WHITE PAPER ON HYPOLUXO AD VALOREM TAXES – 2010

1. Ad Valorem Taxes

· Comparing Ad Valorem taxes between cities is like comparing apples to oranges.

· Each of the 38 municipalities has on the property taxes assessment statement either one tax line item for ad valorem taxes that includes all services or has two line items, i.e. one for ad valorem taxes and another line item for fire/rescue.

· Municipalities with two tax line items have a separate tax for fire/rescue.

· Municipalities with two tax line items must add their ad valorem taxes with their fire/rescue tax line to determine charges to their residents for all municipal services.

· The proposed 3.45 mills for county fire/rescue must be added to the proposed millage rate in those cities having two tax line items.

· Hypoluxo’s one tax line item of 3.15 mills provides for all services including fire/rescue and is less than the 3.45 mills assessed for just fire/rescue services in other municipalities with two tax line items, which results in a substantial savings for our residents.

· Unless one knows whether a city or town has one or two tax line items, comparisons of millage rates between cities or towns cannot be made. Incidentally, the second line item for fire/rescue is listed as either MSTU or fire/rescue on the tax statement.

2. Property Values

· Ten years ago the ad valorem rate for the Town of Hypoluxo was 3.7652 mills, which is greater than the 3.15 mills being proposed for fiscal year 2010.

· As property values increased in the last ten years, the Town’s council was able to lower the millage rate to as low as 2.35 mills. An analogy is that millage rates are adjusted like a scale. As values of property go up the millage rate goes down and as values of properties decrease the millage rate goes up. Therefore, approximately the same amounts of money are collected each year and adjusted for inflation.

· Cities that did not adjust their ad valorem tax rates commensurate with property values collected more money when property values were high. This has resulted in having to cut services and personnel as property values decrease.

· Hypoluxo’s budgets each year provide for the basic services required of a Town.

· Income to the Town from other sources, such as sales tax, communication taxes, permits and fees, are going to be less in fiscal 2010 than previously because of the economy. These losses parallel the downturn in property values.

3. Homestead Exemption

· Approximately 38% of the properties in Hypoluxo are homesteaded.

· Properties that have been homesteaded for a long period of time are going to have an increase in taxes in fiscal year 2010.

· The “Save our Homes” homesteaded program limits increases in taxable valuation to 3% annually.

· Properties without homestead have had no limitations on the increased taxable valuations and therefore were required to pay taxes on whatever the increased property values were each year. This resulted in the non homesteaded properties carrying a bigger share of the ad valorem tax burden than homesteaded properties as property values increased.

· Now that taxable values have decreased the non homesteaded properties will pay less in taxes while the homesteaded properties will still be paying on a 3% annual increase until the taxable value reaches the assessed valuation.

· Lower assessment property values have leveled the playing field for those paying town taxes between properties homesteaded and those that are not.

4. Living

· If one wanted to live in a municipality in Palm Beach County where the sole criterion is the lowest city taxes, there is no community that has a millage lower than 3.00 mills.

· There are only six municipalities out of the 38 in Palm Beach County that are proposing taxes less than 4.00 mills. They are Boca Raton, Gulf Stream, Highland Beach, Jupiter Inlet Colony, Palm Beach and Hypoluxo. Note all of the towns are on the ocean except for Hypoluxo.

· Of the six towns only two are proposing a millage rate lower than Hypoluxo at 3.02 and 3.0437 mills. Hypoluxo is proposing 3.15 mills.

· Most cities and towns are proposing 5 to 8 mills and a couple at 10 mills, which is the maximum permitted by law.

· Hypoluxo’s low millage rates are due to council’s semi-conservative philosophy on financial matters. Hypoluxo’s Council deserves the credit for keeping the millage rate at the lowest levels.

Prepared by Kenneth Schultz

August 2009