With Tax Revenue Down, Cities Face Budget Woes

The three largest cities in south Palm Beach County raked in millions of dollars from property owners as the housing market boomed, using much of that money to pay for the needs of a growing population.

That meant more police and firefighters, better parks and libraries, additional people to review and approve building plans.

Now the state has put caps on how much local government can cash in on soaring property values because Florida protections for homeowners have shifted the bulk of that property tax growth to those who own businesses and second homes.

With Florida mortgage applications in decline, cities are left groping for new ways to do the more they have become accustomed to with the less of a couple of years ago.

The people running those towns have yet to pinpoint where the cuts will come from, but they say the choices will be tough.

“There will have to be some reduction in things people have come to expect,” Delray Beach City Manager David Harden said.

All three are in the top tiers of cutbacks, meaning more trims than just the state’s rollback to 2005-06 budget levels.

In Delray Beach, income from property taxes grew $26 million - four additional dollars for every $5 raised in 2003 - leaving it in the highest tier, so officials now have to cut an additional 9 percent unless they are willing to override state lawmakers’ guidelines.

Boynton Beach increased taxes to property owners by $18 million, which was an additional $3 for every $5 raised in 2002-03, and faces another 7 percent cut.

In the 7 percent tier is the Boca Raton mortgage market, after property tax revenues grew $23 million between 2003 and the current fiscal year, 2007.

While the housing market ran rampant in the south county area, the numbers of people the cities serve increased some, too: Boca Raton grew by 10,000 people; Boynton Beach, by 4,775; and Delray Beach, by 2,568.

In Delray Beach, officials have to decide what to do with a dozen new employees running the new pool and parks built with the property tax windfall.

In Boca Raton, Spanish River library hasn’t even opened before city officials have to scramble for the money to run it.

In Boynton Beach, the decline in Florida mortgages - and subsequent sales and revenues - is so severe that the city may need to cut back may stall plans to relocate and expand the police headquarters.

Building and planning departments swelled in all three cities:

The departments added more than half their cost in Boynton as the U.S. 1 corridor saw condo buildings sprout around the marina and beyond.

The planning department doubled its costs in Delray to take on commercial real estate and residential high-rise projects near Atlantic Avenue.

And planning and building budgets went up more than 50 percent and nine people in Boca Raton, where commercial development continues to surge in spite of the South Florida real estate market slump.

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