West Palm Beach has solved its budget problem for a year, but the city hasn’t solved its budget problem for the next 30 years: police and fire pensions.
Tonight, the city commission will approve the 2013-14 budget that once had a gap of $8.5 million, then had a gap of $2.5 million and now will balance, mostly because Mayor Jeri Muoio raided the reserves. That was common practice for cities during the recession, but property values finally are rising again.
As the finance director noted, though, West Palm Beach has put off the day of financial reckoning. Without any structural changes, the 2014-15 budget gap will be roughly $5 million when the fiscal year begins next Tuesday. The main cause of that gap will be expiration of a concession from the police union on pensions.
The police and fire budgets in West Palm Beach are $88 million in next year’s budget, or $22 million more than the city collects in property taxes. The property tax rate will be $8.34 per $1,000 of assessed value. The legal limit is $10. Unless West Palm Beach intends to cut the number of officers or firefighters, or consider outsourcing those services, the only option will be to reduce pension costs.
To that end, on Aug. 30 an actuary provided West Palm Beach with 10 options regarding police pensions. They include eliminating overtime from benefit calculations, extending from three years to five years the pre-retirement period for calculating benefits, cutting the “multiplier” for each year of service, limiting maximum annual benefits and combinations of those options. Some of those combinations would save the city nearly $40 million over 30 years.
The numbers don’t lie. For West Palm Beach, the next budgets can’t be like this budget.
for The Post Editorial Board