The Town Council has tentatively approved a $104.8 million 2023-24 budget that is nearly 8 percent larger than this year’s $97.2 million spending plan.
The new budget calls for a 9 percent pay increase for employees tied to the annual inflation rate in South Florida. It’s the second consecutive year the employees have received a 9 percent across-the-board pay hike, which is in addition to merit and step increases.
This marks the third straight year the town has contended with inflation, Town Manager Kirk Blouin told the council at its July 13 meeting.
The 9 percent inflation rate is tied to the Consumer Price Index in South Florida, which is more than double the 4 percent nationwide average. Inflation is even higher than 9 percent in the local construction market, adding millions of dollars to the cost of major capital projects, including the reconstruction of the North Fire Station and the final phases of the burial of all overhead utility lines on the island.
Bob Miracle, deputy town manager for finance and administration, said inflation is felt throughout the budget: “It comes across all sectors – capital costs, personnel, contracted services. Inflation is making an impact.”
The budget sets aside nearly $2 million for the 9 percent pay hike and for the creation of eight new employee positions that will bring the town’s workforce to the equivalent of 371 full-time workers.
The eight positions include a design and preservation manager and a zoning technician in the Planning, Zoning and Building Department and a technician and a systems analyst in Information Technology. Two new police officers and a crime scene technician will be added to the Police Department, and a new golf pro shop assistant will join the staff at the Par 3 Municipal Golf Course.
“We have slightly increased our staffing levels to meet the service needs of the community,” Blouin said. “The cost of some of these positions is offset by the creation of additional revenue for the town.”
Lower property tax rate
The new budget calls for a 3 percent cut in the property tax rate, to $2.61 per $1,000 of taxable value instead of the current $2.69 per $1,000.
Under the new rate, property owners with a homestead exemption would see no tax increase per $1 million of taxable value. Those without the exemption would pay $179 more per $1 million.
Despite the tax rate cut, the town would generate an additional $6.1 million in revenue because of a 13 percent increase in taxable property values, according to a June 28 preliminary estimate from the Palm Beach County Property Appraiser’s Office.
This will be the sixth consecutive year the town has lowered the property tax rate so there is no tax increase for homesteaded owners, Blouin said (homesteaded owners saw a tax decrease during two of those years).
“We have delivered a budget that meets the highest-level needs of the community at the lowest possible cost,” Blouin said.
Homesteaded property owners are capped by the state at annual property tax increases of 3 percent, Miracle pointed out. Non-homesteaded owners’ property taxes are capped at 10 percent.
At $72.1 million for fiscal 2023-24, property taxes are by far the single greatest revenue source for the town budget.
The town collects about 18 percent of the property taxes paid in the town. The remainder goes to Palm Beach County, the county schools, and other taxing districts.
North Fire Station
The budget includes a transfer of $10.3 million from the general budget into a separate Capital Improvement Fund. Most of those funds will be used to pay for the reconstruction of the historic North Fire Station.
The century-old, landmarked building at 300 N. County Road was closed last year for rehabilitation. A temporary station was set up next to it until the reconstruction of the permanent station is complete in late 2024.
Virtually all the three-story station has been demolished because of the poor condition of the original building, Public Works Director Paul Brazil said. Only the four exterior walls and elevator shaft remain. Reconstruction will include the entire interior, roof, foundation and pilings.
The original budget for the project was $5.5 million. But the overall cost has mushroomed to $17 million, including the reconstruction and related costs such as utility connections and the purchase of the trailers used to house the temporary station, Brazil said.
Brazil and Blouin both said high inflation in the construction market in South Florida is largely to blame for the higher-than-anticipated cost.
Landmark status protects the exterior of the station from being demolished. But, in the current inflationary environment, Brazil told the council earlier this month that the town would not have saved much if any money had it been able to simply raze the entire building and replace it.
Because of high interest rates in the current lending environment, the town has taken a “pay as you go” approach to financing the reconstruction, Miracle said. The town decided to fund the project over a period of three years.
The council previously approved $3.8 million that Brazil said is included within the $14.9 million construction agreement the council approved this month with the contractor, Hedrick Brothers Construction.
Councilwoman Bobbie Lindsay said historic preservation always costs more per square foot than new construction.
“But I don’t think this council, or the community, would have tolerated tearing down the second oldest continually operated fire station in Florida,” she said.
Lindsay noted that, even though it’s a restoration project, the rebuilt North Fire Station will be able to stand up to hurricane-force winds as well as any new station.
Council President Margaret Zeidman said the station is a civic building that is important to the town. “It’s part of our history and part of our story and, if we lose it, we lose that part of our history.”
Phipps Ocean Park
The council approved an additional $2 million in town funds toward the restoration of Phipps Ocean Park, the town-owned oceanfront park in the South End. The $2 million will be paid in two separate $1 million payments during the 2023-24 and 2024-25 budget years.
At Miracle’s recommendation, the $1 million paid in 2023-24 will be drawn from a debt service fund that is outside of the operating budget.
The Preservation Foundation of Palm Beach, which is spearheading a fundraising campaign to finance the renovation of the park, recently asked the town to shoulder some of the infrastructure costs to help it close a $7 million funding gap.
The preservation foundation said it has raised $23 million but needs $30 million. It cut about $12 million from the design after a construction estimate in February pegged the project at $42 million, foundation President Amanda Skier said.
Skier said the preservation foundation is continuing to solicit donations for the project and was not asking the town for the entire $7 million.
The council previously committed to maintain and staff the park once the project is completed. That is estimated to cost $660,000 annually, partially offset by $378,000 in increased parking revenue. The town is also spending $229,000 to remove invasive plants.
Councilwoman Julie Araskog said she could not justify an additional contribution to the project when the town is faced with inflation that is driving up personnel and capital costs.
But other council members said the Phipps Ocean Park re-do is a prime concern for the town. The park has not undergone a redesign or major renovation since the property was donated to the town by the Phipps family in 1948.
“For us in the South End, it is a high priority,” Councilman Lew Crampton said. “We certainly can do it. Doing this will help the preservation foundation attract other major donors.”
Councilwoman Bobbie Lindsay said the new Phipps Ocean Park, with its sweeping ocean view, native plantings and educational features, will be a “game changer” for the town.
“This is the largest gift to the town I’ve ever seen for a park in my lifetime,” Lindsay said.
She predicted that the new Phipps Ocean Park will lure many beachgoers away from Midtown Beach, which will help alleviate traffic and parking congestion in that area.
Final approval of the new budget and property tax rate is scheduled for two public hearings at 5:01 p.m. on Sept. 12 and 5:01 p.m. on Sept. 21 in the public meeting chambers at Town Hall.
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