Sebastian committee recommends 3.5455 mill tentative rate after budget review; vote unanimous

The Sebastian Budget Review Advisory Committee on July 21 voted unanimously to recommend a tentative millage rate of 3.5455 to the City of Sebastian City Council after reviewing the fiscal year 2025 second-quarter financial reports and the draft FY2026 budget.

Committee members present recommended the rate by roll call: Terry McGinn, yes; Baker, yes; Garton, yes; Jacob, yes; Middleton, yes; Reid, yes. The committee’s recommendation will be presented to council at its Wednesday meeting for final action and for TRIM (Truth in Millage) notice calculations.

The recommendation followed a detailed staff presentation of the FY2025 Q2 financial report and the draft FY2026 budget. Finance staff said the city’s certified taxable assessed value rose 8.4% (about $193 million), producing a rolled-back rate of 3.0148; staff proposed 3.5455 to balance the draft budget. “Staff requests for the budget committee to recommend to the council the tentative millage for fiscal year 2026 at 3.5455,” staff concluded during the presentation.

Why it matters

Adopting a tentative millage above the rollback rate will increase city property taxes for many homeowners when the final rate is set. Staff told the committee the proposed 3.5455 rate would be advertised on TRIM notices as a 17.6% tax increase over the rollback calculation; using the rollback rate instead would require about $1.3 million from general fund reserves to balance the draft budget.

Key points from the fiscal review and budget presentation

- Revenues and collections: The Q2 report (through March 31, FY25) shows ad valorem and stormwater collections at about 93–94% of budget at that checkpoint, with staff noting typical final ad valorem collections settle near 96–97% later in the year. Sales and gas taxes were reported at roughly 30–36% of budget to date because of reporting lags.

- Expenditures: Salary and benefits were about 13% higher than the prior year but at roughly 50% of the annual budget (expected at midyear). Professional services are up about 10% vs. prior year but were only 26% of budgeted amounts through Q2. Overall expenditures were reported at about 49% of the amended budget.

- General fund and reserves: The draft FY26 general fund shows a personnel increase of $1.1 million, a $388,000 net reduction in capital funded from the general fund (shifted to other funds), and an overall general fund increase of roughly $734,000 (about 3.8%). Staff said the city’s available general fund reserves are approximately $8.59 million today, with the city’s policy target set at $7 million.

- Capital programs and major projects: The six-year capital improvement program totals about $46.47 million, with roughly $12.9 million requested in FY26. Major FY26 line items cited included $3.5 million for street work, $1.1 million for a terminal apron expansion, and about $987,000 for Taxiway Golf construction at the airport. Staff noted that about $4.1 million of next-year capital is expected to be funded by grants (about 31.9%).

- Airport and grants: Airport revenue was projected to show a modest excess (~$23,000), and staff described multiple grant-match requests in the CIP. Staff said many airport projects are funded primarily by FAA grants (typically 95% federal share, with a local match usually between 5% and up to 20% for DOT-funded elements). The presentation also summarized the city’s broader grant activity: about $21 million in grant applications over two years, $5.6 million awarded so far, and roughly $12 million pending.

- Funding shifts and planned adjustments: Council discussion at workshops prompted staff to plan to use airport reserves for some airport match items (about $27,000–$50,000 line items mentioned) rather than discretionary sales tax (DST) so DST would be available for other priorities.

Unexpected liabilities and other concerns

Staff told the committee the city recently received notices from Florida East Coast Railway for railroad-crossing maintenance charges: $223,000 for the Barber Street crossing and $90,000 for the Schumann crossing. Staff said those notices represent roughly a $310,000 unbudgeted obligation and indicated they are working to allocate the cost to other infrastructure funds (local option gas tax or DST) rather than the general fund. “These agreements go back to the forties, fifties, sixties… We received notice, recently… that railroad maintenance on the Barber Street Railroad Crossing was $223,000. We’ve also received notice that the Schumann Railroad Maintenance Crossing is $90,000,” staff told the committee.

Union negotiations, insurance and other uncertainties

Staff reminded the committee several variables remain unresolved before finalizing the FY26 budget: police and supervisor union negotiations (next meeting July 29), outstanding property and liability insurance quotes, and health insurance renewals. Staff noted the current draft assumes a 7% health insurance increase under a program the city implemented; other municipalities were seeing projected increases in the 20–30% range if not for similar programs.

Public comment and committee reaction

Two members of the public commented during the meeting. Local resident Damien Gilliams told the committee he supported fund scrutiny and spending reductions, arguing reserves should be used more aggressively to ease taxpayers’ burden: “You need to take a fine tooth comb to that budget because there’s money floating around,” he said. Gilliams criticized several planned capital expenditures and urged the committee to seek cuts so the city’s millage could approach rollback.

Committee members pressed staff on specific line items, asked for clarification on reserve accounting and identified follow-up items. Staff emphasized the draft budget already reflects significant cuts from an earlier $2.4 million deficit and that some capital funds (for roads, airport projects and other enterprise activities) cannot lawfully be repurposed to cover general fund operations.

Next steps

The committee voted to recommend the tentative millage of 3.5455 to city council (motion made and seconded at the meeting; roll call unanimous). The recommendation will be delivered to the council for the statutory TRIM notice process and further budget workshops and hearings in August and September. The committee set its next meeting for Monday, Aug. 4.

Ending

Staff and committee members said they will continue refining estimates (insurance, union settlements, grant awards and other variables) before final hearings. City council will receive the committee’s recommendation at its Wednesday meeting and must set final budget and millage rates in September.