TAX NEWS - June 2010

Palm Beach County's proposed fire-rescue sales tax increase dead for this year

WEST PALM BEACH — The plan to increase Palm Beach County's sales tax by 1 percent to help pay for fire-rescue service came to an abrupt halt Wednesday, after county administrators concluded there were too many unanswered questions about the new state law making the increase possible.

Changes may be needed to clear up lingering questions about the law, including how revenue from the tax would be divided among the county and cities with their own fire departments, County Administrator Bob Weisman said in an e-mail message to commissioners.

So he yanked the issue from next week's commission agenda.

"This means that it will not be possible to implement the fire rescue surtax prior to 2012, and only after further consider by the state legislature," Weisman wrote in the message.

The announcement came a day after county commissioners voted 4-3 in favor of asking voters in November to increase the sales tax by 1 percent to help cover the mounting cost of emergency fire-rescue services. Commissioners Jeff Koons, Steven Abrams, and Priscilla Taylor voted against the measure.

The proposed hike drew widespread opposition from realtors, business leaders and political activists, who said residents are already paying their fair share of taxes. More than 30 people spoke out against the sales tax increase at Tuesday's commission meeting.

"I think they just picked the wrong time," said Mike Jones, President and CEO of the Economic Council of Palm Beach County, which opposed the tax hike. "I think it was a great indication of how concerned the average citizen is. The foremost thing right now on their mind is the economy and their own job. The last think they want is somebody trying to increase their cost and pass it on to them."

A change in state law approved last year at the urging of Palm Beach County firefighters allows counties to ask voters if they want to increase their sales tax by as much as 1 percent to pay for fire-rescue service. Palm Beach County fire officials began drafting the legislation in 2006; they said it would actually provide tax relief to frustrated homeowners.

That's because revenue from the proposed sales tax increase would have been used to lower the special property tax that homeowners in unincorporated areas pay for fire-rescue. Those residents would have seen that part of their county property tax bills fall by as much as half, county fire officials said.

But if the tax passed, the relief would not have come until late 2011, when property tax bills are mailed out. Meanwhile those homeowners would have been paying the extra sales tax since the beginning of the year. Opponents said that meant many homeowners would have been taxed twice for the same service for nine months of the first year that the sales tax was applied.

Municipal leaders also questioned how sales tax revenue would be distributed among the county and the 11 cities and towns with their own fire departments. The only way to answer those questions is by revising the state law, Weisman said.

"The law we passed set a policy, and we found a great deal of unanswered questions," said Palm Beach County Battalion Chief Ron Beesley, who helped draft the law change. "We thought it would be better to go back and get them answered."