Zephyrhills council reviews FY2027 budget amid looming property‑tax changes; Zephyr Park overrun flagged

The Zephyrhills City Council on July 13 advanced budget planning for fiscal year 2027 while weighing a likely drop in property‑tax revenue if a statewide homestead exemption amendment passes in November. Staff told the council the city is budgeting 95% of roughly $1.8 billion in assessed value and is proposing a 6.25‑mill levy for FY2027.

Why it matters: Staff said Amendment 3 would raise the non‑school homestead exemption to $150,000 in 2027 and $250,000 in 2028 and cap non‑homestead assessment increases, producing an estimated $2.3 million reduction in city revenue when the first step takes effect and up to about $3.2–$3.5 million in later steps. With the city projecting roughly $22 million in general‑fund revenue, council members warned the change could require tougher spending choices in 2028–2030.

Staff presented a five‑year capital improvement plan showing major projects including the City Yard and Zephyr Park, and asked council to prioritize funding sources. Finance told the council the city holds roughly $12.1 million in unassigned general‑fund reserves and about $9.8 million of assigned reserves (including dedicated recreation/nursing‑home proceeds and City Yard funds). Council members asked staff to present line‑by‑line funding sources at the August workshop.

On Zephyr Park, staff said design is roughly 65% complete but the project is now several million dollars over the $16 million estimate. "We're doing value engineering with the contractor and the design team to get back toward budget," staff said, noting some site work (about $2.9M) is stormwater‑related and staff is preparing grant requests to Pasco County and SWFWMD.

Water capacity and development queue: Council discussed converting an agricultural well to potable production as a short‑term way to reach the city's permitted pumping level (about 4.49 million gallons), compared with the system's current usable capacity (~3.3M gallons). Staff estimated a conversion cost of about $2.5 million and emphasized that installing capacity is a multi‑year effort that affects industrial and residential projects in the development queue.

Personnel and pay study: Council received a compensation study from the Gehring Group, which recommended market adjustments and presented two implementation scenarios (a 3% COLA plus pay‑grade adjustments, or a 5% COLA). Staff estimated the total annualized cost including benefits at roughly $584,000 for the 3% scenario and $734,000 for the 5% scenario; council accepted the study and will consider funding during the budget process.

Permits and stormwater fees: Under new state law staff recommended, and council approved on first reading, a cost‑based building permit fee methodology tied to inspection/service counts rather than valuation. Council also approved a stormwater utility assessment (resolution 871‑26) on a 4–1 vote; staff said the structure phases in smaller rates in year one then modest escalations over subsequent years to fund stormwater capital work.

Next steps: Staff will bring a draft budget workshop Aug. 10, with the first millage reading Aug. 14 and a proposed final reading Sept. 28. Staff will return with updated revenue forecasts that incorporate finalized state data and a clearer multi‑year schedule for industrial tax recognition from incentive agreements.

The council closed the workshop portion of the meeting with no public speakers and moved to the evening's regular agenda.