No property tax rate change expected for city's fiscal 2024 budget

City of Sarasota property owners shouldn’t expect a third straight millage reduction on their property taxes next year. During the City Commission’s first budget workshop for fiscal year 2024 on April 10, City Manager Marlon Brown said he doesn’t anticipate recommending another rate cut as property value increases return to more normal pre-COVID levels.

Brown reminded commissioners the prior two reductions occurred amid the rapidly rising property values, which for the current fiscal year was a nearly 18% increase, according to the Sarasota County Property Assessor’s Office. In response, the City Commission reduced this year’s ad valorem rate from 3.1372 mils to 3.0 mils for 2023.

With the rate remaining flat, Brown said he has told department heads to hold the line on spending requests for fiscal 2024.

“My intention is not to ask for a reduction in the millage this year, so we will keep them as flat,” Brown said. “We have directed all departments not to request any new personnel, and whatever new initiatives that we may undertake based on commission's direction, those things will have an impact but we don't know until we actually get into some of those items.”

With that, the bulk of the discussion centered on the city’s general fund balance and the philosophy of both Brown and Director of Financial Administration Kelly Strickland to maintain a balance that exceeds the Governmental Finance Officers Association recommendation of a fund balance of 17% to 25% of the city’s overall budget.

For the fiscal year that ended Sept. 30, 2022, the city transferred $1.58 million from the general fund balance to balance the budget. Still, that left a $32.16 million general fund balance — 35.3% of the city's budget. Of that, $27 million is unassigned and may be used for any purpose.

A minimum fund balance is recommended to provide two to three months of operations in the event of a disaster.

“I've always said we need 25% or more because we live right next to the beach,” Strickland said.

As commissioners consider next year’s budget, Brown suggested they keep in mind the critical nature of the general fund balance; he advised against spending it down.

“One of the things that we have never really accounted for are things like hurricanes and red tide,” Brown said. “We’ve come to you on several occasions and asked for budget amendments when these things occur in order to pre-fund a lot of the recovery efforts. Some of these are reimbursable through FEMA or the state, but those dollars come in two, sometimes three years after we spend the money. And also we only get up to 70% to 80% of those dollars back so that is something to keep in mind.”

Strickland told commissioners she expects a citywide property value increase of about 10% for the next fiscal year. If correct, based on an assumed collection rate of 96.5%, that represents an additional $3.37 million in revenue with the millage rate remaining at 3.0. The official estimate of assessed value is provided by Sarasota County on July 1, which determines the property tax revenue estimates for the next fiscal year. 

Adoption of the fiscal 2024 budget is due by the end of September.