Gainesville City Commission Approves Maximum Property Tax Rate for FY2026
At a recent meeting, the Gainesville City Commission approved a maximum property tax rate for the fiscal year 2026 that is 7.2% higher than the current rate and 14.96% higher than the rolled-back rate. This decision was made to address a budget gap that has been growing over the past few years. The mayor emphasized that while this is the highest rate the city can impose, it does not necessarily mean the city will collect at that level.
Mayor Harvey Ward warned the commissioners that the decision was about setting a cap on the millage rate rather than addressing every aspect of the budget. He expressed a preference for focusing on the broader financial strategy rather than getting bogged down in specific details. The new maximum rate will be included in the upcoming TRIM notices sent to property owners.
City Manager Cynthia Curry reminded the commissioners that they would be discussing the detailed aspects of the budget at their next meeting. She noted that the current property tax rate is 6.4297 mills, and property values have increased by 9.3% compared to the previous year. This increase is expected to generate an additional $1.7 million in revenue if the rate remains unchanged.
Executive Chief of Staff Cintya Ramos highlighted other financial adjustments. The city anticipates a reduction in half-cent sales tax revenue by $362,455 and an increase in state revenue-sharing by $268,525. Additionally, the completion of the indirect cost allocation study indicated that GRU should allocate an extra $391,214 to the General Fund. However, due to the budgeted amount developed by GRU, there is a $1.3 million loss in direct cost allocation revenue.
Ramos also mentioned that other miscellaneous adjustments added $1.3 million to the General Fund, and the Employee Pension Plan actuarial report allows the city to reduce expenditures by $510,000. Despite these efforts, the budget gap between revenue and expenses as of July 17 was $8.7 million. To address this, staff recommended increasing the millage rate to 6.8912 mills, which is 7.2% higher than the current rate and 14.96% higher than the rolled-back rate of 5.9944 mills.
The proposed rate would result in an increase of $138.45 for a homesteaded property valued at $350,000. Homesteaded properties are limited to a 3% annual value increase, while non-homesteaded properties have no such cap.
Some cuts in the Charter Offices are still under consideration. With GRU taking over responsibilities from several offices, the city is evaluating potential reductions, including the Fleet Replacement Fund. While the city’s excess fund balance could help balance the budget, the millage rate remains a critical factor.
The proposed FY26 budget is $1.9 million higher than the FY25 adopted budget but $1.25 million lower than the FY25 amended budget. The General Fund budgets from FY24 to FY26 show fluctuations, with the FY24 actual budget being significantly higher than the FY24 adopted budget. The FY25 adopted budget saw a slight decrease, but subsequent amendments increased it. The FY26 proposal reflects a smaller increase compared to the amended FY25 budget.
Commissioner Casey Willits acknowledged the challenges of balancing the budget, noting that some expenses must be covered despite tight financial conditions. Commissioner Bryan Eastman pointed out that Gainesville’s property tax rate is historically below average for the top 20 cities in Florida. However, he expressed concerns about the city’s reliance on temporary measures to address the budget gap.
Eastman referenced a formula established in April 2023 for the General Fund Transfer, which has been reduced over time. He argued that the current approach treats the transfer as a slush fund rather than a stable source of income. He emphasized that the property tax increase is temporary and should be reversed once the original formula is honored.
Commissioner Ed Book highlighted that the budget increase is primarily due to staff raises, particularly for union employees. He noted that these increases align with inflation rates and are essential for maintaining a skilled workforce. While he personally prefers a lower tax rate, he recognized the necessity of the current measure.
Commissioner James Ingle supported the motion to approve the maximum millage rate of 6.8912 mills, which passed unanimously. Mayor Ward noted that the reduction in the General Fund Transfer is a key reason for seeking voter approval in November.
The decision to set the maximum property tax rate underscores the complex financial challenges facing Gainesville as it works to balance its budget while maintaining essential services.
