Budget Review Advisory Committee

SEBASTIAN BUDGET REVIEW ADVISORY COMMITTEE AGENDA 6:00 P.M. MONDAY – JULY 20, 2026 CITY HALL 1225 MAIN STREET a. Call to Order b. Pledge of Allegiance c. Roll Call d. Approval of Minutes: Meeting of May 4 & 11, 2026 e. Presentation on Draft FY 2027 Budget and Proposed Millage f. Consideration of Proposed Millage recommendation to Council g. Next Meeting Date – Monday, August 3, 2026 h. Adjourn Agenda Attachments: • Minutes for Meeting of May 4 & 11, 2026 • FY 2027 Draft Budget and Proposed Millage PowerPoint Presentation • Link to Draft Proposed FY 2026 Budget: https://www.cityofsebastian.org/DocumentCenter/View/3736/Draft-FY27_Budget- Dated20260708-opt ANY PERSON WHO DECIDES TO APPEAL ANY DECISION MADE WITH RESPECT TO ANY MATTER CONSIDERED AT THIS MEETING WILL NEED A RECORD OF THE PROCEEDINGS AND MAY NEED TO ENSURE THAT A VERBATIM RECORD OF THE PROCEEDINGS IS MADE, WHICH RECORD INCLUDES THE TESTIMONY AND EVIDENSE UPON WHICH THE APPEAL IS TO BE HEARS. (F.S.286.0105) IN COMPLIANCE WITH THE AMERICAN WITH DISABILITIES ACT (ADA), ANYONE WHO NEEDS A SPECIAL ACCOMODATION FOR THIS MEETING SHOULD CONTACT THE CITY’S ADA COORDINATOR AT 589-5330 AT LEAST 48 HOURS IN ADVANCE OF THIS MEETING. ZOOM INFORMATION For Zoom link and Agenda please go to the City’s Calendar here: https://www.cityofsebastian.org/calendar.aspx  CITY OF SEBASTIAN BUDGET REVIEW ADVISORY COMMITTEE MEETING MINUTES MONDAY, MAY 4, 2026 - 6:00 P.M. CITY COUNCIL CHAMBERS 1225 MAIN STREET, SEBASTIAN, FLORIDA a. CALL TO ORDER – Chair Napier called the meeting to order at 6:07 PM. b. PLEDGE OF ALLEGIANCE c. ROLL CALL: Only three members were present, falling short of the four-member minimum required to establish a quorum. No roll call was taken. Staff Present: Brian Stewart, Chief Financial Officer d. APPROVAL OF MINUTES: Meeting of February 9, 2026 e. REVIEW AND APPROVAL OF FY2026 2ND QUARTER FINANCIAL REPORT f. REVIEW OF FY2026 2ND QUARTER BUDGET AMENDMENT REPORT g. ANNOUNCE NEXT MEETING DATE h. ADJOURN As a quorum could not be established, no business was conducted. Chair Napier cancelled and adjourned the meeting at 6:07 PM, with the understanding that it would be rescheduled. Agenda items d through g were not addressed and are expected to be carried over to the rescheduled meeting. By: ______________________________________ Date: __________________ Chair Napier  CITY OF SEBASTIAN BUDGET REVIEW ADVISORY COMMITTEE MEETING MINUTES MONDAY, MAY 11, 2026 - 6:00 P.M. CITY COUNCIL CHAMBERS 1225 MAIN STREET, SEBASTIAN, FLORIDA a. CALL TO ORDER – Chair Napier called the meeting to order at 6:00 PM. b. The Pledge of Allegiance was recited by all. c. ROLL CALL: Present Larry Napier Grace Reed Bill Flynn Scott Baker Absent Harry Hall – Excused Susan Jacob (Alternate) Staff Present: Brian Stewart, Chief Financial Officer Brian Benton, City Manager (via Zoom) d. APPROVAL OF MINUTES The minutes of the February 9, 2026 meeting were presented for approval. Vice Chair Reed noted one correction: in item (n), the minutes incorrectly attributed the adjournment to "Chairman Hall" when it should have read "Chairman Napier." No other issues were identified. Mr. Baker moved to approve the minutes of the February 9, 2026 meeting as corrected. Vice Chair Reed seconded the motion. The motion carried unanimously. e. REVIEW AND APPROVAL OF FY 2026 2ND QUARTER FINANCIAL REPORT Chief Financial Officer Stewart presented the FY 2026 Second Quarter Financial Report for the period ending March 31, 2026. Key highlights included: Revenues: The Ad Valorem tax had reached 93% of the budgeted amount by March 31. Sales taxes, gas taxes, and discretionary sales taxes were noted to BUDGET REVIEW ADVISORY COMMITTEE MAY 11, 2026 MINUTES PAGE 2 carry a two-month collection delay but remained within expected ranges of 30– 33% of budget. Golf fees and sales were notably strong at 68% of the annual budget with only 50% of the fiscal year elapsed, representing a 5% increase over the prior year. Expenditures: Chief Financial Officer Stewart reported that expenditures overall were in line with budgeted figures with no major anomalies on the expenditure side. Cash and Investments: Chief Financial Officer Stewart highlighted improvements made to the cash and investments report format, including the addition of a prior- year comparison column as of March 31, 2025, and a clearer separation of governmental/enterprise funds from fiduciary funds. The fiduciary fund section reflected a negative 4.6% rate of return, driven by an unrealized $1.28 million loss in the Salem Trust and PD Pension accounts attributable to a market dip on March 31; Chief Financial Stewart noted the market had since recovered in April and the funds appear on track. Interest earned for the period increased significantly from $243,000 in the prior year to $494,000 in the current fiscal year. Capital Projects: Remain ongoing. Budget Amendment Summary (Exhibit A of Resolution R-26-19): Chief Financial Officer Stewart summarized that the adjustments affecting fund balance for the quarter were largely comprised of project closeouts and final payouts. The net effect on fund balance for the quarter was a modest increase of $5,297. Chief Financial Officer Stewart then opened the floor to board members for questions or discussion. Mr. Baker commended the city's approach to investing cash reserves and confirmed that the investment portfolio is structured to maintain strong liquidity. Chief Financial Officer Stewart explained the largest single investment, an $8 million credit union CD, was secured with a no-penalty early withdrawal guarantee. He also pointed out that the City’s investment pools including Florida Class, Florida Trust, and Florida Prime all carry one-day liquidity. Mr. Baker then referred back to the Capital Projects list. He inquired whether any projects were at risk due to timeline or deadline constraints. The City Manager, attending via Zoom, provided updates on individual projects: BUDGET REVIEW ADVISORY COMMITTEE MAY 11, 2026 MINUTES PAGE 3 • The FY 2020 CDBG Grant Program is recurring annually and will remain an ongoing line item. • The FY 2022 Concha Dam project has been redesigned as a refurbishment, has been bid and awarded, and is awaiting construction commencement. • The Gardenia Ditch project is approximately 80% complete. • The Schumann Drive Box Culvert design is nearly complete; the full construction project will not proceed at this time. • The FY 2023 Stonecrop Drainage project is open and currently subject to ongoing legal issues. • All FY 2024 projects are actively advancing. Mr. Flynn raised questions regarding year-over-year expenditure increases ranging from approximately 20% to 57% in several departments. The City Manager addressed each area: • Finance: Increases reflect new software costs (chart of accounts redesign, budget software), and the addition of a Finance Director salary not previously captured in the department's budget. • MIS: The increase reflects front-loaded operating purchases earlier in the fiscal year compared to the prior year, not a budget overrun. • Fleet Management: A heavy equipment mechanic position was reallocated from Roads and Drainage into Fleet Management, increasing that department's apparent costs without adding a new city position. • Cemetery: Reflects earlier purchasing patterns compared to the prior year. • Community Development: Also reflects earlier purchasing patterns compared to the prior year, and included a payout to a long-tenured retiring employee drawn from reserved funds. The City Manager emphasized that in all cases, no department had exceeded its amended annual budget; the elevated year-over-year comparisons were primarily a function of the timing of expenditures. BUDGET REVIEW ADVISORY COMMITTEE MAY 11, 2026 MINUTES PAGE 4 Mr. Flynn broadened the discussion, presenting his own analysis showing that Sebastian's overall budget had grown by more than 50% from 2019 to the present, against population growth of only 7–8% and cumulative inflation of approximately 25%. As a 35-year resident, he stated he did not observe a doubling of city services to justify the budget trajectory. The City Manager acknowledged his concern but offered important context: staffing costs, benefits, construction costs, and general maintenance, for example, have all increased substantially. He emphasized that population growth is not an appropriate metric for evaluating municipal budget growth, since the cost of maintaining services for existing residents—roads, parks, police, IT, finance—rises regardless of population change. Mr. Baker added that around 2022, the city conducted a comprehensive salary audit and adjusted staff compensation to be competitive with neighboring municipalities, as wages had previously been below regional peers. Mr. Flynn understood the need for the salary audit, but pointed out that Indian River County’s budget increase was only about 42%. He said he will have to conduct his own study on Vero Beach and Fellsmere for comparison, and expressed concern that taxpayers were feeling a financial pinch. Chief Financial Officer Stewart made a suggestion to Mr. Flynn, stating that a more meaningful comparison could be achieved by disaggregating operating expenses from capital expenditures. Chair Napier noted that property valuations also make direct comparisons with jurisdictions such as Vero Beach difficult, as Sebastian's property values are lower. Mr. Flynn brought to attention the need to develop commercial tax base, return city-owned properties to tax rolls where feasible, and prepare for the potential impact of state-level property tax reform. The City Manager acknowledged these concerns, noting the city had recently transferred three parcels to Habitat for Humanity for affordable housing development and continues to evaluate its property portfolio. He welcomed the Committee's input on revenue generation ideas and expressed openness to collaborative discussion through the budget process. Vice Chair Reed moved to approve the FY 2026 Second Quarter Financial Report. Member Flynn seconded the motion. The motion carried unanimously. f. REVIEW OF FY 2026 2ND QUARTER BUDGET AMENDMENT REPORT The FY 2026 Second Quarter Budget Amendment Report was presented in conjunction with the financial report discussion above. The report, comprising BUDGET REVIEW ADVISORY COMMITTEE MAY 11, 2026 MINUTES PAGE 5 Exhibit A of Resolution R-26-19, had been reviewed as part of the preceding agenda item. Vice Chair Reed moved to approve the FY 2026 Second Quarter Budget Amendment Report. Member Flynn seconded the motion. The motion carried unanimously. g. ANNOUNCE NEXT MEETING DATE The next meeting of the Sebastian Budget Review Advisory Committee was announced for Monday, July 20, 2026. h. ADJOURN There being no further business, Chair Napier adjourned the meeting at 6:25 PM. By: ______________________________________ Date: __________________ Chair Napier  CITY OF SEBASTIAN Draft Budget & Proposed Millage FY 2027 Budget Review Advisory Committee Meeting: Monday July 20, 2026 City Council Meeting to Approve Millage: Wednesday July 22, 2026 City Council First Hearing: Monday September 14, 2026 City Council Second Hearing: Monday September 23, 2026 Prepared By: Brian Stewart, CPA FY 2027 Chief Financial Officer Draft Budget & Proposed Millage 1  FY 2027 Draft Budget & Proposed Millage Agenda  General Information  Current Factors  Summary of General Fund Budget  Enterprise Special Revenue and Other Funds  Capital Improvement Program  Property Values and Millage FY 2027 Draft Budget & Proposed Millage 2  General Information  Because one tax year determines the following years budget, the adopted millage will be applied to the 2026 tax roll and will be collected in FY2027  Amendments will be done during the year FY 2027 Draft Budget & Proposed Millage 3  Current Factors Economy  Consumer Price Index inflation up 4.2% for year ending May 2026  Interest remains higher, Fed rate 3.50%-3.75% ⚫ Causing housing value to decline ⚫ Helps with Interest Revenue Earned  Florida unemployment trending higher at 4.8%, up 1.1% year-over-year in May 2026  Florida housing prices down 2% year-over-year in May 2026, (0.2% in Sebastian)  Sebastian Taxable Assessed Value up 5.2% for FY 2027 2026 tax year (FY2027 Budget) Draft Budget & Proposed Millage  Current Factors Personnel  Health insurance premiums projected to be up by 6.0%  Police Union negotiated pay increases  Non-Union employees pay increases  One new Part Time position FY 2027 Draft Budget & Proposed Millage  General Fund Summary General Fund Increases (Decreases)* $ 365,740 Personnel Costs (198,525) Operating Expenditures (185,792) Capital Items and Projects $ (18,577) 0.09% Budget Decrease * As compared to the prior years Amended Budget FY 2027 Draft Budget & Proposed Millage 6  Enterprise Funds Golf Course  Draft is showing a revenue excess of $11,283. ⚫ Revenues are projected conservatively ⚫ $100,000 is shown as a repayment to General Fund  $32,240 for restaurant lease  Airport rent from $107,483 to $107,662.  $37,397 Principal and Interest on $700,000 Building Fund loan FY 2027 Draft Budget & Proposed Millage 7  Enterprise Funds Airport  Draft is showing revenue excess of $81,972  Loans from Discretionary Sales Tax fund: ⚫ Hangar A $20,000 payment = $202,035 By 9/30/27. ⚫ Hangar B $20,500 payment = $201,444 By 9/30/27.  Grant Matching From DST fund: ⚫ $35,000 for the rehab of Runway 10/28; $150,000 for the Construction of Taxiway Golf Apron ⚫ Over the next five years:  $150,000 for the construction of Taxiway Golf Apron (Phase 2)  $15,000 for the design of Taxiway Alpha Rehab  $50,000 for the design Golf Apron (Phase 2)  $15,000 for the design of Taxiway Bravo Runway 10/28 FY 2027 Draft Budget & Proposed Millage 8  Enterprise Funds Building  Permit and Fee revenues are expected to remain level  Expecting $37,397 Principal and Interest payment on Golf Course loans: ⚫ $700,000 loan will be $389,608 by 9/30/27. ⚫ $559,684 loan to be paid after the $700,000. FY 2027 Draft Budget & Proposed Millage 9  Special Revenue Funds American Rescue Plan Act Fund (ARPA)  Must be spent by December 31, 2026  Currently allocated to Gardenia Ditch, Schumann Drive Box Culvert Design  Road work completed in FY25, Gardenia Ditch work undergoing project closeout, Schumann Drive Box Culvert Design to be completed by end of FY26 FY 2027 Draft Budget & Proposed Millage 10  Special Revenue Funds Local Option Gas Tax  Projecting collections at 1.0% annual increases for future years  Being used for all road preservation and associated swale work as scheduled in current paving management program  Funds sidewalk repairs and railroad crossing maintenance annually FY 2027 Draft Budget & Proposed Millage 11  Special Revenue Funds Discretionary Sales Tax  Projecting collections at 1.0% annual increases for future years  Being used for road reconstruction and associated swale work as scheduled in current paving management program  Also Funding: MIS infrastructure, Police vehicles/equipment, A/C replacements, Schumann Park upgrades, major construction vehicles/equipment and matching funds for FAA and FDOT grants FY 2027 Draft Budget & Proposed Millage 12  Special Revenue Funds Riverfront CRA Fund  Operating Expenditures: ⚫ Audit fees, administration, working waterfront improvements, facility maintenance, submerged land leases, consulting fees, travel and education, legal ads, state fee, association dues and landfill fee on Fisherman’s Landing ⚫ Landscaping is handled in-house  Fisherman’s Landing and Working Waterfront projects thru FY 27-28  Central Avenue Catalyst Site in FY 30-31 FY 2027 Draft Budget & Proposed Millage 13  Special Revenue Funds Recreation Impact Fee Fund  $20,000 unspecified improvements ($5K per Zone)  $40,000 in park improvements  $100,000 toward $400,000 court and lighting upgrades  Projected 2027 ending Fund Balance is $117,245 FY 2027 Draft Budget & Proposed Millage 14  Special Revenue Funds Stormwater Utility Fund  Revenues exceed Expenditures by $47,055  Capital Includes: ⚫ F-250 truck replacement (SW Fund) ⚫ Park roadway drainage (SW Fund) ⚫ Pond fountains (SW Fund) ⚫ Sliplining or pipe replacement (DST Fund) FY 2027 Draft Budget & Proposed Millage 15  Special Revenue Funds Law Enforcement Forfeiture Fund  Used only for unbudgeted items  Specific items need City Council approval  Projected beginning balance is $36,528 FY 2027 Draft Budget & Proposed Millage 16  Special Revenue Funds Parking In Lieu Of Fund  Used for providing additional parking  Projected beginning balance is $131,902 FY 2027 Draft Budget & Proposed Millage 17  Permanent Funds Cemetery Permanent Fund  ½ of Sales on Operations and Maintenance: ⚫ Reimbursing $150,000 to General Fund  ½ of Sales on expansions or cost incidental to adding future sites: ⚫ Ongoing Admin Building replacement project totaling $735,410 FY 2027 Draft Budget & Proposed Millage 18  Capital Improvement Program  $61.9 million over 6 years.  $11.1 million next fiscal year of which 40% ($4.4 million) will be funded by grants  Largest items for next fiscal year: ⚫ $ 2,156,510 Sidewalk work ⚫ $ 1,800,000 Street reconstruction ⚫ $ 1,350,000 Taxiway golf construction ⚫ $ 1,250,000 City Hall A/C chiller $ 5,645,100 Total of largest items FY 2027 Draft Budget & Proposed Millage 19  Property Values and Millage: Certified Taxable Values  Total Certified Taxable Property Values increased $130,420,661 or 5.2% above 2026. ⚫ Additions account for $47,106,920 or an increase of 1.9% ⚫ Reassessments were $83,313,741 or an increase of 3.3%  Rolled-Back is 3.3339. Proposed millage is 3.4455 (Same rate as Prior Year).  To use rolled-back millage would require using $282,732 of reserves. FY 2027 Draft Budget & Proposed Millage 20  Property Values and Millage: Taxable Value Additions Dollar Value of Tax Roll Additions: % Increase (Decrease) from Prior Year 2026 47,106,920 (20.0%) 2021 32,716,715 (3.0%) 2025 58,569,929 (1.0%) 2020 33,685,698 44.0% 2024 59,143,508 (30.0%) 2019 23,351,814 46.0% 2023 84,817,696 77.0% 2018 15,998,366 (56.0%) 2022 47,981,095 47.0% 2017 35,951,704 40.0% FY 2027 Draft Budget & Proposed Millage 21  Millage Rate Options Increase % Change Increase MILLAGE RATE OPTIONS Net Tax Collection (Decrease) from From Roll- (Decrease) in GF Roll-Back Back Rate Reserves Roll-Back Rate 3.3339 $8,734,465.40 $0.00 0.00% (282,732.00) Draft Budget (PY) Rate 3.4455 $9,026,845.60 $282,731.65 3.35% - 3.5705 $9,354,332.38 $599,411.37 7.10% 316,679.70 1/4 mill increase 3.6955 $9,681,819.16 $916,091.08 10.85% 633,359.40 3.8205 $10,009,305.94 $1,232,770.80 14.60% 950,039.10 1/2 mill increase 3.9455 $10,336,792.72 $1,549,450.52 18.34% 1,266,719.00 FY 2027 Draft Budget & Proposed Millage 22  Property Values and Millage: Millage Impact on Various Home Values Millage With Homestead (3% Max) Without Homestead (10% Max) Example Home values 350,000.00 400,000.00 450,000.00 350,000.00 400,000.00 450,000.00 2026 Tax Amount @ 3.4455 1,033.65 1,205.93 1,378.20 1,205.93 1,378.20 1,550.48 2027 Tax Options 2027 Increase (Decrease) over Roll-Back Rate Rolled Back Rate 3.3339 (3.47) (4.05) (4.63) 77.63 88.72 99.81 Proposed (PY) Rate 3.4455 31.01 36.18 41.35 120.59 137.82 155.05 Other Rate Options: 3.5705 69.63 81.24 92.85 168.72 192.82 216.92 1/4 mill increase 3.6955 108.26 126.30 144.35 216.84 247.82 278.80 3.8205 146.88 171.37 195.85 264.97 302.82 340.67 1/2 mill increase 3.9455 185.51 216.43 247.35 313.09 357.82 402.55 FY 2027 Draft Budget & Proposed Millage 23  Millage Setting 20 Year History At or Below Rolled-Back 10 Years - 50% of the Time 4.0000 3.8000 3.6000 3.4000 3.2000 3.0000 2.8000 2.6000 2.4000 2.2000 2.0000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Rolled-Back 3.212 3.364 3.803 3.901 3.731 3.564 3.739 3.544 3.629 3.670 3.493 3.151 2.939 2.809 3.004 2.683 2.627 2.985 3.014 3.333 Final 2.991 3.345 3.345 3.304 3.304 3.716 3.716 3.855 3.855 3.800 3.400 3.151 2.939 3.151 3.004 2.905 3.195 3.195 3.445 3.445 FY 2027 Draft Budget & Proposed Millage 24  Other Considerations  Property and Liability insurance costs not yet settled  Setting the proposed millage for the trim notices at 3.4455 will be advertised as a 3.35% tax increase  Exceeding the proposed millage on the TRIM is expensive and delays budget adoption FY 2027 Draft Budget & Proposed Millage 25  Conclusion  Staff requests the Budget Advisory Committee recommend to Council to approve the tentative Millage for Fiscal Year 2027 at 3.4455. FY 2027 Draft Budget & Proposed Millage 26