Budget workshop Day 2: Property taxes, impact fees, surplus funds and more
The Cape Coral City Council gave staff directions to keep the millage rate the same and apply the reserve as a starting point for discussions for the Fiscal Year 2027 budget.
The balance left from last year is $29 million.
“I would much rather have a $29 million surplus, than be in the hole,” Mayor John Gunter said Friday, the second day of a two-day budget workshop. “We did pretty good. I do think it’s important to try to figure out when we do have money left over where we can put it and how to spend it.”
Council was told early in the discussion that it is not good practice to spend all of the $29 million.
There were many topics discussed during the Friday workshop.
A presentation was provided on the budget adjustments based on a millage rate of 5.3466 for FY27, 5.7222 for Fiscal Year 2028 and 5.9885 for Fiscal Year 2029.
Budget Administrator Nicole Reitler said the proposed and forecasted budget did not include any future general fund positions. The 2027 budget includes capital improvements for city fiber and wireless as well as design for Festival Park soccer and football field expansion and amphitheater; $6.6 million in equipment replacement; $14.6 million in facilities maintenance and $3.7 million in fleet replacements.
Reitler said the working document does not have any planned sidewalks, median improvements, or Operation Sparkle for park upgrades and fleet reduction.
“What I would like to see – what it looks like for staff to bring back a budget utilizing the existing millage rate,” Gunter said. “What it looks like and what needs to be reduced and then have a list of what was cut.”
He said council can pick and choose from there as to what they want to do and back into the working budget if they decide they need to raise the property tax rate.
“My goal is to keep it the same. You have needs here, not wants,” Gunter said, adding that council needs to “prioritize our needs and see what we want to do and when forecasting over the next three years.”
The workshop also included a presentation by Stantec Consulting Manager Peter Napoli of a five-year projection of the financial sustainability of the general fund for the city. The general fund, for city operations, is heavily reliant on property taxes.
The revenue escalation assumptions was 4.5% to 4% for property valuation increases, 3% for utility taxes and franchise fees, 2-3% for state shared revenues and 3% for internal service charges.
The operating expense assumptions was 5% increases for salaries, retirement and fire operations, 10% for health insurance and 2% for supplies, materials and other inflation.
The capital improvement program for Fiscal Year 2026 is $12.8 million and $23.9 million for FY27.
The FY26 fund balance stabilization reserve is $60.3 million and $29.9 million for unassigned for a combined amount of $90.2 million.
Napoli took the council members through various scenarios that included both homestead impact not yet passed by the state legislature in its reform efforts and the addition of police and fire personnel as requested by both departments.
He said with a structurally sustainable general fund the city’s revenue and expenses have to trace together.
“The expense growth far exceeds the revenue growth in that five-year period and the gap widens,” Napoli said. “Even when you have a good starting point with sufficient fund balance, you will hit a point and run out of the balance.”
Another presentation was on the overview of outstanding general governmental debt and capacity for new projects by PFM Financial Advisors LLC Director Julie Santamaria.
She said the city currently has $49 million in general obligation debt paid b yproperty tax dollars, and $177 million in debt paid by non-ad valorem revenue.
The city’s financial position is very strong with ratings among the highest categories, which result in lower borrowing costs.
She said the city’s existing annual debt service in 2026-2027 is approximately $18 million and declines significantly in 2029.
“The ’26 projects are $88 million and ’27 projects is $318 million for a total of $406 million over the next two years,” Santamaria said.
With an absence of new revenues, or reduced expenses, there would be limited budget capacity for new debt, she said.
Assistant City Manager Mark Mason said the presentation was not to share how they are going to fund debt, but to let the council know that this is the cost of debt if all of it is issued.
The presentation also included a discussion on impact fees — fees on new construction — to see if they need to be adjusted.
DTA Manager Richard Ruiz spoke about police, fire, advanced life support and parks impact fees. He said council needs to be mindful that the purpose is to generate revenue, but not discourage development.
The units of measure are based on per unit for residential, and per square foot for nonresidential.
Ruiz said the current fee for police, fire, advanced life support and parks is $2,321.66 and, as proposed, the change would take it to $2,611.87 for a new home.
Council gave directions to staff to make a forecast of each year of how much additional money would be generated for the impact fees. Staff said they would provide incremental growth and revenue for a five-year plan of how to spend each one.
To reach MEGHAN BRADBURY, please email news@breezenewspapers.com