HOLMES BEACH – The first budget meeting of the year was a July 7 work session that left commissioners considering hard decisions for the coming fiscal year.
City Treasurer Lori Hill presented a draft of the proposed 2020-21 fiscal year budget that she said could have as much as a 35% reduction in revenue and showed a 1.5% cut in spending from the previous year’s approved budget. With the cut in revenue, to meet expenses and still have enough left in the bank for a recommended 25% of annual expenses operating fund, Hill said the city would need an extra $822,746 to put in reserves. And while the city’s budget was drafted at the previous year’s 2.25 millage rate, the rate charged per $1,000 of assessed property value, Hill said that rate would need to be increased to 2.62 mills to fully fund the deficit.
Commissioners will have to set the maximum millage rate during their July 21 regular meeting. Setting the maximum millage rate doesn’t mean that will be the rate charged to residents, but it will be the highest rate commissioners will be able to charge for the coming fiscal year which begins Oct. 1.
With property values in Holmes Beach increasing, setting the millage rate at 2.25 mills means a tax increase for city property owners. At 2.25 mills, Hill’s draft budget shows a $192,378 increase in ad valorem tax, the amount received from property taxes. If commissioners increase the millage rate to 2.62 mills, it would mean an increase over the increase caused by rising property values of $185 for a home with a $500,000 taxable value, $240 for a home with a taxable value of $650,000 and $316 for a home with a taxable value of $850,000. The increase in taxes is on top of an already approved stormwater assessment increase which Hill estimates will raise those fees an average of $150 over the previous year.
Commissioners Jim Kihm and Kim Rash both said they would be willing to forgo their entire salaries as commissioners to help close the gap in the deficit to not put the burden solely on the city’s residents and property owners. Rash is currently up for re-election on Nov. 3 so he would only be able to follow through on his promise if re-elected. Commissioners are given a stipend of $760 per month for their service to the city. The mayor’s stipend is planned at $2,520 per month for the coming year. Both amounts include cost of living increases.
Kihm said that he feels this will be a “need” year for the city, not a “nice to have” year and encouraged all department heads to take another look at the budget to see what expenses can wait. He suggested considering starting the cuts with the $12,000 budgeted for new computers for the mayor and commissioners as well as holding off on the estimated $33,625 purchase of new agenda management and webcasting software and reconsidering planned new hires.
With a revenue shortfall, he said that spending must be readdressed, that the city can’t afford to spend in a deficit, depleting reserves, and that he’s not in favor of raising taxes.
With residents already anticipating a tax increase, Rash said he’s not in favor of raising taxes further.
Hill said that hopefully within the coming weeks she’ll have a better idea of the amount of revenue to expect from state sources and some clarity on the future of the $51 million in Bert Harris cases facing the city in Manatee County Circuit Court. Currently, in addition to an insurance policy with the Florida League of Cities, the city plans to have $1 million set aside for the cases in reserves by the Sept. 30 end of the current fiscal year that could be added back to the general fund reserve if the cases are settled in the city’s favor. She said the amount of money tied to the cases has also led to a substantial increase in the amount of insurance premiums the city pays.
For the mayor/commission portion of the budget, expenses are expected to come in at $220,337 including the $12,000 for computers, $8,500 for travel and $81,642 for commission and mayoral salaries and associated taxes.
The city’s general government budget, including lobbyists, the clerk and treasurer’s offices, contributions to The Center of Anna Maria Island and other community organizations, professional services, utilities and operating supplies, is estimated to come in at $1,777,634, a decrease of $19,217 over the previous year despite increases in insurance, staff salaries and computer/IT services.
The budget for the Holmes Beach Police Department is anticipated to come in at $3,575,242, just over the previous year’s budget of $3,410,457. The planned expenses include increases in insurance and utility services, as well as an increase of $51,189 in IT services, including a required upgrade to the department’s software at $35,200 to be compliant with Florida Department of Law Enforcement standards. Police Chief Bill Tokajer said he’s applied for a grant to cover the cost of the software upgrade and hopes to receive news that those funds will be awarded soon. Also budgeted is $18,000 for the purchase of a new side-by-side vehicle for beach patrol to replace an aging vehicle that Tokajer said costs more to maintain than it would to purchase a new one. He said he hopes to receive grant funds of $6,000 to help with the purchase. An additional $25,000 is also budgeted to purchase hardware to outsource parking tickets.
The budget for the public works department tops out at $1,824,852, just under the previous year’s budget of $1,830,361 despite increases in insurance, salaries and overtime to accommodate 11 full-time employees and materials/supplies. Two of the budgeted increases questioned by Kihm include $175,000 to dredge Sportsman Harbor and $25,000 to reseal the parking lot at city hall. He also questioned spending $38,000 to update the city’s T-end boat docks with electricity.
Director of Development Services Eran Wasserman said that he would take another look at the parking lot but that issues there will need to be addressed sooner rather than later.
City Engineer Lynn Burnett said that she was applying for grant funds for the dredging project at Sportsman Harbor but that if commissioners took it off the budget, the project wouldn’t be eligible for the grant funds. In order for the project to be eligible for the grant from the Southwest Florida Water Management District, she said the city has to prove that the project is necessary and important. If the grant funds are not received, she said the expense can be postponed to the following fiscal year.
The building department’s budget is expected to come in close to the previous year at $862,363 with the primary difference being in the amount of revenue the department generates. Due to changes in the department’s permit fee schedule, the city’s building department is expected to generate $324,903 less in permit fees than in the 2019-20 fiscal year. Hill said that the department would need about $150,000 more than anticipated revenue for the department to meet its spending for the 2020-21 fiscal year, funds that she said were received in excess by the department during the current fiscal year and have been set aside for the purpose of making up lost revenue in the coming year.
The Code Compliance department had the biggest jump in anticipated spending with an increase to $566,471, an increase of $90,007 over the 2019-20 approved budget. Helping to make up that increase is $75,000 for court recorders for special magistrate hearings, a $13,400 increase in insurance and $25,000 for a consultant to evaluate how the department is run and suggest new policies, procedures and best practices designed to make code compliance more efficient, lessen response time and ultimately save the city money, according to Wasserman.
Where city leaders expect to be hit hardest is in stormwater and infrastructure funds and improvements.
Hill is expecting funds for the half-cent discretionary tax and fifth cent gas tax to come in at around 65% of the normal amount due to COVID-19. Despite the increase in stormwater fees, she said the fifth cent and half-cent will both have a negative projected cash rollover at the end of the 2020-21 fiscal year. Hill estimates that the fifth cent tax will have -$138,906 rollover at the end of the current fiscal year and -$328,323 at the end of the 2020-21 fiscal year. The half-cent tax is expected to have -$88,176 at the end of the 2020-21 fiscal year. Burnett said that the city cannot go back on planned infrastructure projects, many of which are ongoing, and that the deficits in spending will have to be covered by the city until FEMA matching funds are received or the revenue from the two tax sources is increased. City leaders also plan to renew their request for $3 million in state appropriations funds for stormwater and infrastructure improvements in the coming legislative session. This year, city leaders were awarded $2 million in appropriations funds but those funds disappeared when Gov. Ron DeSantis cut the state budget before signing it in June.
After the maximum millage rate is set on July 21, commissioners plan to have public hearings on the budget in August and September to set the actual millage rate and approve the final draft of the budget before the new fiscal year begins Oct. 1.
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