- The city of Tallahassee is projecting a multi-million-dollar shortfall in funding next fiscal year. Staff anticipates a $3.8-million-dollar deficit in the general fund in the fiscal year 2024-2025.
- City staff said the projected shortfall's main driver is an increase in health costs, and an increase in pension costs, among other things.
- Watch the video to see how city commissioners voted to help staff work to fill the gap.
BROADCAST TRANSCRIPT:
The city of Tallahassee is projecting a multi-million-dollar shortfall in funding next fiscal year.
City commissioners, the mayor, the city manager, and city staff discussed the potential shortfall during a workshop.
The workshop included a 2024 Second Quarter Budget Update and Fiscal Year 2025 Budget Plan.
The shortfall was anticipated for fiscal year 2025 (2024-25) because the amount of anticipated tax dollars coming in and the expenses coming out aren't currently balanced.
The city of Tallahassee does check-ins every few months to see if they’re still within budgets outlined in previous years and future budgets.
The assessment of the FY25 budget shows—right now—they’re not.
"This is where we start every year at a deficit,"
Dianne Williams-Cox, Tallahassee City Commissioner said.
According to a city spokesperson, the workshop is 2 of 5 sessions that will happen. The FY25 budget won't be finalized until later this year.
In the Wednesday workshop staff said it anticipates a $3.8 million deficit in the general fund for FY25.
The mayor, commissioners, city staff, and the city manager sat down Wednesday to talk about how to avoid the multi-million-dollar shortfall.
It got heated at times.
"I've never seen any desire to have any meaningful budget conversations at this table," Jeremy Matlow, a Tallahassee Commissioner said.
Tallahassee Mayor John Dailey disagreed.
"Commissioner Matlow you have been with us for six years," Dailey said. "But clearly truly do not understand the budgetary process and how we go through this to form a budget and that is on clear display today."
The City’s current General Fund Budget, for FY24 (2023-24) is $201.45 million.
The money goes towards multiple things like public safety, parks and recreation, public works, and community resilience. According to the city staff the fund is operating within existing resources.
The general fund's revenue sources include Ad Valorem Property Tax, water, gas, and electric taxes, state revenue sharing, service charges, and utility transfers.
According to city documents, the two largest expenses for the General Fund are the Tallahassee Police Department and Parks and Recreation.
TPD taking the biggest share.
Last year the city invested millions more dollars into TPD.
City data show the personnel budget for TPD went from $107.1 million to $115.6 million.
That's an over $8 million increase.
"We made a conscious decision to increase the millage rate to pay for those things that Robert outlined," Curtis Richardson, Tallahassee Mayor Pro-Tem said in response to questions about raising taxes previously to increase TPD operations. "Police officer salaries, hiring additional police officers and technology."
In a report, staff said," Based on second-quarter performance, Police expenditures are on track with the budget. A key driver for the Police department's budget is overtime, and FY24 second quarter results are consistent with prior years. Staff will continue to monitor overtime and personnel expenses as new officers are hired throughout the year."
City staff said the projected shortfall's main driver is an increase in health costs, an increase in pension costs, and a transfer of funds to Star Metro to get back to pre-pandemic funding.
This is despite Star Metro ridership being down, not unlike other public transit systems across the United States.
Star Metro has a separate fund under the branch of the city of Tallahassee.
"Even though we have a general fund deficit, there won't be a change in the millage rate," Robert Wigen, Tallahassee Director of Resource Management said. "We ask that we balance the budget with salary and health care and pension costs."
That means no anticipated raises in taxes.
Staff also said in its report," Due to the varied nature of General Fund revenue type and their timing, revenues may appear over or under-collected when compared to expenditures on a month-to-month basis."
Pointing to another reason why the budget may not yet be balanced.
"You've told us where the pressure points are," Commissioner Williams-Cox said. "This is where we start every year at a deficit at this point in time because there's some things that we're gonna learn as we go through the year. There's revenue that we're gonna realize."
Wigen also warned city commissioners that efforts by the state legislature could hinder revenue generators in the future.
"Though much of the legislation the City opposed did not pass, a clear trend for the 2024 legislative session was limiting local government's ability to generate revenue to fund critical services," city staff said in a report. "Multiple bills were filed to cap general fund transfers from utilities, eliminate or reduce allowable surcharges for water and wastewater customers outside the municipal boundaries, and reduce local government ad valorem revenue."
The commission voted to move forward with sharing at least one bill with Leon County accepting the new budget update and leaving staff to find out ways to balance the budget.
It’s also important to note that just because there’s a projected deficit doesn’t mean the bills don’t get paid.
Like you—the city has access to credit lines—bonds are most commonly used.
That’s how the city is paying for things related to portions of the bicentennial, the Southside Transit project other improvements.
"A vital piece of our key assumptions is debt service with the Bicentennial and key projects moving forward that you're very familiar with," Wigen said. "Southside Transit Center, TPD headquarters, the senior center, Parks and the Orange Avenue area and Market District. They're all slated for completion in fiscal year 25."
That money, due to it being borrowed, eventually must be paid back, and it ultimately comes from the general fund.
