, at $32.7 million, would be $1.4 million or 4.43 percent higher than this year. Engineering & Public Works, at $25.6 million, would be $1.3 million or 5.39 percent higher than this year.

It’s not unusual for West Palm Beach to project a revenue gap at this stage, still several months from final passage of next year’s budget. But officials acknowledge the administration will now have to look to all departments for potential expenditure cuts, or for projects that could be put off another year.

“We need to continue to build wealth in our city,” Mayor Jeri Muoio said at the conclusion of Parks’ budget presentation. “We need development. ... We need to increase the property values in the city. ... We need to make sure our green spaces are beautiful so our values are up.”