Gainesville City Commission reviews initial budget gap of $7.5 million, votes to explore a franchise fee for GRU

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At a March 26 special meeting, the Gainesville City Commission voted to allocate $5 million in excess fund balance to 8th & Waldo, learned that the City’s initial FY2027 budget has a $7.5 million gap, voted to ask the GRU Authority for a joint meeting, and asked staff to explore the City’s ability to impose a franchise fee on GRU.

After adopting the FY2025 Annual Comprehensive Financial Report, which marked the third consecutive year with no audit findings, the Commission unanimously reaffirmed and approved the City’s existing Strategic Plan. 

FY2027 budget estimates

Allison Teslia, Director of the Office of Management and Budget, kicked off the FY2027 budget development process by announcing that the starting point for next year’s budget includes an estimated revenue of $164.8 million, which is $2.8 million or 1.7% higher than the FY2026 adopted budget. That assumes that the millage rate will stay flat at 6.7297 mills and that the GRU Authority would continue a Government Services Contribution (GSC) of about $7.2 million. 

FY2027 expenditures are estimated at $172 million, so the current budget gap is about $7.5 million.

Teslia said the City’s fund balance policy requires a maximum fund balance (unassigned funds) of $40.5 million, but the current General Fund fund balance is $49.9 million, giving Commissioners about $9.4 million in available funds; staff recommended setting aside $5 million from the fund balance for the 8th & Waldo project.

Mayor Harvey Ward: “For anyone who might be curious or worried, seeing that there is a gap at this point, we will, as we are required by law, pass a balanced budget when all is said and done. In my experience, we always start out with a gap, and we figure it out over the course of the next several months; that’s what this process is.”

Mayor Harvey Ward said that Commissioners had already tentatively agreed to that $5 million figure the last time they had the 8th & Waldo discussion, “so this is just to remind everybody that’s not new… And for anyone who might be curious or worried, seeing that there is a gap at this point, we will, as we are required by law, pass a balanced budget when all is said and done. In my experience, we always start out with a gap, and we figure it out over the course of the next several months; that’s what this process is.”

Commissioner Bryan Eastman noted that last year, the Commission used about $7 million in excess fund balance to balance the budget. He asked, “Why is staff recommending that we commit to this so early in the process?” Interim City Manager Andrew Persons said the Commission could wait until they have more precise revenue estimates to make that decision.

Commissioner Cynthia Chestnut said she would prefer “to earmark the funds and set them aside… That’s what we made a commitment to do… I don’t want to start tinkering with the funds in any way.”

Ward agreed, “I agree with Commissioner Chestnut. We essentially have committed this, because we voted for the ladder of funding for everything at 8th and Waldo at a previous meeting. And this affirms that more clearly.” He said they could put the money back “if something horrible happens.” 

Referring to a list of capital needs, Commissioner Ed Book said, “We’ve had some situations where we have buildings and structures — merely because we weren’t maintaining them,… it costs us more in the long run. And so our fiscal responsibility is to try and maintain things.” He asked which funding sources are available to fund those capital needs, and Interim Chief Operating Officer Brian Singleton said, “Our main funding source is the General Fund for a lot of these items. So, balancing the budget and being as lean as possible is really the preferred option.”

Book said he supported 3% annual merit increases for staff and did not support a millage increase or a fire assessment fee increase. He suggested scheduling a joint meeting with the GRU Authority to discuss the GSC and the deductions the Authority has made from the starting amount of $8.5 million. 

Eastman also said he was not interested in raising taxes this year: “I think we need to give people a sense of calm on that. But there’s a bunch of unknowns that we have lingering out there:… the Government Services Contribution, property tax reform,… we’ve been overdue for a slowdown in the economy for a little while… — and I would like to have money set aside for a rainy day.”

First motion

Chestnut made a motion to approve setting aside $5 million from the excess fund balance from the General Fund to the 8th and Waldo project and to schedule a meeting with the GRU Authority to begin to develop the budget. Commissioner Casey Willits seconded the motion.

Persons said he would be meeting with GRU CEO Ed Bielarski soon to discuss a variety of items, and “certainly, the GSC is top of the list for us.” He said his staff would try to schedule a joint meeting with the Authority.

The motion passed 6-1, with Eastman in dissent.

Eastman later clarified that his vote was against transferring $5 million out of the excess fund balance; he said he supported having a meeting with the GRU Authority.

Second motion 

Commissioner James Ingle: “I think [a franchise fee] would be a solid number that we can actually count on, and based on something with an actual formula, instead of just randomly whatever is coming out of GRU.”

Commissioner James Ingle said that the GSC can “change with the wind,… [so] I think it would make a lot of sense to move forward with the process of establishing franchise fees. That way, it will be something that is concrete, not something to be changed at a whim by either board… I think that would be a solid number that we can actually count on, and based on something with an actual formula, instead of just randomly whatever is coming out of GRU.” He made a motion to direct the City Manager and the City Attorney’s Office to bring back information on what it would take to start the process of putting a franchise fee into effect.

Willits said he would support the motion because he wanted to know how franchise fees would fit in with the City’s Charter and state law. 

The motion passed unanimously.

Third motion

Ingle also made a motion to ask staff to bring back a report on how peer cities handle exemptions for fire assessments. He said the current exemptions total about half a million dollars, “everything from small nonprofits to Shands Hospital.” Willits seconded the motion.

Ward said, “I would note that no matter how much we ask to tax Shands Hospital, we don’t get to tax Shands Hospital.” Ingle said, “We can’t tax them, but they can pay a fire assessment fee,” and Ward said, “That’s a good point. I think they probably still will say, ‘Thanks so much, but no,’ but we’ll see.”

The motion passed unanimously.

During a subsequent discussion about the Government Services Contribution, Willits said, “There’s no guarantee. They could just have an extra $1.1 million or whatever in their coffers, and they could just give their CEO a pay raise. They could buy a bigger flag for public events. Who knows what they would want to use that for?… 100%, it’s a choice on their part… If anyone is playing a game, it’s them.”

With no further motions, Ward moved on to the next agenda item, which will be covered in a separate article.