Budget Workshop #2 - August 4, 2026

The Dunedin City Commission held its second budget workshop on August 4, 2026, to review the proposed FY 2027 budget, long-range financial plans, and discuss policy direction in light of potential property tax reform. Key topics included a follow-up memo from the first workshop, the Board of Finance annual report, updates to the General Fund, Risk Fund, and Health Fund, a contingency plan for Amendment 3, and funding recommendations for civic partners and aid to non-profit organizations.

Follow-up Memo from Workshop #1

• Staff responded to 16 questions from the July 21st workshop. Notable points:
  • Storm cost reconciliation: Total costs of $19.4 million from Hurricanes Helena and Milton; $5.2 million received from insurance and FEMA/State; an additional $13.2 million anticipated, reducing the city's match to $975,000.
  • Water consumption: Potable water use decreased by 23.4 million gallons and reclaimed water use increased by 8.1 million gallons after the rate increase.
  • General Fund expenditure increase in FY2025: $13.3 million, of which $2.5 million was personnel (including six SAFER grant positions) and $10.5 million operating (including $6.7 million storm expenses).
  • Stadium Fund: The transfer from the General Fund was reduced from $550,000 to $525,000, using reserves to cover insurance and property taxes.
  • Gas tax revenues: Adjusted to show a 2.2% annual decline due to electric vehicle adoption and fuel efficiency.
  • Public works efficiency study: $564,701 in net savings to date, with further analysis requested on costs vs savings.

Board of Finance Annual Report

• Chair Kathy Harvey presented the Board's findings and recommendations:
  • Carry-forward capital projects reduced from $31 million to $15.5 million in FY2026.
  • Recommended delaying the Highlander Aquatic Complex (cost now $23.5 million) to 2029 and conducting a scope review to reduce costs.
  • Listed several park infrastructure projects (Fisher Little League lights, pavilion replacements, playground equipment, restroom renovations) that could be reduced or delayed if non-essential.
  • Supported the proposed health plan changes (Option 3) and increase of stop-loss to $160,000, but cautioned that raising the stop-loss may offset premium savings with lost claim reimbursements.
  • Suggested increasing executive oversight of overtime ($1.5 million budgeted) and passing credit card transaction fees ($330,000 annually) to users.
  • Recommended including an employee survey on preferences for compensation vs. benefits.

General Fund Update

• FY2027 fund balance estimated at 18.4% (above 15% target).
• Five-year shortfall reduced to $5.35 million (from $5.65 million) due to expense reductions.
• Key changes: Risk fund property insurance allocation decreased by $163,200; health fund costs down $38,100; stadium fund contribution reduced by $25,000.
• Staff highlighted that the shortfall may be addressed through revenue increases, service reductions, or a combination.

Property Tax Reform / Contingency Plan

• Amendment 3 on the November 2026 ballot proposes increasing the homestead exemption on non-school taxes to $150,000 in FY2028 (loss of $4.75 million including roll-downs) and to $250,000 in FY2029 (total loss of $7.6 million).
• Staff is developing a contingency plan to achieve $3 million in savings by January 1, 2027, with a draft presented in September.
• If Amendment 3 passes, an additional $4.6 million in reductions would be needed for FY2029.
• Commissioner Sandberg stressed that the full impact must be communicated, not just the first $3 million.

Risk Fund Update

• FY2027 property insurance premiums decreased by $790,000 from FY2026 budget; workers' comp increased by $45,000.
• Net expense budget down 13.7% to $683,000 less than proposed.
• Reserve level at $4.1 million, above the $3.5 million minimum.
• Proposed moving $125,000 in sidewalk maintenance from gas tax fund to risk fund in FY2028.

Health Fund Update and FY2027 Benefits

• Health costs rose 12.6% for medical and 16.7% for pharmacy claims; proposed increase was 15.6%, reduced to 12% through plan design changes and premium adjustments.
• Staff recommended Option 3: flat dollar employee premium increase (e.g., $5/pay for employee-only in base plan) and increasing stop-loss from $140,000 to $160,000.
• Board of Finance concurred, noting the high-deductible plan would remain at no cost for employee-only to incentivize enrollment.
• The city's total health fund annual cost under Option 3 is $7.2 million (10.8% employer increase, 9.8% employee increase).
• Commissioners expressed concerns about sustainability and the need to weigh compensation vs. benefits.

Civic Partners and Aid to Non-Profit Organizations

• Proposed FY2027 funding: $30,000 for Dunedin Fine Arts Center, $35,000 for History Museum, $37,000 for other civic partners, and $106,500 for 21 social/cultural non-profits, totaling $208,500.
• One applicant (Divine Coastal House of Healing) was not recommended due to lack of track record.
• Staff recommended a 50% reduction in all grants if Amendment 3 passes, with disbursement delayed to December 1.
• Public comments were heard from:
  • Lindsay Marshall (Dunedin High School Band Boosters) – thanked for $5,000 grant, highlighted impact on 75 students.
  • Kirsten Stiffwalker (Progressive Arts Theater) – described scholarship and free ticket programs.
  • Steve Beatty and George Ann Washington (Dunedin History Museum) – thanked for support, noted 50th anniversary of Blue Jays exhibit and DAR recognition.
  • Christina Garcia (Dunedin Cares Community Food Pantry) – reported 30,000 people served in the past year.
  • Tiffany Eaton (Dunedin Middle School Band) – noted over 200 students, need for kilt replacements.
  • Joan McHale (Scottish American Society) – funds used for education and building improvements.
  • Sarah McAdoo (Freeman Sound.org) – music-based mental health outreach, including the Walk for Mental Health.
  • Andrea Knolls (Dunedin Fine Arts Center) – reported record attendance, five Best of the Bay awards, and 1,200 student field trips.
  • Steve Beatty (also for Dunedin Youth Guild) – $50,000 in scholarships, $40,000 in community support.
  • Camille Hepting (NAMI Pinellas County) – thanked for continued support of suicide loss survivor groups.
  • David Lamaca (Neighborly Care Network) – provided 23,000 meals and 10,000 trips to Dunedin seniors.
• Commissioners unanimously expressed strong support for all organizations, emphasizing the community value they provide.

Key Outcomes

• Board of Finance Report: Accepted by consensus; direction to leverage Board expertise more frequently.
• Health Benefits: Consensus to adopt Option 3 (flat dollar employee contributions) and increase stop-loss to $160,000.
• Aid to Non-Profits: Directed staff to proceed with recommended funding as presented; grants subject to 50% reduction if Amendment 3 passes.
• Contingency Plan: Staff will present a full plan in September, including the