Five-year forecast: Highland Beach staff model 10% cut and homestead-freeze scenarios

Town finance staff delivered a five-year budget forecast that projects continued reliance on property-tax revenue (roughly 74—ft75% of total general-fund revenue), normal capital spending of about $900,000 per year and specific outliers such as the $626,000 library roof. The presentation used historical data and conservative growth assumptions (property-value growth assumptions of 5% then 4% in later years) and described fund balance, transfers and days-of-cash metrics across the general, building, water and sewer funds.

Staff ran two illustrative exercises requested by the commission: a 10% revenue-reduction exercise and a hypothetical change that would freeze or exempt homesteaded properties from ad valorem tax growth. The 10% reduction was modeled as a roughly $2 million general-fund impact and would require either service cuts, using reserves, transfer reductions or structural changes to personnel and capital plans. The homestead-freeze scenario produced a modeled $5 million gap in the general fund under staff assumptions; presenters said closing that shortfall would likely require millage increases (staff estimated a roughly two-mill increase in the model) or deep structural changes. Finance staff recommended continuing planning, adjusting transfers and prioritizing capital timing; commissioners asked for follow-up analyses and monthly updates as the budget season proceeds.