Delray Beach staff recommend 6.4371 tentative millage, $8.4M reserve drawdown to balance FY2026–27

City staff presented a proposed $219.8 million fiscal 2026–27 budget and recommended a tentative millage rate of 6.4371 at a Delray Beach commission workshop on July 14. The proposal would raise gross property tax revenue from about $118 million to roughly $132 million, though tax-increment financing (CRA/TIF) payments would increase as well and cut into the net gain.

The recommendation pairs revenue increases from property values and the proposed millage with an $8.4 million planned drawdown of the general fund reserve. Chief Financial Officer Henry Dackewitz said the proposed rate ‘‘would be an increase of a little under 4 and a half percent’’ from the current rate and that staff aims to balance maintaining service levels with restoring reserve positioning. ‘‘We are proposing a millage rate of 6.4371,’’ Dackewitz stated during the slide presentation.

Why it matters: staff told commissioners the city has lowered its millage in recent years even as operating costs rose, and the city’s municipal cost index shows inflationary pressure on labor and contracts. Staff cautioned that a separate November referendum that would expand homestead exemptions could materially reduce ad valorem revenue in subsequent years, forcing the city to pursue alternatives such as fee-based revenue.

What staff proposed and how the math works: Dackewitz displayed three linked charts showing (1) millage history, (2) a municipal cost index, and (3) rising city expenditures. Under the recommendation, taxable values would generate about $8.5 million in additional revenue from valuation changes and $5.67 million from the millage increase, totaling roughly $14 million in added gross property tax dollars. Because CRA/TIF obligations rise with taxable value, staff estimated CRA payments would grow from about $25.0 million to $28.6 million, leaving net general fund property tax revenue increasing from roughly $92.7 million to $103.5 million in the staff presentation.

Reserves and risks: staff recommended a targeted unassigned fund balance near 18 percent of expenditures while noting peer benchmarks ranged from about 10 percent to 30 percent for different communities. The presentation projected an unrestricted fund balance of about $47.13 million at the start of the next fiscal year after an $8.4 million drawdown, which staff said equates to roughly 21.9 percent when measured using the commission’s policy metric (expenditures less transfers). Dackewitz warned that rating agencies and bond markets watch reserves, and commissioners raised concerns about cutting reserves below peer benchmarks. ‘‘They like to see the reserves,’’ Dackewitz said of rating analysts; one commissioner urged caution given uncertain federal disaster assistance.

Service impacts and constraints: staff emphasized that police and fire comprise the majority of the general fund and in some modeled scenarios are off-limits for cuts under proposed state legislation linked to homestead changes. Dackewitz told the commission that if the referendum passes, staff would be unable to use reductions in police and fire to close gaps, which would concentrate pressure on other departments and on fee-based options.

Mitigation steps and timetable: city management proposed launching consultant studies on fee-based revenue (including potential fire/EMS fees) and other fiscal-impact analyses. Dokowitz committed to providing updated level-of-service detail and budget breakdowns to commissioners within days and an informational report by July 24. The city plans to submit a tentative millage and non‑ad valorem information to the Florida Department of Revenue and the Palm Beach County property appraiser by Aug. 4; public hearings are scheduled in September, and the fiscal year begins Oct. 1.

Public input and outreach: staff outlined an education package tied to the referendum that includes a dedicated property-tax information web page, an easy-to-understand brochure, a targeted social-media campaign, a ‘‘myth vs. fact’’ series, and short informational videos explaining how property taxes fund services.

Public comment and oversight: at the start of the workshop, Paul Cannon urged the commission to move quickly to reconstitute the Budget and Finance Review Board so it can analyze the budget and propose alternatives before adoption.

Next steps: staff will return with more detailed, department-level level-of-service information and updated figures in the days ahead, present a tentative millage for commission consideration at the July 21 meeting, and hold the required public hearings in September before adoption.