Interim city manager had explained need to replenish city reserves, with tens of millions of dollars expected to be used for hurricane response
During a special meeting held the evening of Sept. 15, the Sarasota City Commission unanimously adopted a slightly higher operating millage rate for the 2025-26 fiscal year, which will begin on Oct. 1.
The rate of 3.2730 mills is necessary to replenish the city’s reserve fund, a topic that interim City Manager Dave Bullock discussed with the board members during their late-July budget workshops.
The current operating millage rate is 3 mills.
One mill represents $1,000 of the value of a piece of property. For example, without a homestead exemption, the owner of a home valued at $200,000 would pay $200 in property taxes at a rate of 1 mill. If the rate were 3 mills, the tax bill would be $600.
“The median homeowner with a taxable value of $360,000 will pay an additional $84.63” with the new rate, a city news release noted.
“The 3.2730 operating millage rate will generate an additional $4.7 million, which will be designated for reserves,” the news release added.
In July, the City Commission set the preliminary operating millage rate at 3.3000 mills, for publication in the Truth in Millage (TRIM) notices that the Sarasota County Property Appraiser’s Office sends out each August. Those notices list not-to-exceed millage rates. A local government board can lower any of them before adopting their budgets for the next fiscal year.
During their first budget hearing, held on Sept. 2, the city commissioners lowered the operating millage to 3.2730.
During their July 28 budget workshop, interim City Manager Bullock pointed out that the city at that time had an estimated total expense of $50 million in its recovery from the effects of the 2024 storm season. Approximately $37.8 million would be coming out of the city’s General Fund, he said.
As a slide explained, “The General Fund is the Main operating fund used to account for and report all financial resources not accounted for and reported in other funds.” It is the repository of the annual property tax payments the city receives, along with other types of revenue.
During those July 28 remarks, Bullock characterized the General Fund as the one “that we turn to whenever we’re in trouble.”
He emphasized that day that while the city has a policy calling for its fund balance — or reserves — to represent 17% to 25% of overall city expenditures (approximately two to three months of operating funds), the use of those reserves for the hurricane damage response had dropped the level to an estimated 13.9% for the 2024-25 fiscal year, which will end on Sept. 30.
Bullock did point out, “You maintained a reserve for the very purpose we used it for.”
The commissioners ultimately agreed with Bullock about the need to replenish the reserve fund. The additional money generated by the higher millage rate for the next fiscal year will boost the city’s reserves to 20% of General Fund expenditures, the city news release said.
The overall $303-million budget for the 2025-26 fiscal year is $2 million less than the 2024-25 budget, “while maintaining levels of service,” the city news release noted after the Sept. 15 vote.
“We understand residents and business owners are still recovering from last year’s hurricane season,” said Mayor Liz Alpert in the city news release. “We’re balancing that with the need to be fiscally responsible and replenish the city’s reserves, which were diminished by almost 80% due to hurricane recovery expenses. This budget presents a fiscally responsible path to restoring our reserves while maintaining the high level of service that Sarasota residents expect.”
Alpert added in the release, “Thanks to our Interim City Manager, Financial Administration staff and all involved with preparing this conscientious budget.”
The release also explained, “The budget includes a significant investment in the repair and restoration of the city’s coastal parks, which suffered extensive hurricane impacts, alongside funding for citywide restoration and resiliency projects.”
It further noted that all of the city’s hurricane-related projects are in the permitting phase with state and federal agencies. “Project updates are available at www.Sarasotafl.gov/RestoringSarasota,” it said.
“While City staff will pursue every available means to recoup federal funding for hurricane recovery,” the release also pointed out, “the adopted budget does not include possible FEMA [Federal Emergency Management Agency] reimbursement dollars.”
During his July 28 budget workshop remarks, Bullock referred to “this new uncertainty as to federal reimbursements,” with the Trump Administration having indicated plans to reduce or eliminate federal funding support for communities dealing with natural disasters.
In early June, as CNN reported, President Trump announced that he planned to phase out FEMA after this year’s hurricane season, shifting “responsibility for response and recovery to the states.”
However, in early August, PBS News reported, “Lately, [Trump’s] team has backed away from that idea, but there are still major changes underway …”
In regard to the city’s updated Capital Improvement Plan, the city news release said that it totals $42 million, “with the funds dedicated to infrastructure improvements for Fiscal Year 2025-26, focusing on hurricane recovery, transportation safety, sustainability, utilities infrastructure, and accessibility.”
Further, the release noted, “The City maintains a high bond rating of Aa1 from Moody’s Investor Services and AA+ from Fitch Ratings, based on low debt burden and responsible budgeting practices.”
The ‘ripple effect’
Having been named the interim city manager in May, Dave Bullock was participating in his first budget discussions with the City Commission in late July. Even so, Bullock previously had served as the manager of the Town of Longboat Key and as a deputy Sarasota County administrator.
“I want to talk to you mostly about the ripple effect of the [2024] storms,” he told the board members on July 28. The total estimate for the responses to Tropical Storm Debby and Hurricanes Helene and Milton is “all unexpected expenditure,” he stressed.
Not only was the city paying for repairs, Bullock noted, but it also was dealing with lost revenue from the Bobby Jones Golf Club, the Van Wezel Performing Arts Hall and parking, for examples.
Turning to the reserves issue, he said, “We began this year with about $29 million in your unassigned fund balance …” It represented about 28.7% of operating expenses, he continued. At least for the past 10 years, he noted, the city had had reserves that were “somewhere between 20 and 30%.” By the Sept. 30 end of this fiscal year, Bullock pointed out, the figure was expected to be less than 14%.
“Currently,” he said, “there is no policy for replenishing the fund balance. I kind of looked around for one …” The only thing he could find, Bullock added, was policy language specifying that the fund balance should be between 17% and 25% of expenditures.
“To replenish the reserves,” he continued, “I’ve taken a three-year approach.” The first step, Bullock said, is to “spend less than budgeted. You’ll see the city did a good job of spending less than it budgeted for several years,” he noted. “And then it did a not-so-good job of spending less than budgeted.”
He showed the board members a slide illustrating those statements.
Over the past four years, Bullock pointed out, “The city began to dip into its reserves pretty deeply and lowered its revenue.”
He presented the commissioners another slide, directing them to the effects of board budget decisions especially for the 2023, 2024 and 2025 fiscal years. With reduced revenue from lowering the millage rate, Bullock said, “You begin to see some fiscal storm clouds forming. Now layer a couple of hurricanes on top of that, and you’ve really got the situation that were in today.”
Further, he noted, while the city had seen property values rise over the past 10 years, the rate of climb had slowed for the past four years. “I think the increase in property values will get smaller and smaller and smaller,” Bullock said.
During his 31 years of service in local government, he continued, “I’ve never recommended an ad valorem increase, and never had to, because property values went up, or there were adequate reserves to cover those few years when they dipped.”
However, for the 2025-26 fiscal year, Bullock told the commissioners, he was recommending a slight increase for three reasons:
- “Revenues are not keeping up with recurring costs …
- “The hurricanes depleted our reserves.”
- The city’s fund balance policy “is pretty clear” in calling for a level between 17% and 25%.
Moreover, he pointed out, complying with that fund balance policy “helps us maintain a good bond rating.”
Following Bullock’s remarks that day, Vice Mayor Debbie Trice said, “I understand the desire to build up our reserves as fast as possible, but I also recognize … that there are plenty of Sarasota residents who are still hurting, still recovering, still have the expense of recovery. So increasing the millage more than necessary to front-load the recovery, I think, hurts them.”
Yet, she added, “I see the proposal that Mr. Bullock has made as being a compromise between meeting the city’s needs without squeezing the residents who were still trying to recover.”
Commissioner Jen Ahearn-Koch pointed out that during her time on the board — she first was elected in 2017 — “We raised the millage slightly once and then kept it the same, lowered it, rolled it back, lowered it. I think we’ve been trying very hard to be as fiscally responsible as we can, and responsive to our citizens and respectful of them.”
Yet, she continued, “There’s always that tap on your shoulder: ‘What if? What if? What if?’ Last summer, we did have the ‘What if?’ ”
Ahearn-Koch told Bullock that she respected the fact that he never had proposed a millage increase in his past local government service. “This means a lot that you’re doing this now.”
She also expressed support for increasing the millage rate to build up the reserves more in the first year of Bullock’s three-year plan, as that “could put us in a better position to be prepared to respond to our citizens,” especially with concern about the future trend in property assessments.
Commissioner Battie likened Bullock’s proposal to hitting a home run in the first year and then focusing on hitting singles in the subsequent years.