Bock offers recommendations as county money dries up

By John Johnston
Managing Editor

It was fun while it lasted – that is, it was fun while Palm Beach County governmental revenue (and in some cases dramatically) exceeded expenses.

However, Clerk and Comptroller Sharon Bock told commissioners this week that expenses are now four times higher than revenue.  That was followed by three specific recommendations:

• Development of a policy governing the who, what, when, how and why for county use of excess revenue – so-called “reserves.”

• Some citizen oversight of the entire process -- as 27 percent of the county’s debt service is due over the next three years, and 70 percent due over the next 10 years.

• A reduction in bricks and mortar spending to a level able to be sustained by revenue realities.

Chief Financial Officer Carter Hammer reported $277 million in excess revenue for 2007.  However, beneath that lies the following, Hammer said:

The $277 million is actually a 27 percent decline versus 2006, and actually primarily reflects bricks and mortar assets, not cash in the bank. Those same assets have long-term operational and repair costs, adding to the need for revenue maintenance, said Hammer.

Expenses are growing faster than income, Hammer said, and more importantly, some $93 million from cash reserves was needed in 2007 to meet current liabilities – and which wasn’t replenished.

And while the county does have $3.8 billion in net assets, more than 60 percent of that is in capital assets – all of which have future expense implications, Hammer said.

County Investments Manager Felicia Landerman reported a $1.7 billion return on investments, but – and because the county’s portfolio fund was used to create bricks and mortar assets -- the total portfolio balance declined for the first time in 10 years.

Landerman also reported that the county exceeded its benchmark rate of return for 2007.

Commissioners in general praised Bock and her team for, in the words of Commissioners Burt Aaronson, “a good job” in trying financial times. Commissioner Mary McCarty had special praise for Investments Manager Landerman, saying she has done “a fanastic job.”

And while it was unclear how a reserves policy would be developed -- and who would develop it -- no one opposed the idea, and Bock herself suggested it should be developed through a “staff endeavor.”

Bock’s remarks preceded some sharp, and partisan criticism from commissioner Democrats, accusing the Republican led State Legislature of ignoring local needs.

"The citizens of Palm Beach County didn't have a good session," said Commissioner Aaronson. Both he and Commissioner Jeff Koons were critical of health care, judicial and education cuts that will primarily now have to be born “on our backs,” Aaronson said.

As one example in support of the criticism, Palm Beach County will see funding cuts of $117 per student in the next fiscal year.

.