Delray Beach weighs municipal service taxing units and other fee options if state referendum limits taxing authority

Delray Beach commissioners spent substantial time on June 9 reviewing municipal service taxing units (MSTUs) and alternative fee strategies in response to possible state changes that could limit local taxing authority.

City staff explained the statutory and procedural steps to form an MSTU in Palm Beach County: adopt a municipal ordinance that defines purpose and boundaries, conduct financial analysis showing revenues to cover capital and ongoing costs, present to the Palm Beach County Board (which must adopt a corresponding county ordinance/resolution), enter an interlocal agreement with the county, adopt a specific millage rate and budget resolution to fund the MSTU, and notify the property appraiser and tax collector to apply the tax. Staff said establishing an MSTU typically needs to begin about nine months before the affected fiscal year.

Commissioners debated merits and limits. Supporters said MSTUs or dedicated fees (for parks, public safety or street lighting) could give taxpayers clearer transparency about what they pay and protect funding for specific services. One commissioner cited Fort Lauderdale as an example of a municipality that already lists several taxing units on its tax bill.

Opponents cautioned that MSTUs can be an additional tax rather than a re‑labeling of existing taxes, that statutory rules may restrict eligible uses (some commissioners noted parks and special events may not qualify), and that establishing MSTUs imposes administrative requirements (advisory boards, reporting, caps) and may reduce commission control over some budget areas. Several commissioners emphasized the legal limits on what the city may say about ballot questions but supported non‑advocacy educational outreach to explain consequences to voters.

City Manager Terrence Moore and CFO Henry Dawitis said staff will continue educational outreach and prepare cost‑accounting work so the city can evaluate MSTUs, pay‑in‑lieu strategies, fee options and shared‑service alternatives if state action constrains existing revenue sources. Staff recommended public education and a measured preparatory timeline rather than immediate implementation.

The commission did not take a binding vote to form any taxing unit at the June 9 workshop; rather, the meeting produced direction to return more detailed cost accounting and outreach plans in advance of the July 14 budget considerations.