Loxahatchee Groves finance advisers flag large shortfalls; manager proposes $4.5M budget, assessment and cuts to close gap

The Town of Loxahatchee Groves’ finance consultant and staff told the Finance Advisory Committee on Tuesday that the town faces a material budget gap driven by timing of revenues, unpaid FEMA reimbursements and higher-than-expected legal and personnel costs, and they presented a draft FY2026 budget built on conservative revenue assumptions.

The presentation by David Delena, the town’s finance consultant, outlined an estimated $4.53 million in general‑fund sources for 2026 and proposed total town expenditures of roughly $8.89 million across funds. “The farthest column to the right, I’m anticipating revenues to go up by 4.9,” Delena said, summarizing his revenue assumptions, and noted that transfers to capital will be far smaller than in recent years.

The nut graf: The committee learned that the town’s operating picture is affected by three main factors: (1) the timing of ad valorem tax receipts and outstanding FEMA reimbursements that staff say should be recorded as receivables; (2) legal expenses that have exceeded recent budgets and prompted a $231,000 budget amendment; and (3) reduced one‑time revenues such as local option sales tax (LOST) and ARPA/CARES funding. Those factors, staff said, create what they called a structural imbalance that would leave the town with limited funds for capital projects unless revenues are increased or spending cut.

Delena emphasized the difference between a straight‑line comparison and the staff’s year‑end estimate. He told the committee the packet shows “budget to June” (9/12ths) vs. “actuals to June” and that some reimbursements are not yet reflected. He said the Hyde Park project alone is expected to generate about $150,000–$175,000 in FEMA reimbursement that has not yet been booked as revenue. “We need to provide what the reimbursement dollar amount is,” Delena said. “When we get better information from FEMA…several $100,000 that are coming back.”

Committee members pressed staff on the size and timing of the shortfall. One committee member summarized Delena’s estimate and earlier staff comments: the committee was told a $312,000 operating shortfall (from lower revenues and higher expenses), plus a recent $231,000 legal amendment, producing roughly a $543,000 gap in the general fund by Delena’s estimate. Committee discussion also referenced a previously reported $789,000 overspend in 2025; combining those figures produced concerns about a larger structural deficit that would deplete reserves absent changes.

Roads and drainage were a recurring focus. Staff said the road‑and‑drainage fund is showing a negative balance that has been supported by transfers from the general fund and one‑time revenues in prior years; Delena recommended the committee consider an increase to the per‑acre assessment used to fund that program. The presentation shows a proposal to raise the current assessment from $200 per acre to $300 per acre for typical 5‑acre parcels (an increase of about $500 per parcel annually), which staff calculated would materially improve the fund’s sustainability. Delena said the town’s capital improvement fund has many unfunded projects and noted that “everything the town owns, the town has to maintain.”

Legal costs drew repeated attention. Committee members and staff said legal expenditures declined in a recent year, then resumed at historically higher levels; Delena said the town had budgeted legal at approximately $230,000 but observed that several prior years had legal spending nearer $400,000. He said the council and town attorney had set the lower budget figure but that a budget amendment was required to pay actual invoices. The committee asked whether outside legal work tied to development reviews (listed as recoverable in some instances) had been recorded as cost recovery revenue; staff said cost recovery shows up in permit and service revenues but that a precise breakout was not available in the third‑quarter packet.

Members also sought clarity on the fate of local option sales tax (LOST) proceeds that have historically funded capital projects; Delena said Palm Beach County had revisited the surtax and that the town is losing that revenue stream, which reduces available capital funding. Public comment echoed those concerns: resident Mary McNicholas told the committee that “your surtax funding is being sunsetted,” urged the committee to pursue bonding and public‑private partnerships, and recommended the committee present creative business‑friendly proposals to attract funding.

Committee direction and next steps included requests that staff: (1) provide a reconciled receivable schedule for FEMA reimbursements and show how those receivables would affect the current year close; (2) show three budget options — hold 2025 spending levels, increase spending only by an identified affordable amount, and a third option with targeted cuts — and (3) prepare a clearer breakdown of legal costs and cost‑recovery revenues tied to development reviews. One committee member asked staff to circulate written answers to detailed, 17‑point questions they submitted.

Delena told the committee the draft FY2026 budget presentation assumes a 3‑mill property tax scenario for purposes of notice and that the town’s proposed transfers to capital would drop substantially from prior years unless new revenue or cuts are approved. He said the town’s general‑fund reserve policy targets roughly 25% of operating expenditures to ensure liquidity for emergencies. “My hope is that I’ve overstated expenditures and understated revenue,” Delena said, adding that staff would bring recommended adjustments at upcoming meetings.

The committee scheduled further review: members proposed one‑on‑one review meetings with their appointing council members and staff the week of Aug. 4 (to be publicly noticed or livestreamed if the committee member chooses), followed by a joint committee‑council session in mid‑ to late‑August so the town can meet statutory hearing deadlines for the September hearings required under Florida law.

Ending: The committee left the meeting with clear follow‑ups for staff — reconciled FEMA receivables, a three‑option budget package, a legal‑cost reconciliation and a proposed schedule for one‑on‑one briefings and a joint meeting with council to resolve policy choices before the first public hearing in September.