NEW BUDGET MEANS MOST CITY TAXPAYERS WILL SEE NO INCREASE IN THEIR TAX BILL.
A SIMPLE LESSON IN TAX RATES 101
September 12, 2012
West Palm Beach – The West Palm Beach City Commission voted last night to approve the tentative budget for the next fiscal year.
The budget holds down spending, ensures city services remain at current levels, and perhaps most importantly, does not increase costs to taxpayers. This is because the City will only collect about the same amount of money it collected last year.
While the budget does increase the tax rate, it does not increase taxpayer costs. This is because property values have decreased across the City.
Also as part of the budget, City Commissioners voted to reduce their own compensation by more than 10% as compared to last year as part of the effort to reduce spending.
City leaders intentionally wanted to avoid increasing the costs to residents, so they adopted what is called the “roll back” tax rate in the new budget.
Here’s how the “roll back” rate works:
If, for example your home was worth $100,000 last year,
and your tax rate was 1%, you paid a total of $1,000 in taxes.
Today, due to dropping property values, your
home is worth $97,000. Even though the tax rate went
up to 1.031%, you still only pay a total of $1,000 in taxes.
In the example, even though the tax rate increased from
1% to 1.031%, because the value of your home dropped the
amount you pay stays the same.
This is exactly what the City Commission wanted to accomplish. They wanted to adopt a budget that did not cost taxpayers more this year than it did last year. On average, property values dropped about 3% since last year. The tax rate that was adopted in the new budget is the “roll back” number that would keep the amount a resident pays the same as last year.
The only exception to this is if the value of your home increased since last year, but the reality is that almost all property values dropped over the last year.
The budget still needs a second hearing and vote before it is finally approved.