Tavares council sets maximum tentative FY2026 millage, adopts budget framework and discusses reserve transparency

The Tavares City Council received the finance department's first presentation on the proposed FY2026 general fund budget and set the maximum tentative millage rates at the meeting.

Council set the maximum tentative general fund millage at 6.685 mills by motion (recorded vote 3-1). The council also set the maximum tentative voted debt millage at 0.1467 mills (recorded vote 4-0). City staff noted the millage actions set the maximums for required public notification; the council may reduce them later but not increase them as the budget process continues. Two public hearings on the budget are scheduled for Sept. 3 and Sept. 17, 2025.

Finance staff presented highlights of the proposed FY2026 budget, which covers the fiscal year that begins Oct. 1, 2025, and ends Sept. 30, 2026. The proposed general fund budget reflects a 4.11% increase over the current year and is presented as balanced. Staff said the general fund millage would decrease from 6.7756 mills to 6.685 mills and the debt service millage from 0.1601 mills to 0.1467 mills. The finance director told the council the estimated general fund reserve balance is $7,283,849 — about 2.95 months of operating expenditures — exceeding the Government Finance Officers Association (GFOA) two-month reserve guideline.

Key items in the proposed budget include a 5% across-the-board employee pay increase, health insurance budgeted for a 4.5% increase (shared by employer and employees), six new public safety positions (three police and three fire), six additional general-fund positions, and $400,000 proposed for citywide street paving. Staff listed capital and operating projects in the packet and said some items were cut to balance the budget; the cut list begins on page 599 of the budget book.

Councilmembers asked about the source of funding for new positions, the timing of hires and the contingency for unforeseen costs. The finance director said unused contingency funds would return to reserves. Council discussed separating contingency from hurricane reserves: one councilmember proposed creating a general expense contingency fund distinct from the hurricane reserve so routine contingencies would not be described as tapping reserves. Staff agreed to present future agenda summaries with clearer fiscal-impact language identifying whether requested expenditures would draw on contingency or hurricane reserves.

City staff read a list of grants and other external funding sources the city is pursuing or has received, including Florida Department of Environmental Protection (FDEP) grants, Lake County Water Authority grants, an FDOT aviation planning grant, SRF loan forgiveness provisions for water projects and FEMA reimbursements tied to hurricane response. Staff said future updates to state-shared revenue estimates and other outside revenues would be incorporated into subsequent budget workshops.

The council's adoption tonight of the maximum tentative millage rates triggers the formal notice process to the county; the millage may be lowered in coming workshops but cannot be raised above the amounts the council set.