Panama City — The Panama City Commission spent more than three hours July 22 examining the proposed fiscal year 2026 budget, directing city management to return within 30 days with a staffing and programming plan for the new Martin Luther King (MLK) Recreation Center and voting to retain the city's proposed millage ceiling at 4.7999.

The vote comes after a presentation from city staff that put the proposed all-funds budget for fiscal 2026 at $153,704,626, a decline of about 1.4 percent or roughly $2.1 million from the adopted 2025 budget. The general fund proposed total is $67,600,000, a 1.7 percent decrease from the prior year. Staff said the draft is balanced at the current millage with no use of reserves and includes operating and capital spending across enterprise and special funds.

Why it matters: The commission's direction affects how soon and how fully the MLK Rec Center will open and who pays for ongoing costs. Commissioners repeatedly discussed one-time revenues the staff is counting on ' notably a $2.8 million anticipated sale of a nursing-home property and a roughly $1.8 million actuarial gain in the fire pension ' and whether those one-time items should be used for recurring personnel costs. The city is also carrying interest costs tied to a previously approved $150 million loan that staff allocates across funds.

Most important decisions and directions

- Staff directed to present a written staffing and programming plan for the Martin Luther King Recreation Center at a workshop in August (motion passed 5-0). The plan should show the requested staffing (discussed as 12 positions), a timeline for ramp-up during fiscal 2026, and how those costs would be funded or phased in.

- The commission set the proposed city millage rate cap at 4.7999 (motion passed 4-1). Commissioners noted that staying at the current rate preserves the option to raise rates later only at greater expense and administrative burden (re-mailing of TRIM notices).

- The commission voted to keep the Downtown Improvement Board (DIB) millage at 3.000 (motion passed 5-0) and approved dates and times for the required tentative and final budget hearings (motions passed 5-0).

Key details from the staff presentation

- All-funds proposed budget: $153,704,626 (down ~1.4% or $2.1M from FY2025 adopted).
- General fund proposed: $67,600,000 (down ~1.7% or $1.2M).
- Capital outlay (all funds): $10,100,000, which staff described as operating capital (equipment/vehicles/software) and capital projects (including CRA and infrastructure surtax projects). Staff said capital outlay includes $2,700,000 for machinery/equipment, $900,000 for intangibles (software), and $6,700,000 for capital projects; specific project allocations were identified in departmental budget pages.
- Loan and interest: staff referenced the city's $150,000,000 loan approved in 2023 to fund reimbursable infrastructure and recovery work and presented interest expense allocation across funds. Staff is pursuing a refinance to reduce the city's interest burden and reported an estimated refinance savings of about $2.2 million if a term sheet proceeds.
- Revenue items called out as balancing the draft: $2,800,000 expected from the sale of a nursing-home property and $1,800,000 from better-than-expected actuarial experience in the fire pension; staff described both as one-time items used to balance the FY2026 draft under the current millage.

MLK Recreation Center discussion

Commissioners spent substantial time on programming and staffing for the new Martin Luther King Recreation Center. Staff said the request included up to 12 new positions linked to full programming, while the proposed budget currently funds a much smaller staffing increment (staff noted one new funded position explicitly listed for the MLK center in the draft). The Downtown North Community Redevelopment Agency (CRA) committed $325,000 toward initial supplies for the center; staff and commissioners discussed whether CRA, CDBG, SHIP, or other restricted funding sources could help with start-up or program costs.

Staff and commissioners highlighted these constraints and options:

- One-time versus recurring funding: commissioners repeatedly cautioned against using one-time proceeds (property sale, actuarial gain) to fund permanent positions without a plan for recurring funding in subsequent years.
- Phase-in approach: commissioners and staff discussed phased staffing and operations (crawl, walk, run), running initial programming with existing Parks & Recreation employees where feasible, and outsourcing programming or partnering with community providers as interim options.
- Grant and partnership opportunities: staff said grant writing (for equipment, programming) and partnerships (local nonprofits, potential sponsorships) had been explored, but many programming grants require the facility to be open and/or have use restrictions.

Votes at a glance (formal actions recorded in the meeting)

- Motion: City management to return with a staffing and programming plan for the Martin Luther King Recreation Center (showing requested positions, timeline and funding options) at a workshop in August. Outcome: approved, vote 5-0. (Direction to staff; no positions were immediately authorized.)

- Motion: Set proposed city millage rate cap at 4.7999 for fiscal year 2026. Outcome: approved, vote 4-1 (Commissioner Lucas voted No).

- Motion: Maintain the Downtown Improvement Board millage at 3.000. Outcome: approved, vote 5-0.

- Motion: Approve dates and times for the tentative and final budget hearings (first hearing Sept. 9, 2025 at 5:01 p.m.; second hearing Sept. 23, 2025 at 5:01 p.m.; both in County Commission Chambers). Outcome: approved, vote 5-0.

What commissioners and staff emphasized

Commissioners repeatedly urged staff to present a concrete, costed plan showing program hours, the number and type of staff needed at each phase, and funding sources and trade-offs. Multiple commissioners pressed staff to identify clear options ("good/better/best") for departmental services such as parks maintenance, street sweeping, or other operations so elected officials could make explicit priority choices rather than ad hoc reductions. Staff said it would return with the requested MLK plan for the August workshop.

Context and next steps

Staff characterized the FY2026 draft as balanced at the current millage with no reserve draws, but said the city has limited remaining reserves and will need structural changes (additional revenue or program/staff reductions) in coming years if projections hold. Staff also reported work on refinancing the $150 million loan to lower future interest costs; preliminary estimates presented at the workshop suggested roughly $2.2 million in savings under a refinance scenario, but staff cautioned the refinance terms would carry market risk.

The commission's direction requires staff to provide the MLK Rec Center staffing/programming plan at the next workshop in August and to prepare the TRIM/notice materials reflecting the chosen millage cap and the scheduled public hearings for September. The tentative budget hearings will give the public opportunity to comment before final adoption of the millage and budget in late September.