City manager proposes 0.273‑mill increase to rebuild reserves after storm losses

City Manager-led staff presented a proposed 2025–26 operating budget at the July 28 Sarasota City Commission workshop that assumes no federal disaster reimbursements and recommends a 0.273‑mill increase in the city’s operating millage to help replenish reserves drained by recent hurricanes.

The budget presentation said the city estimates the three storm events’ combined cost at about $50,000,000, with roughly $38,000,000 of that hitting the general fund. The manager told commissioners, “I want you to know that this budget has been prepared assuming no FEMA reimbursements.” The presentation noted the city already received $7,700,000 from FEMA but did not rely on future federal or state reimbursement in the baseline figures.

Why it matters: City staff say the general fund reserve percentage has fallen from historic levels (generally 20–30%) to under the adopted policy band of 17–25%. The manager recommended a modest ad valorem increase of 0.273 mills — taking the operating millage from 3.000 to 3.273 mills — to generate about $4.7 million and bring the projected unassigned fund balance to roughly 20% of expenditures in year one. Under the recommendation, the median Sarasota homeowner (taxable value $360,000) would pay about $82 more a year, staff said.

Details of the proposal: Staff presented a layered, multi‑year recovery approach. For year one they proposed the 0.273‑mill increase and a package of operating savings and limited use of fund balance (about $1.1 million in the proposed budget to balance recurring costs). The manager said he aimed to reach a 20% reserve level in year one and then continue replenishing over a three‑year horizon. He warned that if FEMA or state reimbursement materializes, the fiscal picture improves substantially and the commission could revisit millage choices.

Commission discussion and alternatives: Commissioners expressed interest in alternatives and asked staff to model higher, front‑loaded increases. One commissioner urged weighing a larger increase in year one to capture more revenue before anticipated slower property‑value growth; staff showed a scenario for a 0.4‑mill increase that would generate about $7 million in year one. Commissioners also stressed sensitivity to residents still recovering from storms and asked for clear homeowner cost impacts for each millage option. The manager repeatedly emphasized the recommendation was modest for his 31 years in municipal finance and that any final millage setting remains the commission’s decision.

Risk management and options: Staff outlined short‑term and medium‑term tools if further disasters occur while reserves are low: activate the city’s $3.3 million revenue stabilization account (a single commission vote makes those funds available), use interfund short‑term borrowing from enterprise funds with a written repayment plan, delay or reduce capital projects, institute hiring freezes or temporary redirections of revenue, and pursue short‑term market borrowing if necessary. Staff emphasized these are emergency measures and that normal operations would continue while recovery actions proceed.

Other budget choices: The proposed budget contains no new general‑fund base wage cost‑of‑living increase; it funds step increases where applicable but does not budget increases for employees already at the top of their pay steps. The budget also trims capital and operating lines and shifts some enterprise positions into their corresponding funds; staff said service levels are intended to be maintained.

Follow‑up requested: Commissioners asked staff to return with scenario comparisons (e.g., 0.273 vs. 0.30 vs. 0.4 mills) showing revenue capture over the three‑year horizon given projected assessed‑value growth assumptions (staff used 5.3% in year one, 4% in year two and 3% in year three in the materials). Commissioners also asked staff to model the homeowner impact of each option and to provide more analysis of long‑term bond‑rating implications. Several commissioners asked staff to prepare an analysis of establishing a dedicated debris‑removal reserve funded from a modest increase in the solid‑waste assessment; the city manager agreed to bring options back as a future agenda item.

What the budget does not assume: Staff said the baseline budget does not include any state reimbursement and assumes no future FEMA reimbursements. If reimbursed amounts are later received, staff said the commission could amend the budget and reallocate funds or reduce planned ad valorem increases.

Next steps: This was a workshop presentation and discussion; staff will return with additional scenario modeling and detail the commission requested before the formal millage-setting process begins. The city manager said the commission can set an upper‑limit millage and reduce it later if reimbursements or other revenues improve the city’s fiscal position.

Sources: City Manager presentation and staff budget briefing at the July 28 Sarasota City Commission workshop; remarks and figures attributed in the public session to the city manager, Kelly Strickland (Director of Financial Administration) and Tyler Harris (Budget Manager).