Recovery costs leave city in a fund balance crunch

After taking a more than $9 million hit — so far — to its fund balance in the wake of the 2024 hurricane season, city of Sarasota officials have been asked to keep that emergency fund at top of mind as it develops the fiscal year 2026 budget.

During its April 21 regular meeting, city commissioners approved a budget amendment for the current fiscal year to reflect the $17.2 million the city has spent on recovery efforts. The city began the fiscal year with $28.7 million in the reserve fund. Subtracting the $7.7 million advance the city received from the Federal Emergency Management Agency, that leaves $19.2 million, for the time being at least, in emergency funds entering the 2025 hurricane season. 

Kelly Strickland, the city’s finance director, said she expects, eventually, 75% to 85% of remaining balance to be reimbursed by FEMA. With some payments from the agency for Hurricane Ian in 2022 and 2023’s Hurricane Idalia still outstanding, though, it’s a matter of when.

“We don't recognize it until we get it,” Strickland said of the budgetary line item. “Sometimes we get it quickly.”

And sometimes they don’t.

That means, at worst, Sarasota will enter fiscal year 2026 with $19.2 million in the fund balance, providing the city doesn't incur more storm damage prior to the end of the fiscal year. That's shaky accounting ground considering it cost nearly that much — so far — to recover from last year alone.

That fact drew some concern from Commissioner Jen Ahearn-Koch, who cautioned her colleagues the fund balance needs to be a priority for the coming year, anticipating the annual tussle over how much money be set aside for emergencies versus returned to the taxpayers in the form of a lower ad valorem rate.

“Hurricane season is not that far away and I think it's important as we go into budget season that we focus on having healthy reserves,” Ahearn-Koch said. “Right now this is not where we should be, in my opinion, so I just wanted to bring it to the attention of the commissioners that it should be forefront on our thoughts.”

According to city documents, Hurricane Helene recovery cost the city $1,380,730 and Hurricane Milton $15,780,177, a total of $17,160,907. Subtracting the $7,717,350 advance from FEMA, that leaves $9,443,557 in remaining non-reimbursed expenses. 

And that doesn’t include an estimated $17.4 million the city faces in remaining recovery, mostly in city-owned parks and other owned property along the shorelines. 

“This is to let you know where we are with the expenditures from the hurricanes and how it is affecting our fund balance," Strickland said. "We do hope to get the reimbursement from FEMA. It's all about the timing.”