Weekly comments from Dale Martin – The proposed city budget

Dale Martin
City Manager
Fernandina Beach
July 23, 2021

Honorable City Commissioners, Residents, and Staff of the City of Fernandina Beach:

Please find following this memorandum the City’s proposed 2022 budget. The proposed budget is presented in accordance with the provisions of the City of Fernandina Beach City Charter:

Sec. 71. – Annual estimate of expenditures and revenues for forthcoming year; submission to city commission by city manager. The City Manager shall set forth an estimate of the expenditures and revenues of the city for the upcoming fiscal year. The estimate of expenditures and revenues shall be submitted in compliance with the procedures set forth in the laws of Florida. The estimates and budget so given and constituting the recommendation of the City Manager as to the amounts necessary to be appropriated for the ensuing fiscal year shall be supported with information giving the reasons therefore in such detail as may be necessary to afford the City Commission a comprehensive understanding of the needs and requirements of the various departments and divisions of the city government for the ensuing fiscal year.

The proposed budget reflects total revenues and expenditures in the amount of $168,054,440. Approximately one-third of that amount, however, is related to cash, revenues, and expenditures associated with the Trust and Agency Funds. With those funds excluded, proposed revenues and expenditures total $109,691,444. In both instances, the revenues and expenditures reflect an approximately 4.5% increase in relation to the 2021 budget.

The portion of the proposed budget that typically draws the most interest is the General Fund, which is the primary operating fund for the City, and principally financed by property tax receipts. The proposed General Fund expenditures total $23,673,910. The proposed General Fund budget is supported primarily by a proposed operating millage rate of 5.4683 mills, the same millage rate as levied for the current year. The proposed millage rate exceeds what is commonly referred to the “rollback rate” by seven percent and will be appropriately noticed as a tax increase under the provisions of state statutes.

When combined with the elimination of the City’s voter approved debt service millage (the debt incurred by the City to acquire the original Egans Creek Greenway properties has been paid), however, properties within the city limits that qualify for homestead exemptions will likely see a decrease in property taxes due to the City. Under the provisions of the State of Florida Save Our Homes constitutional amendment, the increase of the Assessed Value of homesteaded properties is limited to three percent of the rate of inflation, whichever is less. This year’s maximum increase of Assessed Value for homesteaded properties was the rate of inflation, 1.4%. Non-homesteaded properties will likely see an increase of approximately $25 per $100,000 of Taxable Value (the aggregate increase in City property values was approximately 7.3%).

For the first time, the City’s total Taxable Value has exceed $3,000,000,000 (up 9.63% over last year), nearly double the Taxable Value calculated at the nadir of the Great Recession: 2013/2014, $1,535,000,000. Based upon the City’s Taxable Value, the proposed property tax levy, at a collection rate of 96%, will generate approximately $15,800,608 (an increase of 6.60%).

For the fifth consecutive year, the City’s continued growth will forego the need to increase fees for water and wastewater services (as stipulated in related bond covenants). The anticipated revenues for those utility services are expected to continue to increase due to the growing number of users and associated usage.

The City’s Five-Year Capital Improvement Plan details significant proposed expenditures for planning purposes. Capital expenditures, funded through property taxes, utility fees, impact fees, loans, and grants (including, this year, federal American Rescue Plan funds), are approximately $21,000,000 across a variety of Funds such as the Airport Fund and the aforementioned American Rescue Plan Fund (each over $4,000,000); Capital Improvement and Expansion Funds (combined, $5,400,000); Utility Funds (combined, $4,600,000); Marina Fund ($1,225,000); the General Fund ($663,000); and other Funds with lesser expenditures. Significant projects in the proposed budget include a new Fire Station (located on Airport property); downtown waterfront resiliency and stormwater improvements; Peck Center improvements (brick and mortar, roof repairs, and window replacement); street and sidewalk improvements; Police Station improvements (roof, plumbing); hardware and software upgrades; and several vehicles.

Proposed staffing changes in the General Fund are substantial, but more due to re-organization efforts than personnel allocations. In the General Fund, only one full-time employee is proposed (Facilities Department), but due to a similarity and overlapping of responsibilities, most of the staff of the Streets Department will be incorporated into other “public works” associated departments such as Water, Wastewater, Stormwater, and Sanitation (with most transitioning from the General Fund to other Funds). One Director position will be eliminated. The preponderance of additional employees are due to the return of the City Golf Course to internal management (for at least one fiscal year) and for service needs within various utility departments.

In accordance with the City’s reserve policy, approximately $4,734,782, roughly 20% of General Fund expenditures, is budgeted for reserves. An additional $200,000 is budgeted for other contingencies.

Several key projects, some of which have been envisioned for years (if not decades) are on the cusp of realization due to the leadership of the City Commission and support of the community: Amelia River waterfront improvements (resiliency to protect downtown infrastructure from storm surges, high tides, and projected sea-level rise) and the re-opening of the Alachua Street railroad crossing at N. Front Street. Other goals as annually established by the City Commission will continue to be at the forefront of City staff efforts. It is also likely that the City’s long-running efforts to secure reimbursement from the Federal Emergency Management Agency (FEMA) for the Marina reconstruction will conclude.

This proposed budget was developed with the exceptional leadership and assistance of City Comptroller Ms. Pauline Testagrose. I also wish to express my appreciation to the Department Directors for their assistance and support throughout the past year as not only the City, but also the entire country and world, struggled through an incredible pandemic. While nearly everyone has been personally affected by the pandemic to some degree, City government (Commissioners and staff) made remarkable efforts to ensure that City support and services continued for residents, businesses, and valued non-profit agencies.

I have now served the City of Fernandina Beach for nearly six years and I look forward to continuing to serve the residents. I remain honored and privileged that I have had this opportunity in such an exceptional community. Thank you for your support.