By Rich Pollack
Having to spend about $250,000 less than they expected on employee health insurance, Highland Beach commissioners will plow that money back into reserves rather than minimally reduce a tax rate that is already among the lowest in Palm Beach County.
In a rare split decision on Aug. 24, commissioners followed the recommendation of staff and voted 3-2 to use the money to partially replenish the town’s fund balance, which continues to be diminished as Highland Beach prepares to start a new fire department and builds a new fire station.
Commissioner Judith Goldberg and Vice Mayor David Stern voted to put $150,000 into reserves and use the remaining $100,000 to lower the proposed tax rate of $3.58 per $1,000 of taxable property value. But Mayor Natasha Moore and Commissioners Evalyn David and Donald Peters voted to put all $250,000 back into reserves.
That proposed tax rate is the same as the current year’s tax rate, even with anticipated increased fire-rescue costs.
“If the economy drops, I don’t want to have to start asking for a tax increase when money is tight,” David said.
During his budget presentation to commissioners, town Finance Director David DiLena offered three choices on how the unexpected savings on health insurance could be used.
Had commissioners chosen to use all of the $250,000 to lower the tax rate, residents would have seen a reduction of about $74 for every $1 million in taxable value. Had they decided to put $100,000 into lowering the tax rate, residents would have saved about $30 for every $1 million of taxable value.
“It’s just a small number,” said Moore, who like David and Peters saw the benefit of rebuilding reserves.
Goldberg, who along with Stern are in seats that will be up for reelection in March, said that she believes the town’s current reserves of more than $6.2 million are sufficient.
“We have significant savings,” she said.
DiLena said that the town plans to earmark the $250,000 for a “fire truck replacement fund” that will be built over time to help cover the future costs of replacing fire apparatus.
Should that money be needed for something other than fire truck replacement in the future, commissioners have the option to use it elsewhere.
In his original budget, DiLena had planned for a significant increase in health insurance costs for the town’s 44 covered employees.
Following a switch of companies to Florida Blue, however, the town’s anticipated costs dropped by just under $10,500 from $781,238 to $770,796, or by 1.3%.
The new plan, according to Human Resources and Risk Management Director Eric Marmer, is a better plan at a lower cost.
“Florida Blue was extremely aggressive,” Town Manager Marshall Labadie said. “They really want our business.”
Overall, the town is seeing a more than 45% increase in its overall budget, due in large part to the creation of the new fire department and the building of the new fire station.
The proposed budget shows a very slight decrease in the operating tax rate and in general debt service but includes a separate, slight increase in the debt service tax rate to cover a bank loan being used to build the fire station.
While the proposed budget reflects a decrease in the overall tax rate, it is likely to be offset by a significant increase in property values.
Property values throughout the town increased by about 13% — more than town leaders had expected — making it easier to increase services without boosting the tax rate.
Property taxes, which are expected to increase by about $1.4 million, account for about 58% of the town’s overall projected general fund revenues.
The town also expects to see a significant increase in investment earnings, which are projected to grow by a little more than $50,000.