City of Gainesville’s budget gap increases to $12.05 million in final budget workshop

BY JENNIFER CABRERA

GAINESVILLE, Fla. – Today, the Gainesville City Commission held its third budget discussion for the 2027 Fiscal Year and learned that the budget gap has increased to $12.05 million because the increase in property values was lower than expected.

Click here for our article on the first budget workshop.

Click here for our article on the second budget workshop.

Budgets for remaining departments

Office of Management and Budget Director Allison Teslia gave a presentation about the budgets for the departments that had not yet been presented; the full presentation can be viewed here.

Gainesville Community Reinvestment Area 

Gainesville Community Reinvestment Area (GCRA), which does not get any money from the City’s General Fund, proposed a $261k decrease in salaries and benefits from the FY26 adopted budget, with a reduction of three positions. The budget proposes a $3.5 million decrease in operating expenses, a Capital Outlay increase of $3.2 million, and an increase of $160k in aid to private organizations, for an overall decrease of about $450k, or 6.6% less than the FY26 adopted budget. 

The proposed budget eliminates a vacant Project Manager 3 position and two Project Manager 4 positions (both filled). The reduction in operating costs is based on actual expenses, the reallocation of some programs to Grants & Aid, and non-recurring expenses in the FY26 budget. 

The increased Capital Outlay budget will be used for GTEC improvements, Citizens Field, and the 8th & Waldo revitalization project. 

None of the GCRA spending is from the General Fund.

Housing and Community Development

The Department of Housing and Community Development (HCD) only takes about $578k per year from the General Fund; most of its funding comes from grants. The proposed budget recommends a $34k increase in salaries and benefits and a $13k increase in operating expenses, for an overall increase of $47k, or 8.8% more than the FY26 adopted General Fund budget for that department. The increase in salaries and benefits reflects the partial reallocation of the HCD Manager, previously funded by ARPA, to the General Fund and Other Funds.

The increase in operating costs reflects an increase in insurance costs and the reallocation of ConnectFree assistance to Grants & Aid.

The Other Funds budget for HCD increased by $39k, 1.3% higher than the FY26 budget from Other Funds. The overall budget for the department increased by 2.4%.

Sustainable Development

The Department of Sustainable Development, which administers the City’s Comprehensive Plan and codes, proposed a decrease of about $64k in salaries and benefits and an increase of about $67k in operating expenses, for an overall 0.1% increase from the adopted FY26 General Fund budget.

The department added a Fire Protection Technician during FY26 (via a budget amendment), transferred the Chief Resiliency Office to the City Manager’s office, and is requesting a new Permit Expeditor position for FY27. Both of the new positions are funded through the Building Fund.

Operating increases reflect increases in insurance costs and fleet fuel, maintenance, and replacement costs. 

The Other Funds budget for Sustainable Development increased by $442k, 9.8% higher than the FY26 budget from Other Funds. The overall budget for the department increased by 5.7%.

Transportation 

The Transportation Department’s General Fund budget is only projected to be $1.7 million for FY27 because most of its funding comes from grants. The proposed changes to the department’s General Fund budget include a $54k increase in salaries and benefits and a $242k increase in operating expenses, for an overall 21.3% increase from the adopted FY26 budget. 

The budget includes 11 new positions to support the ADA/Community Transportation program, and two filled positions will be eliminated: a Fleet Maintenance Supervisor and a Transit Planning Manager position.

The increased operating costs include $83k for repairs and maintenance for the SW Downtown Parking Garage.

The Other Funds budget will increase by about $5 million, or 14% over the FY26 budget. The department’s overall budget will be 14.3% higher than the FY26 budget.

Non-departmental

Non-departmental “is where we recognize City-wide costs, such as debt service, interfund transfers, contingency reserves, the retiree health, and City-wide insurance and risk allocation,” according to Teslia. The non-departmental General Fund budget has no change in salaries and benefits, increases operating expenses by $1.5 million, has no change in aid to private organizations, increases debt service by $167k, and decreases transfers by $215k, for an overall increase of about $1.5 million, or 4.9% higher than the adopted FY26 General Fund non-departmental budget.

The non-departmental budget maintains GRACE Marketplace funding at $2,050,000, with $1.7 million of that from the General Fund and $350k from GCRA funds. It maintains funding for four RTS routes (5,8,15, and 43), $190k for free bus fares for riders 18 and under and 65 and over, $130k in funding for the Hoggetowne Medieval Faire, $85k for PAPI grants, $65k for the Early Learning Coalition, $57k for outside agency grants, $50k for Special Events Grant in Aid, $50k for the Wilhelmina Johnson Center, $40k for the Workplace Stewardship Committee, $36k for the Freedom in Motion program, $35k for the Holiday Parade, and $10k for the Family Unification Program.

It increases funding for the Combined Communications Center by 4% and increases the Annual Required Contribution for Pension Plans by about $1.3 million.

The Other Funds budget will increase by about $21 million, or 17.3% over the FY26 budget. The department’s overall budget will be 14.9% higher than the FY26 overall budget.

Commissioner Ed Book said the land the City recently transferred to GRACE Marketplace should “allow them to leverage monies… and get additional funding sources from other places… I know that gets very touchy, and people get very, very concerned when they hear that, but we are funding them by millions, and the whole point of turning over the land was to allow them the opportunity to get monies from other sources.”

Wild Spaces Public Places Department

The Wild Spaces Public Places Department only uses $11k from the General Fund budget (no change from FY26); its budget also includes about $9.7 million in expenses, including five existing positions and two new positions, from other funds.

The new positions are an Engineer IV and a Construction Project Coordinator (both added via a budget amendment in FY26); a temporary part-time position was reallocated to Cherry Pool.

The Other Funds budget will decrease by about $1 million, or 10.1%, from the FY26 budget, and the department’s overall budget will also be 10.1% lower than FY26.

Revenue estimates

Teslia said staff initially estimated that property values would increase by 5%, but the estimated property values from the Property Appraiser’s office only show a 3% increase; that means that the reduction in the budget gap that was anticipated at the May 28 meeting turned into an increase. The revenue of $163,267,304 is only anticipated to be about $1.2 million, or 0.8%, higher than the FY26 revenue.

The expenditure estimates currently add up to $175,314,077, which leads to the current budget gap of $12,046,773.

Next steps

Interim City Manager Andrew Persons said the next scheduled budget discussion is on June 18, when the preliminary fire assessment fee will be set; he will bring balancing scenarios for the budget to the July 16 meeting. He also said that staff members will be meeting with Commissioners to get feedback on proposed changes to the budget.

Commissioner Ed Book: “We have to start [cutting] with the external funds that are going [to outside organizations], even though we know they’re doing great work, every one of them… That’s probably about half a million dollars on the non-departmental side.”

Book said the City’s priority should be to “fund internally… We have to start [cutting] with the external funds that are going [to outside organizations], even though we know they’re doing great work, every one of them… That’s probably about half a million dollars on the non-departmental side.” He recommended letting these organizations know that funding may be cut. He also said he hoped the Charter Officers would propose cuts from their own offices.

Commissioner Casey Willits: “I don’t think this is something you can decrement your way out of;… it’s more about restructuring things, because you have to find real savings or real chunks of services that the City’s just no longer going to provide.”

Commissioner Casey Willits said the $12 million gap was “oddly close” to the City’s projected loss from homesteaded property tax exemptions. He said it would be a good exercise to look into possible cuts around 7-8% “because that’s already what the Governor’s proposing a City like us would have to do, anyway… I don’t think this is something you can decrement your way out of;… it’s more about restructuring things, because you have to find real savings or real chunks of services that the City’s just no longer going to provide.”

Commissioner Bryan Eastman: “I think people think there [are] magic cuts. I’ve seen the budget; there are no magic cuts to get to $12 million, but we do have some levers here, so I appreciate that.”

Commissioner Bryan Eastman said, “I think people think there [are] magic cuts. I’ve seen the budget; there are no magic cuts to get to $12 million, but we do have some levers here, so I appreciate that.” He said the increased homestead exemptions would lead to a $9 million revenue loss because they start three months into the City’s fiscal year.

Persons said his interpretation was that the proposed constitutional amendment wouldn’t affect the City’s budget until the following year, but there are still a lot of questions. He also pointed out that a bill passed today by the legislature “also comes with the restructuring of how we can spend ad valorem (property tax) revenue.”

Teslia said that if the constitutional amendment passes, it would affect the property values starting January 1, 2027, but those are billed the following November, so what they’re really preparing for is Fiscal Year 2028, which is when the taxes will reflect the $150,000 exemption increase for homesteaded properties. The $250,000 exemption will affect the FY2029 budget.

Eastman said they needed to look “at where our budgets have increased in recent years and see what kind of efficiencies we could find there,… [and look] at more revenue changes” like sponsorships for events and advertisements on signs and bus stops. 

Mayor Harvey Ward: “I do not accept as a foregone conclusion that what the legislature passed… becomes part of the constitution. We have an opportunity to affect that.”

Mayor Harvey Ward said, “First of all, I do not accept as a foregone conclusion that what the legislature passed… becomes part of the constitution. We have an opportunity to affect that. I intend to work very hard to affect that.”

He said the second thing was that the General Services Contribution formula previously passed by the Commission would provide a transfer from GRU that would close the budget gap: “The gap is the difference between the formula and the random number that has been chosen, and it’s important to say that, and that may offend some folks, but that’s the reality… I see the elephant in the room, and I’m not going to let anybody else not see it.”

The GRU Authority initially set the transfer at $15.3 million, the amount set by the City Commission in 2023, but voted in June 2024 to reduce it by $6.8 million a year for 10 years because they calculated that GRU had paid $68 million more than what the utility made in the years before the Authority was established by the legislature. 

Commissioner Cynthia Chestnut said, “I think it’s going to be very, very important that we inform the public of the true impact of all of this, if we’re going to have to look at cutting again” if the constitutional amendment is approved by voters.

Persons said the $150,000 exemption would reduce the City’s property tax revenues by about $9 million, and the $250,000 exemption would reduce revenues by $12.6 million.

Chestnut continued to ask questions about the legislation, but Persons said the implications were not fully understood, and he suggested scheduling it for a future meeting.

City Commission will discuss the new legislation on June 11

Ward said they could have that discussion at the June 11 General Policy Committee meeting.

Chestnut said they could increase the fire assessment fee to cover a larger percentage of fire services costs, but she didn’t know whether there were other services they could similarly assess; she said they might need to increase bus fares. She asked for information on “who really uses the [free] youth fare [and the free senior fare]… Let’s just see how those fares are utilized.”

Willits said property taxes pay for “a whole bunch of stuff that people rely on, and I don’t know what the legislature intends, but a City cannot only be firefighters and police officers — they can’t. Otherwise, I’d live in The Villages. I’m sure they provide fire and police. I don’t want to live in The Villages; I want to live in Gainesville. There’s got to be something more to a City budget… than police and fire.”

The legislation states that ad valorem taxes can be used to:

• a. Provide for public safety, including law enforcement, fire service, and emergency medical service; 
• b. Provide funding for education and public schools; 
• c. Finance or refinance infrastructure, including expenditures on road and bridge construction and maintenance and stormwater control; 
• d. Finance or refinance natural resource projects, including flood control measures; 
• e. Issue local bonds for uses consistent with this paragraph and to make debt service payments for existing obligations; 
• f. Meet obligations for retirement benefits of local government employees; or 
• g. Fund the operations and administration of county officers and commissioners established under Article VIII and municipalities, and the expenditures approved by such county officers or county or municipal governing bodies, except those expenditures prohibited by general law.

The legislative bill analysis states, “County and municipal ad valorem taxes may be used for all valid purposes of the respective unit of government.”

Ward said that ad valorem taxes “are just shy of 50% of our total revenues,” but he did not discuss the percentage of ad valorem taxes that come from homesteaded properties. Based on the June 2 presentation, the total property tax revenue for FY27 is estimated at $81 million, so the homesteaded property taxes for that year would be about 15.5% of property tax revenue and about 7.6% of all revenue.

Chestnut agreed that it would be a good idea to alert outside agencies that their funding may be cut: “I think we’re going to look back at the budget of 2020, 2021, as the glory days, as we are certainly in a very austere posture now.”

The City of Gainesville’s adopted General Fund budget for FY21 was $137,800,833, $27 million lower than the estimated revenue for FY27 and $39 million less than the proposed expenditures for FY27. Adjusting the FY21 budget for inflation would come to about $169 million, which is about $4 million more than the estimated revenue for FY27 but about $6.3 million less than the current estimated expenditures.