City residents will see no millage rate increase next year

Property owners in the city of Sarasota will not see a millage increase in fiscal year 2025 as the Sarasota City Commission on Tuesday unanimously set the rate at 3.0 mils, matching the current fiscal year rate. That means the owner of a home with an assessed value of $300,000 will pay $900 in property taxes to the city next year.

The City Commission ended its two-day budget workshop by setting the not-to-exceed millage, which means the final rate can be lowered, but not raised, following two budget public hearings in September. Given multiple departmental “budget issues” amounting to $3.8 million, including requests for 16 additional full-time employees, that's an unlikely scenario.

The total proposed budget for next fiscal year is $305.6 million, an increase of $18.9 million, or 6.6%, over the current year. That includes $113.3 million in self-sustaining enterprise funds such as utilities, parking management, solid waste, Bobby Jones Golf Club and Van Wezel Performing Arts Hall; capital project debt service of $8 million; and special taxing districts whose funds are reinvested in their neighborhoods.

Projected revenues are bolstered by an increase in assessed property value of 9.7% to $18.3 billion, resulting in a 9.7% increase in ad valorem taxes totaling $53 million. The value of one mil, not including the Newtown Community Redevelopment Agency and The Bay Tax Increment Financing District, is just more than $16.5 million.

“The expenditure budget has increased $9.4 million,” Director of Finance Kelly Strickland told commissioners. “This is primarily due to increased pension retirement contributions, salary increases approved after fiscal year 2024 budget adoption, new programs, budget issues and increased cost of operating materials and supplies.”

The general fund proposed budget revenues are approximately $102 million with expenditures of more than $106 million.

“This leaves a deficit, or use of fund balance, of $4,664,000,” Strickland said. “The projected unassigned fund balance on Sept. 30, 2025, is $28,772,000. This is a 26.9% unassigned fund balance to our operating expenses.”

The city’s budgetary policy is to maintain a fund balance of 17% to 25% of spending. Including the revenue stabilization fund available for emergency spending, currently at $2.8 million, that brings the effective fund balance to 29.6%.

Still, the proposed spend down of the fund balance to equalize the budget captured the attention of Vice Mayor Jen Ahearn-Koch. 

“I just want to get this out there that that is concerning to me as we go through the budget because we are a coastal city. We do have extreme weather events,” she said. “I don't know if there's an alternative for this budget than lowering that fund balance, but I just wanted to get that out there that that number concerns me.”

When the Monday workshop session resumed following a recess, City Manager Marlon Brown told commissioners that staff reminded him that although spending down the fund balance has been included in prior budgets, it hasn’t been necessary by the time the books are closed. 

“Historically, even though we propose to use fund balance, by the time we do the reconciliation, we end up using either minimal or none at all,” he said. “If indeed, there is angst about using fund balance, we can have a discussion as to what to cut. The only option is to raise the millage, and I would not recommend that. So it's about cutting. It's a policy decision.”

By the Tuesday afternoon special meeting to set the max millage rate, commissioners had heard from all department heads about their needs for the next fiscal year, and also those budgetary items not under the city’s control such as insurance premiums, pension fund contribution requirements and others. 

No suggested cuts to budget requests were made at that time, and now that the max millage rate is set, it isn’t likely to change.

Still, given the number of unfunded capital projects on the city’s wish list, the fund balance vs. tax rate matter remained a point of discussion shortly before the vote.

“I was not suggesting we raise the millage,” Ahearn-Koch said. “I was just asking for the logic behind the recommendation because I have in years past had input from some citizens saying now is the time to raise the millage a little bit and capture funds to accomplish some of those projects.”

Two meetings remain in the fiscal year 2025 budget season. The first of two public hearings is scheduled for Tuesday, Sept. 3, and the second on Monday, Sept. 16, when the budget will be adopted.