Palm Beach County to set 2018 property tax rates

The prospect of a voter-approved change in the state homestead exemption program — still years away — has led Palm Beach County officials to shy away from reducing property tax rates despite a rise in values that puts more money in county coffers.

County commissioners are poised to set property tax rates Tuesday when they meet to discuss the  2018 budget.

County staff members have recommended that the property tax rate remains unchanged for the seventh year in a row, a recommendation commissioners in previous meetings have indicated they plan to embrace.

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“I’d love to see it reduced,” Commissioner Dave Kerner said. “I don’t think there’s much appetite to raise it. I think there’s probably a consensus to keep it the same.”

While property tax rates would remain the same, taxpayers — particularly those who own second homes and businesses not eligible for the homestead exemption — would pay more. That’s because property values continue to rise, giving the county the ability to use additional revenue without taking the politically unpopular step of raising tax rates.

Left unchanged, the county’s property tax rate of $4.78 for every $1,000 in taxable value would generate $845.6 million in property tax revenue — about $56 million more than was generated in 2017. That rate doesn’t include county debt or taxes levied by such entities as the library system, fire-rescue or cities.

Rising property values have given the county a bit more cushion as its budget is crafted.

The Property Appraiser’s Office has reported that values throughout the county rose by 7.3 percent from 2016 to 2017.

While that increase doesn’t mean every homeowner would get more if they listed their home — market forces determine a home’s worth when it’s put up for sale — it does mean many taxpayers will be paying a bit more in property taxes.

Excluding debt and taxes from other entities, the owner of a home valued at $200,000 in 2016 would pay $20.08 more if commissioners decide to keep the property tax rate flat.

For tax purposes, state Save Our Homes legislation caps the increase in value at the Consumer Price Index, which in 2017 is 2.1 percent. That increase takes the value of the home from $200,000 to $204,200 and the tax bill from $717.23 to $737.31 for homeowners also taking advantage of the homestead exemption, which decreases the value of a home before tax rates are applied.

Against the wishes of city and county officials throughout the state, lawmakers in Tallahassee passed legislation allowing voters to determine whether they want a larger homestead exemption.

If voters back a bigger homestead exemption when they go to the polls in November 2018, it would go into effect in January 2019.

Some estimates say the bigger exemption would cost Palm Beach County about $30 million in lost property tax revenue. While that scenario won’t play out for a couple of years, if it plays out at all, commissioners are already taking it into consideration, underscoring their belief that voters won’t turn down an opportunity to reduce their property tax bills.

“Going into next year, with the homestead exemption going up, we have to take a holistic approach,” Commissioner Mack Bernard said. “We need to make sure actions that we take now don’t hurt us in the future.”

Businesses and second-home owners whose property isn’t eligible for the homestead exemption would see their tax bill rise if Bernard and his colleagues keep tax rates flat.

Such a prospect has not produced a broad outcry from business owners, said Kelly Smallridge, president and chief executive officer of the Palm Beach County Business Development Board.

Smallridge said tax rates in Palm Beach County are still favorable when compared with those in the Northeast, where she and her colleagues work to persuade business owners to move here.

She said those comparatively lower rates, combined with the recent approval of a sales tax increase whose proceeds will be used to repair county roads, bridges and buildings, make her pitch an easier one to deliver.

“There is a cost to live in paradise, and this is truly paradise,” Smallridge said. “There aren’t many places that compare with the quality of life that’s available here in Palm Beach County.”

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