Finance director provides mid-year review to commissioners
The mid-year financial picture for the City of Sarasota shows that the reserve funds are not climbing back as quickly to the preferred level as staff had anticipated after the City Commission approved a tax increase for this fiscal year, which began on Oct. 1, 2025.
That was the news that the city’s finance director, Kelly Strickland, delivered to the board members last week.
During her April 20 presentation, Strickland emphasized what then-interim City Manager Dave Bullock explained during the commission’s July 2025 budget discussions: The “significant reduction in the unassigned fund balance at the end of the 2025 fiscal year “is primarily the result of debris cleanup costs following Hurricanes Debby, Helene and Milton.”
She added later during her remarks, “We continue to see additional costs showing up in the [city’s] Capital Improvement Plan as we work through repairs and long-term recovery projects.”
Moreover, Strickland pointed out, “Our FEMA reimbursements remain on hold indefinitely.” She was referring to the Federal Emergency Management Agency.
“While we’re hopeful … some of the funds … will eventually come through,” she said, “we cannot rely on the revenue in our budgeting at this time.”
Although the city policy mirrors the national best practices of maintaining a reserve of between 17% and 25% — “or roughly two to three months of operating expenditures … for unforeseen emergencies,” Strickland pointed out, the level at the end of FY 2025 was 10.8%.
“Historically,” she said, “the city’s lowest point [with its unassigned fund balance] was 24.7[%] in 2018.” The highest, she added, was 35.3% in the 2022 fiscal year.
Interim City Manager Bullock initially recommended that the City Commission raise the millage rate from 3 mills to 3.3 mills for the 2026 fiscal year. However, after further discussions before the final vote, the board members agreed to a millage rate of 3.2730. (One mill represents $1,000 of the value of a piece of property.)
Based on the adopted budget for this fiscal year, Strickland continued, that increase “was projected to bring the reserves back up to 20% of expenditures.”
However, she said, “When the Fiscal Year 2025 actuals came in, the unassigned fund balance was lower than we had projected. It was short about 3.1%, or roughly $4.4 million.” She was referring to the results of the annual audit.
In other words, Strickland added, for the 2027 fiscal year, which will begin Oct. 1, the city will be “starting from a lower point than we expected, and that does create an additional pressure on the reserve restoration plan.”
She reminded the commissioners that that plan was to take place over three years.
“Any millage adjustments that may be needed to comply with the city’s fund balance policy,” Strickland added, “will ultimately be at the commission’s discretion.”
A slide she showed the board members put the estimated revenues for the city’s General Fund for the 2025 fiscal year at $115,265,636. The budget later was amended to anticipate $110,061,576 in revenues, the slide said. The actual figure was $114,681,890, the slide noted.
The General Fund is made up largely of the city’s property tax revenue. It covers the expenses of departments that do not generate sufficient revenue on their own to cover their costs.
The property tax revenue ended up increasing by $7.6 million in the last fiscal year, another slide said.
Yet, the slide showed, while the city’s General Fund expenditures originally were estimated at $129,676,480 for the 2025 fiscal year, they did end up being lower by $2,465,425, for a total of $127,211,055.
As a result of the budget situation, Strickland told the commissioners, “We’re not allowing any new personnel requests within the General Fund this year. This isn’t the year to grow services,” she continued. “Our focus is on stabilizing and rebuilding our reserves.”
Any program changes that department leaders would like to see included in the 2027 fiscal year budget, Strickland said, “will need to be brought individually to the City Commission” for approval.
Yet another point that Strickland made was that staff is working on the basis of the estimate that the city’s property value will rise only 4% this year. The July 1, 2025 estimate that the Sarasota County Property Appraiser’s Office sent to state officials, as required by law, put the increase that year at 6.26%.
In 2024, the preliminary, June 1 estimate of the city’s property value was up 9.53%, compared to the certified figure for 2023.
Strickland also explained to the commissioners that, in accord with accepted practices, staff will create the 2027 fiscal year budget on the basis of receipt of 96.5% of the property tax revenue due to the municipality. At the current millage rate, she added, that would generate an extra $2.2 million for the General Fund.
However, Strickland reminded the board members, because of the existence of the tax-increment financing district for The Bay Park in downtown Sarasota, the money generated by the rise in value of property in that district — which encompasses more territory than just the park — is set aside in a special fund to pay for amenities in the park. She noted that the revenue is set aside in similar fashion for the Newtown Community Redevelopment Area (CRA) of the city. Therefore, none of that additional money would go to the General Fund.
On one positive note, Strickland said that the city’s Revenue Stabilization Fund has a balance of approximately $3.8 million. “That reserve fund gives us another layer of protection, but it’s also something we need to reserve carefully as we work through the recovery period.”
‘Thirteen million in the hole’
At the conclusion of Strickland’s presentation, Vice Mayor Kathy Kelley Ohlrich summed up the crux of the comments: “So … our attempt to rebuild our reserves is not moving ahead as quickly as we had anticipated or hoped. Is that correct?”
“That is correct,” Strickland responded.
Given the amount of hurricane damage with which city staff has had to contend, Strickland continued, “Our estimate [for rebuilding the unassigned fund balance] was too high. We came in … about $4.4 million lower than where we thought we would …”
Replying to another question from Ohlrich, regarding departments’ funding for the next fiscal year, Strickland explained, “We gave them the operating budget that was adopted in the Fiscal Year 2026 budget, and then they were able to put in 2[%], 3% to come up with how much they would need to reduce their operating [costs] to offset any salary increases. It seemed to work very well,” she added, referring to a work sheet distributed to each department.
The other departments were given a deadline of March 31 to provide their proposed FY 2027 budgets to her department, Strickland continued. “We’re in the process now of working through those … And I would say that the departments tried their best.”
Mayor Debbie Trice asked a question about the slide Strickland had presented that showed the city’s expenditures to have been about $2.2 million less than anticipated in the 2025 fiscal year. “I would have thought that would have improved our picture rather than make it look even worse,” Trice told Strickland.
As it worked out, Strickland explained, the total city expenditures were higher by $13 million than the total revenue.
Trice characterized the situation as “Thirteen million in the hole,” based on the audited figures for the 2025 fiscal year.
“Yes,” Strickland told her.
Then Trice asked whether Strickland envisions higher expenses for the rest of this fiscal year than for the first half of it, when it appeared staff was “doing a decent job in holding our expenses down, because we spent less than budgeted.”
“I can’t answer that right now,” Strickland replied. “But we are mandated to stay within the current budget …”
She suggested that whenever the commissioners are presented with a budget amendment, they should ask themselves whether unassigned fund balance will be needed to cover the expense, or whether city revenue will be sufficient for it.
Trice also asked whether Strickland was able “to project where we might end the fiscal year, based on everything that’s been budgeted or moved around or whatever?”
“I cannot tell you that revenues are coming in as we projected,” Strickland told Trice, because staff has to contend with a three-month lag in the receipt of them. By the time the City Commission conducts its July workshops on the 2027 fiscal year budget, Strickland added, “We’ll have a lot more sound picture for you.”