Oakland staff project multi-year deficits if proposed homestead amendment passes

Town staff warned the Oakland Town Commission on June 23 that a proposed constitutional amendment on the November 2026 ballot — which would raise homestead exemptions (phased to $150,000 in 2027 and $250,000 in 2028 for non-school levies) and lower the cap on annual assessment growth for non-homestead properties from 10% to 5% — could sharply reduce local ad valorem revenue and create multi-year budget shortfalls.

Gabby, who identified herself in the meeting as the town’s finance director, said the town’s FY27 general-fund revenue is projected at about $11.2 million, with property taxes (ad valorem) accounting for roughly 59% (approximately $6.6 million). Using the most recent tax-roll data and conservative collection assumptions, staff modeled three-year scenarios showing that ad valorem revenue could fall to roughly $5.7 million under the amendment and that the town could face a projected deficit of about $255,000 in FY28 and as much as $595,000 in FY29 if revenues do not increase.

"This is our biggest revenue source for the town," Gabby said during her presentation, and she warned that higher exemptions and reduced assessment growth would ‘‘directly affect our primary capital fund revenue source’’ and ‘‘place increased pressure on maintaining service levels, particularly police and public safety, parks and rec, [and] infrastructure maintenance."

Staff emphasized two important caveats: the projections are forecasted and depend on the final tax roll (the county’s tax-roll notice is issued July 1), and the current proposal does not include any guaranteed state backfill. "There is being no backfill from the state," staff told commissioners, meaning the town would need to consider local options to offset lost revenue.

Commissioners and residents pressed staff on options. One resident asked staff to calculate how much the millage would need to change to make the town whole; Gabby agreed to produce millage-scenario numbers for the next meeting. Staff also noted recent changes in the state rollback calculation that limit how much millage can be increased without additional procedural steps: if the millage increase exceeds a 10% threshold relative to the rollback rate, the commission must take a unanimous vote to adopt it.

Officials discussed alternatives including modest millage changes, non-ad valorem fees (for fire, stormwater or special services), and targeted expenditure reductions. Gabby said staff had already modeled cuts that preserve core services for FY27 by removing some training and travel, community outreach programs, and reducing capital improvements; even with those reductions the multi-year projection showed declining revenue. "So in 2029, based on these numbers that I projected, we're not gonna have enough ... to pay for public safety alone," she said in the presentation.

HR and benefits also factored into the discussion. Staff confirmed the FY27 budget assumes a 3% cost-of-living adjustment for employees and maintains an 18% retirement contribution for sworn officers; current budget language funds employee-only health insurance premiums (family coverage remains the employee’s responsibility), and the town is awaiting final premiums from its broker.

What happens next: finance will run millage-sensitivity scenarios and present updated numbers at the next commission meeting and the scheduled July 14 meeting when auditors will present unrestricted fund figures. Staff said the commission may need to consider a combination of revenue changes, reserve usage limits, and expenditure reductions before fiscal decisions are finalized.

Commissioners did not take a formal, recorded vote on any budget action during the session; staff framed the presentation as the first budget workshop and requested direction and additional review before any formal adoption steps.