City Manager’s Commentary on Proposed Budget

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

 Please find following this memorandum the proposed Fiscal Year (FY) 2023 budget for the Citof Fernandina Beach.

The proposed budget reflects total revenues and expenditures in the amount of $195,278,427.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 $124,580,762, which represents an approximate 12.5% increase relative to the FY 2022 adopted budget. The higher expenditures are primarily the result of national, state, and regional economic factors: the increased costs of labor, equipment, and materials following the Covid pandemic.

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 $25,910,546, approximately a 10% increase over FY 2022. The proposed General Fund budget is supported primarily by the same operating millage rate of the current year: 5.3330 mills. The millage rate, although unchanged, is defined by state statutes, as a tax increase, due to the amount of additional revenue generated by rising property values. While the cost of living (+7.0%) and market values of properties (+14.0%) continue to significantly rise, the provisions of the State of Florida’s constitutional Save Our Homes limit the increase of “homesteaded” (principal residence) properties’ assessed value to only 3.0%.

The proposed property tax levy, at a collection rate of 96%, will generate approximately$17,570,498. Most homesteaded properties will see a small increase in the City tax burden due to the proposed millage rate. The owners of a “homesteaded” property limited to the 3.0% increase will pay approximately an additional $16.00 per $103,000 of Taxable Value. For a homestead property with an Assessed Value of $300,000, the increase is approximately $50 for the 2022 tax year. Non-homesteaded properties will pay an additional $37.00 per $107,000 of Assessed Value.

The Capital Improvement Project Committee prepared a detailed Capital Improvement budgetfor FY 2023. Capital expenditures, funded through property taxes, utility fees, impact fees, loans, federal and state allocations, and grants, are approximately $6.9 million. Proposed capital projects include improvements to City streets and sidewalks; to recreational facilities such as theAtlantic and Martin Luther King, Jr. Recreation Centers, the Peck Center, Central Park, and areabeaches; for public safety facilities and operations; for enhanced information technology; and for other City facilities such as City Hall, the library, and the lighthouse. Funding has also been allocated for downtown improvements: railroad safety, utility relocation, sidewalks, and streetscape.

The federal American Rescue Plan Act (ARPA) funds provided to the City (approximately $6.5million), are slated to be used for additional Amelia River waterfront improvements, utility improvements, roads, and City facilities. In accordance with federal regulations, the ARPA funds must be expended by December 2024.

Staffing changes in the General Fund include three additional firefighters and one additional information technology specialist. With the anticipated transition of cemetery maintenance to a private contractor, two cemetery maintenance positions will be eliminated. Other General Fund staffing changes (non-financial) are related to the re-organization of several departments, including the City Manager, Code Enforcement, Planning and Conservation, and Parks and Recreation.

In accordance with the City’s reserve policy, approximately $5,100,000, roughly 20.0% of General Fund expenditures, is budgeted for reserves. The restricted reserves of the Building Department, separated from the General Fund, sit at $1.64 million.

For the first time in six years, the City’s water and wastewater fees will increase modestly. As with the other City departments, labor, equipment, and material costs have increased markedly over the past year. City staff is aware of impending federal and state regulations associated with water and wastewater services and must develop appropriate plans for adapting to the new regulations, all of which will require additional investment in the City’s water and wastewater systems.

The budget is a lengthy and complex document and requires the support and assistance of notonly Ms. Testagrose (City Comptroller) and her staff, but also every City Department Director.Their leadership, experience, and dedication have placed the City in a strong organizational, operational, and financial position. Of similar significant importance to the Directors are the frequently unheralded City junior staff: the women and men who serve as public safety officers, maintenance workers, code enforcement officers, information technology specialists, and general government administrators. This community is served well by proud and dedicated employees.

I have now served this community for almost seven years. The City has recently accomplished several projects that have required patience and perseverance. The City was finally reimbursed over $7,000,000 for repairs from Hurricane Matthew. Long-desired enhancements to the Amelia River waterfront have started, with the first element, a riverwalk and seawall, completed this year. It has been the goal of many City Commissions to re-open the Alachua Street crossing and that project, too, is tantalizing close to beginning and will spur additional economic redevelopment of neglected areas of downtown. The Peck Center preservation effort, restoring one of the most significant historic landmarks of the City’s racial diversity, will continue and be rightfully celebrated.

This is a beautiful place, but as our American forefathers alluded, through our collaborativeefforts, we can become “more perfect.” Many of our short-comings pale in comparison to the challenges of other communities throughout this country. We have high expectations for this community, and I truly believe that we should continue to reach for those objectives but remain well-grounded in today’s reality. I remain honored and privileged to serve the City Commissionand residents of Fernandina Beach. Thank you for your support.