By Patrick Sherry
Residents of Delray Beach could see the city’s tax rate rise for a second straight year — following a dozen years of dropping tax rates that culminated with a “no new taxes” budget in 2024.
Officials attributed the proposed increase to rising operating costs and the years of reduced rates.
Commissioners voted 4-1 at their meeting on July 21 for a tentative operating tax rate of $6.4371 for every $1,000 of taxable value, a 4.5% increase from the previous year, to support a proposed $219.8 million general fund budget.
City property owners will also pay taxes to cover debt from bond issues previously approved by voters, for a tentative total city tax rate of $6.446 per $1,000 of taxable value, up 4.1% from the current rate.
The owner of a home valued at $451,411, who receives a homestead exemption, would pay about $2,578 in city taxes, an increase of about $175.
Except for 2024, when the commission approved that year’s rollback rate that meant no new taxes except for those from new construction, the commission’s decision to slight tax rate reductions in other years still led to tax increases for most residents because of rising property values. City officials said government operational costs and inflation continued to rise, so they needed to bring in additional revenue.
“As our taxable values kept increasing, we lowered the millage rate to offset some of that increase, so that the actual taxes paid by the citizens were less than just the increase in the real estate values,” Chief Financial Officer Henry Dachowitz said at the budget workshop. “Now we’re working to try to catch up from where we have been.”
The proposed budget shows salaries and benefits increasing by 8.8%, to a total of $131.4 million, including $1.9 million for employee cost-of-living raises. The city will be increasing firefighter pension contributions by $589,000 and police pension contributions by $724,000. Operating expenditures will also be growing, with public works street maintenance increasing by $500,000 and fleet fuel and lube costs by $370,000. To balance the budget, staff proposed drawing from the city’s reserves.
The proposed budget was also put together with an eye to November and the possibility voters in the state will approve Amendment 3, which will slash property taxes for homesteaded properties, leading to reduced tax revenues for municipalities, counties and other taxing agencies.
“We are trying to balance not just for this year, but also looking forward. … It’s also positioning us well in case the referendum passes,” Dachowitz said at the workshop.
The city could lose about $7.4 million in tax revenue in 2027 if the amendment passes and nearly $12.8 million in 2028. To mitigate revenue loss, additional fees to residents — including fire and EMS fees — may be implemented in the future. City staff will be conducting studies and fiscal impact analysis exercises to see where they could recoup some of the lost revenue if Amendment 3 is approved.
“The only legal avenue above and beyond increasing the millage rate to the extent that [municipalities] possibly can, would be to consider fee-based revenue streams, and it is straight regressive,” City Manager Terrence Moore said at the workshop. “That’s a bit of a downside. Nevertheless, municipalities don’t have any other choice if there’s an interest in maintaining the level of service and covering operational expenses.”
Commissioners may lower the maximum property tax rate before a final rate is approved during public hearings scheduled for Sept. 8 and 22.
Larry Barszewski contributed to this story.
Comments