Palm Beach property owners can expect to 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 Town Council said at a budget workshop on Thursday it intends to retain the town’s existing tax rate of $2.61 per $1,000 of taxable value for the budget year that begins October 1.
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 Bob Miracle, deputy town manager – finance.
The 2026-27 budget would be $137.2 million, a 7.7 percent increase over this year’s $127.3 million budget.
The council has the option of adopting a lower tax rate. A final decision won’t be made before two public hearings on September 8 and September 17 at 5 p.m. at Town Hall.
But, at Thursday’s 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.
Town Manager Kirk Blouin presented the council with a $134.4 million budget proposal that contained a lowered property tax rate that would not raise taxes for homestead owners. Under that rate of $2.53 per $1,000 of taxable value, the town would, because of the overall increase in taxable property values, collect an additional $5.1 million, for a total of $90.8 million.
Homestead owners would pay the same amount to the town as they did this year. Non-homestead owners would pay $155 more per $1 million of taxable value.
About 40 percent of owners in the town have the homestead exemption.
Blouin said the staff’s goal each year is to present a balanced budget proposal that meets the high level of service required by the community without requiring homestead owners to pay a tax increase to the town.
But adopting the lower rate would also mean losing $2.8 million of the additional tax revenue that the town is poised to pull in because of the higher property values.
With a comparatively low tax rate, a strong bond rating and millions of dollars in reserve accounts, Moore and council members agreed the town stands on firm fiscal ground.
But it faces budget pressures including $17.2 million for capital improvements including sanitary sewer work and street paving; coastal improvements including a new Midtown seawall expected to reach at least $25 million; $3 million for street paving; $1.7 million for vehicle and equipment replacement; $1.7 million for contractual increases; and a $2.7 million increase for personnel costs.
The street paving, which is necessary because of the townwide conversion to underground utilities, would be increased to $5 million annually in 2027-28 or 2028-29, after a street schedule is developed by the Public Works Department.
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 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.
The reform includes other measures including spending and taxing limits on local governments.
It also includes an annual limit on how much a non-homestead property’s assessed value can grow. The annual cap on non-homestead properties, which include vacation homes, rentals and commercial buildings, would drop to 5 percent, instead of the current 10 percent, in January 2027. According to Miracle, it would slash town revenue by another $1.6 million annually.
Holding the line
Moore argued for maintaining the existing tax rate, citing the uncertainty over the property tax amendment and the need to protect the town’s reserves.
“We never know what is going to happen,” she said. “The sea wall could cost more. We could have a storm. We could have a million things happen.”
Council member Nicki McDonald was among the four-member council majority that opted against lowering the rate. She noted that the town has reserves of $39.7 million in the General Fund balance, which is equal to 33 percent of the annual operating budget.
“We are in a super-strong financial position but are a coastal town with emergency funds that could be needed, a cash flow that could be needed, [and] we want to maintain a strong credit rating [and] have an economic cushion,” she said.
Council member Lew Crampton was the lone voice of dissent, arguing in favor of cutting the rate to $2.53 per $1,000 – the level that would shield homestead owners from a tax increase.
The town stands on firm financial ground after years of strong fiscal management and climbing property values, Crampton said.
“The town has been getting annual surpluses of at least $2.7 a million a year,” he said. “Second, we are seeing significant year-over-year increases in property values. We can continue to count on that. Third, we have strong reserves.”
Crampton said those reserves include several appropriation accounts with millions of dollars that could be drawn upon in an emergency.
Some of the accounts, such as retirement or OPEB, contain funds that are restricted for certain uses. Including the operating budget, the town has six accounts with reserve balances of around $100 million that it could use in an emergency, according to Miracle.
Adopting a rate that does not increase taxes for homestead owners is good policy, Crampton said. “That is what we should be trying to do as stewards of the town’s resources.”
Mark Zeidman, a member of the Palm Beach Civic Association’s Executive Committee and chairman of its Tax and Finance and Audit committees, told the council it would be risky to reduce the tax rate because of uncertainty over the future of property tax revenue and because of the high cost of capital projects scheduled for the next three years.
As it currently stands, the town is headed toward a $5.5 million deficit in 2027-28 and an $8 million deficit in 2028-29 to meet the demand for infrastructure improvements, he said. Another $5 million will be needed to pay for unfunded street paving tied to the townwide underground utility conversion.
“It’s a long list of projects and the list never gets shorter,” Zeidman said. “There are more projects scheduled than sources identified to fund them, so we’re sort of kicking the can down the road in that respect.”
Zeidman said it’s better to keep the tax rate stable than to cut it and risk having to raise it a year or two later. “You don’t want a bouncing ball,” he said.
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 other taxing districts.
The Palm Beach Civic Association will host a Welcome Back Community Forum to focus on property tax reform on Wednesday, October 28, from 10 a.m. until noon at The Royal Poinciana Chapel. The Welcome Back Community Forum will be open to all residents and will be sponsored again this year by Third Federal Savings & Loan.
RSVP for Welcome Back Community Forum HERE.
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