Palatka officials outline $1.7 million general-fund shortfall; millage, fire assessment and utility rates flagged as options

Palatka city staff told commissioners at a July 10 budget workshop that the third draft of the fiscal 2025–26 budget shows about a $1.7 million gap in the general fund and that a new fire engine priced at about $1.8 million is the primary driver of the shortfall. City staff said total revenue and expense projections including grants are roughly $81 million, but the unrestricted general fund is not balanced.

Finance Director (acting) Carty said the city is evaluating three levers to close the gap: the city millage rate, the fire-assessment rate and utility-rate adjustments. “Our current millage rate is 6.4. The rollback millage is about 6.2397,” Carty said, and noted the difference in revenue between those rates is roughly $44,000; staying at 6.4 would generate about $4.7 million, while a 6.8 rate would generate about $5.0 million. On the fire assessment, staff said they had reduced the variable Tier 1 rate from 2.46 to 2.35 last year; restoring the prior level would raise roughly $80,500 more than the lower rate. The fixed portion of the assessment remains $125 per parcel and staff reported about 3,950 parcels under assessment.

Carty also reported that water-utility net margins are thin and recommended a 6–7% rate increase to prevent an operating loss in utilities, noting rates were last increased on Sept. 22, 2022, by 7.15 percent. City staff said several capital items not funded by grants — including about $2.4 million in planned street projects and $1.818 million in planned city-funded street renovations — will further pressure operating and capital budgets.

Commissioners emphasized public-safety obligations when discussing potential revenue changes. Commissioner Davis said the commission must “be cognizant of balancing” the desire for lower rates with the cost of maintaining public-safety services and infrastructure. Commissioner Campbell and others agreed that relying on historically large grant receipts is uncertain and staff should plan for reduced grant levels.

Staff identified additional steps before the next public budget presentation: finalize state revenue estimates in July, complete an Appendix A rate review of city service charges, and present refined numbers at the next budget meeting (staff flagged Aug. 4). The city manager also said staff is pursuing an operational audit to identify efficiencies and better match spending to priorities.

No formal votes were taken at the workshop; commissioners directed staff to return with options and updated revenue estimates.