Council - workshop

Mr. Clay, are you ready?

Yes, sir. Okay, thank you. Good afternoon, Mayor, Vice Mayor, members of Council, Craig Clay, Deputy City Manager. We generally start our budget process in February each year as we begin to look at a number of things that are out there in the universe. This year we started a little bit early because we knew that there were going to be some things happening. We started in January right after the release of a report by the Florida Department of Government Efficiency that talked about a number of things regarding what they termed to be wasteful spending, et cetera, et cetera. We then came back in June. Excuse me, Mr. Clayton.

Are there any residents from the city of Miami Garden present? I think we brought them. None.

But we're live.

You good?

OK, we're live. We are live. We are live.

No, don't say that. No, don't say that.

We're live.

I just wanted that for the record.

You can go ahead, Mr. Clark. Yeah, I'm ready. OK. I'm ready. All right. After that, we began to think about where we would land moving forward in fiscal year 2027. So where we landed is what we're calling a tale of two budgets. We know that there are some things out in the universe which we will talk about during the presentation in terms of state legislation that will potentially require us to do certain things. Having said that, though, we planned accordingly. But today, we'll take you through some things that you have normally seen in this budget presentation where we talk to you about what our taxable value has become, what that means for us from a financial standpoint, talk to you about some budget highlights, and talk about what we believe to be on the horizon. To summarize our general fund budget, the preliminary property tax value for this year is a little over $10 billion, $10.1 billion, which is an increase of $482 million approximately above our taxable value for fiscal year 2026. The increase in taxable value would generate an additional $3.2 million in fiscal 27 if certain things don't happen come November. The budget will be estimated to be approximately $128 million, which is about $6 million above this year's general fund balance in fiscal year 2026. Historically, our taxable values have risen since 2015. We see incremental changes, which is kind of what we want to see from 15 to 22. You look at 23, 24, and 25. There were some blips in a good direction because of new construction and just general increases in taxable value after subsequent to COVID. And this year, you see that percent change is about 5%.

We'll call it 4.82%.

We are proposing a millage rate, our operating millage rate of 6.9363 mills. This is the same millage rate for the last 14 budgets. Our debt service millage rate, which is solely for payback of our general obligation bond, 0.4137 mills. So for essentially 41 cents on $1,000 of taxable value, our residents get all of the new park amenities that you see and continue to see as we finish up those projects. This next slide is the graphical representation of what you just saw. We want to continue to see those blue bars continue to increase and that orange line continue to come down. And as long as those blue bars increase, the orange bars will and should continue to come down. What is the impact on the average homeowner? And so based on our average homesteaded taxable value of $131,000, if nothing were to happen in November, the average homeowner would pay an additional $5.50 per month or about $66 per year. I want you to keep that $131,000 number in mind as we move through. A few highlights on the personnel side. This is the first year of our new FOP or Federation of Police Contract. That used to be the PBA. There is a slight increase in our overall pension rates. This is pretty good news for us. Since COVID, that number has been somewhere between 4% and 7% each year. On the flip side of that, though, we do anticipate a rather significant increase in our health insurance premiums moving into fiscal 27. We have asked our carrier to look at a couple of things as we've met with them. And in August and when we get back together in September, we hope to have some better news on that front. In our operating budget, the transfer to the CRA due to property values increasing in the CRA will increase from 3 million to 3.2 million. And as a result of many of the new buildings that we have, we anticipate an increase in our property insurance premiums. We will also have a better idea of that when we get back together in September because we will receive those estimates around August as well. On the revenue side, this is typical. We just checked the website yesterday. These values are not available. These are the intergovernmental revenues that we talk about. They come from the state. Municipal revenue sharing, half-cent sales tax, and communications taxes. Those estimates should be available around early August. We will incorporate those into our numbers. and bring that back at our first budget hearing in September. As we talk about how we move forward, there are two pieces of legislation that we believe to be critical for us to keep our eyes on. One of them is already passed and will become effective January 1st of 2027, and that's SB 1134. That is the DEI bill. And HJR 1F is the joint resolution that was passed by the Florida House and Florida Senate back in early June of 2026. And so what this calls for is a ballot amendment to be on our November ballot that talks about and asks residents of the state of Florida whether or not they want to at some point eliminate property taxes. So the first step in that measure is an increase in the homestead exemption from $50,000 up to $150,000. So throughout this presentation, we're going to talk about year one versus year two. So that is year one. Year one would be an increase in the homestead exemption from $50,000 to $150,000. the next step if the measure passes would be the implementation of what they are calling a super exemption and this would be an increase in the homestead uh... extension from one hundred fifty thousand to two hundred fifty thousand the most critical part of the bill which is not being talked about as much is the mandate that some at some point the Florida Legislature gets to full elimination of property taxes for homesteaded property. After year two what the bill says is that the homestead exemption would increase by the rate of inflation each year until full elimination. We don't know how long full elimination will be but On the floor, there was discussion about a five-year time frame. So that would take us out to 2032, potentially beyond. That part is very critical because from a budgetary standpoint, we can't calculate it yet because we don't know what inflation would be come year three, four, five, and so on and so forth. So if we take a look at our revenue sources in our general fund, We see that property taxes, which is the far left bar, is by far the largest generator of revenue in our general fund. And that's the case for any local government throughout. The next highest source in a government of revenue is four times less than property taxes. These revenue sources together total about $126 million thereabout in our general fund, what we anticipated to be in fiscal year 2027. If the ballot measure passes, what will happen is a significant reduction in property taxes from 68 approximately to $58 million approximately. reducing that general fund revenue to $116 million. Obviously, you see on the right-hand side of the screen what that would do to us. If you total up all of those numbers, that $61 million to fund the police department, about $17 million for park and rec, and everything else in the general fund, including debt service, our internal services departments, et cetera, et cetera, is about $50 million. So that year one loss totals to $9.7 million, or let's say $10 million. Year two, as we talked about, when we implement the super exemption, that number increases to $14 million, there about. And so obviously, that type of loss causes us to have to make adjustments to our plan. adjustments to our budget, and adjustments to where we will wind up. And so as we began back in February, moved through June, now here in July, we talked about budget reduction philosophy and best practices. And with any budget, there are only a few things that you can do. You can increase revenues, decrease expenses, or do a combination of both. And so what we've done is three things. We've done what we call strategic expense management. As of July 1, Manager Benson implemented a hiring freeze in our general fund. And we've done revenue optimization. Those revenue generating departments in the general fund, park and recreation, planning and zoning, they have been tasked with taking a look at their fees and one, making sure we generally do this every two years, but we did it last year and because of everything that's going on, we're doing it again this year. Do our fees make sense across the board? Doesn't always necessarily mean that fees will go up. It necessarily means that our fees need to be competitive with any and everybody that's in the surrounding area. Fees could be lowered, but if we lower them, does that mean that we will generate more revenue because of more usage? Those types of things we have to think about. And so as we looked at that, uh... on the expense side uh... a couple of adjustments have been made eighty-one total vacancies have been frozen and we've made a significant reduction in the number of special events uh... these two adjustments would prevent any furloughs being necessary, and it would prevent any layoffs from being necessary. Here are the detailed list of the special event cuts. Some of them we have incorporated them into parks programming with little impact. And some of those national holidays where we have done things in the past, Veterans Day, MLK Memorial Day, Fourth of July, those remain. Moving forward, we will have a workshop on, I'm sorry, our first budget hearing will be September the 9th, 5.01 p.m. and our final budget hearing on September the 23rd at 5.01 PM. Mayor, that's all I have. If there are any questions, we'll be more than happy to address those.

How will we, for those new incoming council members, Will they get a budget workshop for them during the time off in August?

Well, you have two budget hearings in September. So the date of the election is the 18th? Yeah. Okay. So we will be meeting with them prior to the September hearings. as a part of their meeting with us, we will walk them through the similar similar presentation and or updates to that presentation, uh, prior to those September meetings.

Okay.

So they will have the same information you have currently and the updated information going forward.

All right. Thank you.

I don't have a question. Well, it's not more so of a question. It's about moving forward. So should the voters of the state decide to move forward with the elimination of property taxes and an implementation plan is put in place? how would we go about with the implementing of the new budget that would basically include the cuts and the adjustments?

Another bill that recently passed, Vice Mayor, which I didn't have it up here, and I don't remember the identifying number, but the governor is now required that when we submit our budget in late September, we also submit with that a listing of cuts that you have identified. And that will be required of us. If it does not pass, you can certainly restore any cuts that have been made through a budget amendment, a budget adjustment that we would do at that particular point in time.

So the budget that my colleagues and I will vote on with the first and second hearing in September, that would be with the proposed cuts?

Yes, sir.

I thought the proposed cuts wasn't going to be, that wouldn't take place unless it was, I mean, unless it passed in November. That was the purpose of me saying how would that implementation look, what that implementation would look like. Do you get what I'm saying?

I get you, I get you.

So why are we voting on the cut of the budget if we don't necessarily know what's to come?

I think for us, Vice Mayor, it's a timing thing because you're going to start implementing your budget October 1st, your new budget October 1st. I think the safest thing for us to do is to march along a path that prepares us for the worst case scenario. It is much easier for us to begin restoring cuts if something doesn't happen versus trying to implement cuts once we started down a certain path.

Okay, I'm fine with either or, but it wouldn't be implementing cuts because we have two prepared, but we basically have a tail of two budgets, so it wouldn't be implement. We know what we're looking forward and how we'd be moving forward, so it wouldn't be that, but I'm cool with either or. I just was curious as it relates to moving forward, why would we do that? But okay, thank you. Sure.

No other questions?

Thank you, Mr. Clay.

I guess these are the hard facts we gotta deal with right now. Mr. Manager? That's it?

Unless there are other questions.

So I know other questions then.

And, Mayor, I just want to thank you, Vice Mayor, for your question, but also keep in mind that we have to submit a balanced budget going forward. So that's why we're taking the path that we're taking right now. And if there needs to be an adjustment down the road, if it doesn't pass, we have that flexibility to address it at that time as well.

So I think that's important as well, that we can always do a budget amendment to bring back or to unfreeze the 81 positions and all of that. So I think although we're working towards being prepared should this happen in November based off the voter's decision, but I don't want to shy away from 81 cuts is an interruption to municipal services because although we're functioning now without them, but that doesn't mean one don't need it to effectively do their job. So that's what the reality hit in for me when I heard that and saw that. I was like, yeah, okay, this is actually really happening. So that's all I have for that.

All right. I just have a statement to say. I commend the finance team and everyone for putting together this budget, especially at this time when so much is at stake. I think fiscal conservatism probably is the name we'll give this as we go forward. But I believe, as stated, the beauty of being conservative now even if the law does not pass, it now gives us an opportunity to reevaluate our expenditures and are they truly, really contributing to the needs that the residents have. Sometimes a reset is not a bad idea. Of course, keeping in mind, as my councilman said, that For those things that require, such as departments, I'm sure our manager will implement the needed steps should any department fall below, and I'm confident he would not have our city function below standard of safety and care. So just thank you for the work. I know it was difficult. Going conservative at any time on a budget, as a business owner myself, I definitely understand. So just want to give gratitude. Thank you.

All right. There's no more questions or any issues. All hearts and minds are free and clear. This workshop is adjourned.