DUNEDIN — Citing revenue changes, the city has conceded that it will have to pull $2.1 million from its surplus reserves to help fund employee raises and a tax rate reduction next year.
Under a proposal accepted by the City Commission at a budget workshop Tuesday, next year's property tax rate would be reduced by 5 percent instead of the original recommendation of 6 percent. The move still would save taxpayers nearly $334,000.
Instead of a 3 percent salary increase, city employees would receive a combination 1 percent raise and 2 percent one-time bonus. The $174,000 worth of bonuses would come out of reserves.
Reserves would also fund a new $1.5 million fire station and $99,752 worth of other capital projects for the information technology department. Those projects include installation of a new network server, desktop computer replacement and training.
City Manager Rob DiSpirito said the new course of action was necessary to counter a number of changes that threw original budget projections out of balance.
"Several planned savings and revenue estimates have changed," DiSpirito said. "It is no longer possible to provide the original proposal without the use of these reserves."
The "most significant" change prompting his $2.1 million reserves proposal, DiSpirito said, is an "indefinite delay" in the nearly $753,000 fire pension credit the city had anticipated receiving from the state.
The city had initially used the money, which is reimbursement for extra benefits paid to firefighters since 1999, to shore up its budget. However, the funds are on hold while the state investigates claims by Dunedin's fire union that the way the city is splitting the money with firefighters is illegal.
Meanwhile, commissioners have spent months debating how to use their $7.8 million general fund reserve, which contains about $4 million more than what's required by city policy.
Policy requires that Dunedin put a portion equivalent to 15 percent of its operating budget in savings, but the city has 30 percent in reserves.
Finance director Jeff Yates told commissioners Tuesday that DiSpirito's recommendation would still leave Dunedin's reserve fund with a surplus about 5 to 6 percent above policy level.
Commissioners agreed, with little discussion, to use reserves to reduce the tax rate by 5 percent to $3.38 per $1,000 of taxable assessed value. That would mean a resident who had a $100,000 home with a $50,000 homestead exemption would see a tax bill of $169, which is $8.99 less than last year's rate.
"The reason we have the extra reserves we do is because of the taxpayer," said Commissioner Julie Ward Bujalski, adding that "we want to give some of that money that's been sitting there back to the residents."
However, commissioners split over whether to give employees, who haven't had raises in two years, salary increases of 1, 2 or 3 percent.
They ultimately decided to stick with DiSpirito's recommendation of 1 percent raises combined with one-time bonuses of 2 percent.
The $110,000 in raises would come from the operating budget.
Other changes commissioners agreed to Tuesday included:
• Restoring $29,700 to the budget, reversing an earlier proposal to reduce traffic patrol hours from 140 a week to 115.
• Eliminating $35,000 previously budgeted for an economic development employee position. The city will hire consultants on an as-needed basis.
Commissioners will have one more opportunity to tweak budget numbers at an Aug. 29 workshop.
Citizens will get a chance to weigh in at public hearings set for Sept. 8 and 22, during the city's regular commission meetings.
The City Commission will adopt the final budget at the Sept. 22 meeting.
Keyonna Summers can be reached at firstname.lastname@example.org or (727) 445-4153.