VERO BEACH ― Vero Beach City Manager Monte Falls and Finance Director Cynthia Lawson have proposed a 2020-2021 budget that balances at a millage rate of 2.5000, which is the same as last year’s millage rate.
The tentative budget outlined in Mr. Falls and Ms. Lawson’s Aug. 31 memo to the mayor and city council presumes more revenue than had been expected just two weeks earlier, due to more optimistic revenue sharing figures received from the state.
At the Aug. 18 City Council meeting, staff had reported that $229,000 would need to be taken from budget stabilization reserves in order to balance the FY 20-21 budget. According to an Aug. 11 staff memo, that reserve is currently $2.5 million.
The reserve is “intended as a buffer for unexpected budgetary impacts to ensure budget stability and provide service continuity,” Ms. Lawson and Mr. Falls wrote. “Using this reserve will enable the city to maintain stable service levels until next year, when the long-term impacts of the pandemic on the local and state economy may be better understood.”
However, Mr. Falls and Ms. Lawson reported, the state’s Office of Economic and Demographic Research has revised upwards its estimates of several sales tax-related revenue sources, making it unnecessary for the city to use the budget stabilization reserve to balance the budget.
Instead, the proposed budget has an $88,000 surplus. City staff suggested that the surplus be applied to reduce the amount of residual cash from electric sale proceeds used to balance the General Fund budget, or it could be used to support Three Corners planning.
The proposed 2.5000 millage rate to balance the city’s general fund is 2.95% greater than the rolled-back millage rate of 2.4284.
“This millage rate generates ad valorem tax revenue that is $246,000 higher than last year’s tax levy,” read the staff memo. “In this tentative budget, the increased tax revenue has been used to offset a decrease in the amount of residual cash from electric sale proceeds used to balance the General Fund budget and to fund increases in personnel costs.”
The proposed budget represents an increase of eight positions, increasing total full time city staffing to 326 positions. Those added positions include six added to the Water and Sewer Utility budget in anticipation of the requirements of the Clean Waterways Act.
The proposed budget also calls for a 3% salary increase for all city employees, which results in a net increase of $565,000 in salaries city-wide.
While the new revenue sharing estimates from the state were encouraging, they still reflect the negative effects of the pandemic. The city anticipates reductions in shared revenue from the half cent sales tax and the local option gas tax.
The General Government Capital and Construction Fund includes funding for street paving, stormwater repairs, infrastructure projects, replacement of aging fleet vehicles, and upgrades and repairs to recreation facilities and parks.
According to Mr. Falls and Ms. Lawson, the primary source of revenue for this fund is the sales tax revenue remitted to the city from the state. There is a sufficient fund balance in the proposed FY 20-21 budgets to absorb this reduction in the first year of the Five Year Capital Improvement Program. However, the staff concluded that “if this revenue source does not recover to its previous levels by FY 21-22, additional cuts to the Five Year Capital plan will become necessary to balance the budget in subsequent years.”
The budget requires two public hearings. The first, advertised in the TRIM notice mailed to city residents, was on Sept. 9. The second and final public hearing is currently scheduled for Sept. 22.
For more information and to read the entire proposed budget, visit www.covb.org/AgendaCenter to access the agendas for both public hearings.