The Town Council approved at a public hearing on Thursday a $127.3 million budget for 2025-26 – a nearly 7 percent increase in spending over this year’s spending plan.
The new budget, which takes effect October 1, is $8.1 million larger than this year’s budget, which is slightly over $119 million.
The council also approved on Thursday a property tax rate of $2.61 per $1,000 of taxable value. That’s the same rate the council approved last year. Because of an 8 percent increase in taxable property values, the rate will generate an additional $2.6 million, driving total property tax revenue to $85.7 million, according to the town.
The budget and tax rate were both approved on a 4-0 vote, with council member Ted Cooney absent.
Property taxes are by far the largest source of revenue to the town, making up approximately two-thirds of the annual operating budget.
Under the approved rate, homesteaded property owners will pay $79 more per $1 million of taxable value, according to the town. Those without the homestead exemption will pay $120 more per $1 million based on a 10 percent cap set by state law.
Thursday’s public hearing on the budget and tax rate was the second of two public hearings required by the state to be held by municipal governments each September.
At the first public hearing on September 8, when all five council members attended, council member Lew Crampton dissented in a 4-1 decision to approve the tax rate of $2.61 per $1,000 of taxable value. Crampton favored a lower rate of $2.53 per $1,000 of taxable value, which was suggested in Town Manager Kirk Blouin’s original $124.7 million budget proposal in July.
“We are awash in cash and really don’t need the extra $2.6 million that would accrue to the town if we were to keep the millage rate at $2.61 per $1,000 as opposed to lowering it to 2.53 per $1,000,” Crampton said at the time. “Our taxpayers should reap the benefits of the financial management successes we have had.”
With Cooney absent, Crampton switches vote
At Thursday’s final hearing, Crampton initially made a motion to adopt the lower tax rate of $2.53 per $1,000. The motion failed when no other member seconded it.
The council then voted 4-0, with Cooney absent, to approve Julie Araskog’s motion in favor of keeping the tax rate at $2.61 per $1,000 of taxable value. Crampton said he voted with the majority “in the spirit of friendship and comradeliness.”
Had Crampton voted in opposition, the resulting 3-1 vote would have fallen short of the supermajority threshold – at least four out of five votes – that would have been legally required to approve the property tax rate, according to Town Attorney Joanne O’Connor. By state law, the town would have been forced to revert to a default rate of $2.43 per $1,000 of taxable value, which is the “rollback rate,” or the rate which would generate the same amount of tax revenue as the year before. But that would have resulted in a drop of $6.3 million in property tax revenue compared to the adopted rate of $2.61 per $1,000, according to Blouin. Crampton said he could not support such a steep drop in tax revenue.
During a budget workshop in July, a majority of the council and Mayor Danielle Moore expressed support for retaining the $2.61 per $1,000 tax rate.
They expressed reluctance to cut the tax rate at a time when Palm Beach faces a heavy slate of capital projects, hurricane season, and fiscal uncertainties.
Among the capital projects is an estimated $24 million replacement of the Midtown Beach seawall, scheduled for 2027-28.
Blouin said the tax rate is a philosophical matter for the council to decide, and that there were persuasive arguments to be made on both sides of the question.
“It’s the council’s decision,” Blouin said. “Our job at the staff level is to meet community expectations while balancing the budget.”
Blouin said the town’s fiscal picture brightens somewhat after 2027, when the town is scheduled to complete the burial of all overhead utility lines on the island. Completion of that 10-year undertaking will free up annual surplus funds from the Town Marina, which have been used to absorb the costs of the utility burial. Actuarially required contributions to the town’s pension fund will also start to drop substantially in the 2030s, Blouin said.
Bigger budget for 2025-26
Increases in employee salaries and benefits and contractual costs are the two big drivers behind the larger budget for 2025-26, Blouin said.
Most of the salary and benefit increases are due to the addition on new personnel positions, Blouin said. The town is adding four new police officers to help meet safety and traffic needs; two police service aides; a fitness supervisor in the Recreation Department; a deputy town engineer and a maintenance supervisor in the Public Works Department; and a project engineer in the Planning, Zoning and Building Department.
In addition, it is adding two park attendants, a crew foreman, a police officer and a part-time parking enforcement officer, all of which will be devoted to the renovated Phipps Ocean Park after it reopens in November 2026.
The employee pay includes merit and step pay increases and a 2.6 percent cost of living adjustment for inflation in the regional market.
The budget includes additional spending of $1.6 million for the retirement program; $2.4 million for employee benefits; $1.9 million for contractual costs and a $1.8 million additional transfer to the coastal management fund.
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