Three weeks of City Council hearings to hammer out the city of Jacksonville’s 2024-25 budget got underway Aug. 8 with a top aide for Mayor Donna Deegan presenting her budget proposal as a fiscally responsible approach to meeting the city’s needs while investing in its growth and vitality.
The presentation by Darnell Smith, Deegan’s chief of staff, to the Council Finance Committee included comments on a fault-line issue between the administration and some Republican Council members over the Democratic mayor’s plan to spend $47.2 million in operating reserves, or about 2.5% of her $1.9 billion proposed general fund budget.
Deegan’s proposed reserve spending came as the city’s federal pandemic relief funding ran out and property tax revenue fell below the projected level, creating budgetary pressures.
Noting that the city was carrying $345 million in operating reserves, Smith said it was inappropriate to continue stacking away money into reserves “just to look at” as opposed to using it for the city’s betterment. He said the mayor’s proposed spending, which would fund one-time expenses such as purchases of emergency vehicles and economic development grants, would leave the city with well over the required level of operating reserves.
“In light of our new headwinds and old realities, we agree that fiscal responsibility is important,” he said. “But we must continue to move this city forward.”
The committee reacted by voting on a number of budget cuts, including the removal of a proposed $10 million in reserve spending for an affordable housing loan fund. The item was cut by a voice vote with only Democratic member Ju’Coby Pittman opposed.
The hearing came after Council member Ron Salem, the chair of the Finance Committee, was quoted in The Florida Times-Union as saying about the reserves that, “I like looking at them.” Salem has said he prefers to keep reserves in place for emergencies or financial crises.
Council member Rory Diamond said he would file legislation to limit the mayor’s budgeting authority over what he called “wild, liberal spending” in her budget.
“The Mayor’s budget is almost $47,000,000 over-budget and does not present the conservative values of the people of Jacksonville,” Diamond said in a release, in which he also announced bills that would prevent the mayor from being able to transfer over $99,999 without Council approval and would limit spending in future budgets to no more than 1% above projected city revenue.
Diamond also said he would file legislation to bar spending on diversity equity and inclusion.
Deegan’s plan for spending of operating reserves also included $11 million in loans and grants through the Office of Economic Development, a $1 million loan to connect buildings to JEA’s chilled-water system, and a $4 million loan to the Jacksonville Port Authority that was part of a Council-approved $27.5 million package of financing to raise high-voltage transmission lines over the St. Johns River to give additional clearance to large ships coming into the Blount Island Marine Terminal.
Smith noted in his presentation that Fitch Ratings had recently upgraded the city’s credit rating from AA- to AA+ while S&P Global Ratings and KBRA reaffirmed ratings of AA for the city.
Those ratings, which generally translate to lower interest rates for borrowing by the city, took into account that the proposed 2024-25 budget includes the city’s $775 million contribution to its “Stadium of the Future” deal with the Jacksonville Jaguars.
Smith said the city routinely spends operating reserves. According to city records, the average amount of reserving spending was $9.28 over the past 12 years.
“Using reserves is not something this administration takes lightly,” he said. “It should be a rare and justifiable occurrence.”
Critics of Deegan’s budget came into the hearings armed with projections from Council auditors of city revenues and expenditures, which showed possible deficits ranging from $44 million to $105 million through fiscal year 2029.
With the potential deficits looming, Diamond said, “touching (the reserves) now is just begging for a problem later.”
Smith laid out a six-point strategy to improve the city’s financial performance, which included:
• Improving operational performance and increasing efficiencies. Smith said the city is analyzing processes and adopting new approaches, such as use of online document signing, to increase capacity and eliminate waste. The goal is to “reduce headcount through attrition and retirements,” he said.
• Potentially raising city fees. Smith said the strategy was to evaluate fees to ensure they are set at a level that covers most of the city’s costs for providing service.
Smith said the administration also is focused on investing in the city workforce, particularly for low-earning employees. He said about 15% of the city’s workers “are not making a livable wage.”
The Aug. 8 session was the first of seven scheduled budget hearings through Aug. 23. In addition to Deegan’s general fund budget, the Council also is examining her proposed $489 Capital Improvement Plan for 2024 to 2029.