August 8, 2009

REPORT FROM THE RECESSION: So I’ve been at a conference in Lantana, Florida, in Palm Beach County and just about a half hour down the road from Palm Beach proper. Even in tony downtown Palm Beach you see a lot of shuttered shops — and sales in the ones that are around. Restaurants are offering discount menus and specials. And there are speed traps everywhere, to the unhappiness of many locals. That’s because Palm Beach County is nearly broke:

Palm Beach County’s property tax revenue has more than doubled in the past decade.

But despite the windfall, the county faces its tightest budget year in ages. It’s proposing double-digit tax rate increases and preparing to lay off employees, slash bus service and leave some beaches without lifeguards. . . . So where did all the money from the boom years go? Much was spent in just two places: hefty debt payments and a burgeoning sheriff’s budget. Over the last eight years, the county’s yearly debt payments have ballooned by more than 75 percent, to $173.6 million. Like many homeowners, the county borrowed big-time during the boom. As the bills come due, the county’s purse strings are pulled tighter.

And the revenue-enhancing traffic policing takes on a new priority. If I were a municipal-bond rating agency, I think I’d try to devise a metric for that; it’s probably an early indicator of financial stress.

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