Palm Beach’s Town Council has approved a $137.2 million budget for the coming year – a nearly 8 percent increase over this year’s $127.3 million spending plan.
The new 2026-27 budget, which takes effect on October 1, was approved by a 5-0 vote Thursday at the second of two public hearings, required by state law, on the annual budget and property tax rate.
The new budget includes four new jobs in the Public Works and Building departments, increasing the town workforce to the equivalent of 403 full-time employees.
The new jobs include a landscape foreman, two landscapers and a building plan reviewer to meet additional, unfunded permitting requirements imposed by the Florida Legislature. The landscape jobs will enable the town to reduce contractual labor costs, creating an overall savings, according to Bob Miracle, Palm Beach’s deputy town manager for finance.
A $2.7 million increase in employee pay is proposed to cover merit and step pay increases, a 2.9 percent lump sum cost-of-living pay adjustment, and an increase in pay ranges for general and public safety employees to remain competitive in the regional job market.
Of the pay increase, $1.1 million is for special-assignment overtime for police who work off-schedule special detail for town businesses and special events. This is offset by the revenue paid by the local business/customer to the town.
The $2.7 million, which includes the four new employee positions, would raise the total cost of employee pay to $41.3 million.
Other big-ticket expenditures include:
- An increase of about $1 million, or nearly 8 percent, for non-pension employee benefits. The lion’s share of this increase is for health insurance premiums. The total expenditure for this category would reach $13.2 million.
- A jump of nearly $1.7 million, or 9 percent, in contractual costs, which would reach nearly $20.2 million. This category includes legal advice and litigation, public safety equipment, bank service charges and increased utility expenses
An additional $1 million would be devoted to capital outlay, bringing the total to $1.7 million. - Other major expenses include pension benefits, up nearly 3 percent to $16.6 million, and a $14.2 million transfer to the Capital Improvement Fund for drainage work, street paving, sanitary system improvements, and Phase 7 South paving following the conversion to underground utilities.
Nearly $6 million will be devoted to debt service. A $7.7 million transfer into the Coastal Management Fund will help pay for the upcoming $20 million-plus construction of a new Midtown Beach seawall. A $5.4 million voluntary annual transfer into the Retirement Fund will help pay down a long-term unfunded liability in that program.
Property tax increase
Palm Beach residents will pay more in property taxes to the town during the 2026-27 budget year.
That’s not because of an increase in the property tax rate. The council voted 4-1, with council member Lew Crampton dissenting, to retain the town’s existing tax rate of $2.61 per $1,000 of taxable value for the coming year. Crampton favored lowering the property tax rate to give a break to taxpayers, saying the town is in good financial shape with millions of dollars in reserve accounts.
Because of a 9 percent average increase in assessed property values on the island, property owners under the same tax rate will pay the town an additional $9.8 million in taxes, for a total of $93.6 million.
Homestead owners will pay $75 more per $1 million of taxable value, and non-homestead owners will pay $238 more per $1 million, according to Miracle.
The council had the option of lowering the tax rate. Town Manager Kirk Blouin, in his $134.4 million budget proposal for 2026-27, submitted in July, suggested lowering the rate so that homestead property owners would pay the same amount next year. About 40 percent of owners in the town have the homestead exemption.
But adopting the lower rate would have meant sacrificing nearly $3 million of the additional tax revenue that the town is poised to pull in because of the higher property values.
At a July 16 budget workshop, most council members and Mayor Danielle Moore said it would be prudent to leave the existing tax rate intact in the face of major budget expenditures and uncertainty over possible statewide property tax reform.
Property tax reform
Property tax reform involves major changes in how the state taxes properties and limits values. If approved by 60 percent of voters, a proposed constitutional amendment on the November 3, 2026, ballot will expand homestead exemptions and cap non-homestead assessment increases.
For non-school property taxes, the homestead exemption would rise from the current $50,000 to $150,000 in 2027 and $250,000 in 2028. For the town of Palm Beach, that would cut revenue by $800,000 in fiscal 2027-28 and by $1.7 million the next year, according to Miracle.
Roughly 17 cents of every property tax dollar paid by owners on the island goes to the town. The remainder is collected by Palm Beach County, the county schools, and other tax authorities.
Total property taxes paid in the town during 2025- 2026 budget year were $14,871 per $1 million of value, according to the town. Of that, $2,611 stayed in Palm Beach, and the rest went to the other taxing districts.
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