R7D - Adopt Tentative Budgets for Fy2026

Resolutions - R7 D

COMMISSION MEMORANDUM

5:01 p.m. First Reading Public Hearing

RECOMMENDATION

The Administration recommends that the Mayor and City Commission adopt the attached Resolution which establishes the tentative budgets for the General, General Obligation (G.O.) Debt Service, City Center Redevelopment Agency (RDA) Ad Valorem Taxes, North Beach Community Redevelopment Agency (CRA) Ad Valorem Taxes, Enterprise, Internal Service, and Special Revenue Funds for Fiscal Year (FY) 2026, subject to a second and final public hearing to be held on Tuesday, September 30, 2025, at 5:01 P.M., in the City Commissioner Chambers at 1700 Convention Center Drive, 3 rd Floor, Miami Beach, Florida 33139.

As summarized in the table below, the City’s total operating budget proposed for FY 2026, net of interfund transfers, is $911.7 million which includes the General, G.O. Debt Service, Enterprise, and Special Revenue Funds budgets, as well as the City’s contributions to the City Center Redevelopment and North Beach Community Redevelopment Areas. Overall, this represents an increase of $39.3 million, or 4.5%, over the City’s total operating budget of $872.4 million that was adopted for FY 2025.

FY 2025 Adopted $456,164,000 16,298,000 33,909,000 1,396,000 299,757,000 146,792,000 $954,316,000 (81,938,000) $872,378,000

FY 2026 Proposed $483,409,000 16,296,000 36,344,000 1,697,000 312,047,000 144,748,000 $994,541,000 (82,805,000) $911,736,000

General Fund G.O. Debt Service City Center RDA Ad Valorem Taxes North Beach CRA Ad Valorem Taxes Enterprise Funds Special Revenue Funds Total All Funds Less Transfers Grand Total All Funds

Internal Service Funds* $136,208,000 $146,162,000

$ Variance

% Variance

$27,245,000 (2,000) 2,435,000 301,000 12,290,000 (2,044,000) $40,225,000 (867,000) $39,358,000

6.0% (0.01%) 7.2% 21.6% 4.1% (1.4%) 4.2% 1.1% 4.5%

$9,954,000

7.3%

*Presented for informational purposes only; costs allocated within the General, Special Revenue, and Enterprise Funds, etc.

BACKGROUND/HISTORY

As outlined in the companion General Operating Millage Agenda Item, Section 200.065, Florida Statutes, specifies the manner in which the City’s budgets must be adopted. First, the tentative millage rates for both the general operating and debt service are adopted, then immediately thereafter, the tentative budgets by fund are adopted. The Resolution adopting the tentative budgets for the General, G.O. Debt Service, City Center RDA Ad Valorem Taxes, North Beach CRA Ad Valorem Taxes, Enterprise, Internal Service, and Special Revenue Funds for FY 2026 is, therefore, presented to you at this time for adoption.

ANALYSIS

As detailed in the Letter to Commission (LTC #269-2025) dated July 2, 2025 and summarized below, the City’s overall taxable property values based on the 2025 Certified Taxable Values provided by the Miami-Dade County Property Appraiser as of July 1, 2025 increased overall by approximately $3.9 billion, or 6.9%, from the 2024 Certified Taxable Values of $56.4 billion to the 2025 Certified Taxable Values of $60.3 billion. Within the overall increase, however, property values in the City Center Redevelopment Area and the North Beach Community Redevelopment Area increased by 2.7% and 3.7%, respectively, compared to the previous year.

July 2024 Certified

$56,396,947,099

$56,396,947,099

City Center Redevelopment Area

$6,709,447,439

North Beach Community Redevelopment Area

1,844,424,002

Total (Net of RDA & CRA)

$47,843,075,658

July 2025 Certified $ Change % Change

$59,251,456,909 $2,854,509,810 5.1%

- 1,048,123,655 1,048,123,655 100.0%

$60,299,580,564 $3,902,633,465 6.9%

$6,893,643,464 $184,196,025 2.7%

1,913,319,827 68,895,825 3.7%

$51,492,617,273 $3,649,541,615 7.6%

Property Values:

Existing Values

New Construction

Total

It is important to note that while the City’s overall taxable values increased by $3.9 billion, or 6.9%, compared to the previous year, overall taxable property values within the City since FY 2023 have been increasing at a diminishing rate, as reflected in the overall property value trend chart below.

Overall Property Value Trend

35.0%

30.3%

30.0%

25.0%

18.1%

20.0%

13.3%13.0%

15.0%

9.9%

6.9%

10.0%

5.0%

5.0%

0.2%

-0.6%

0.0%

-8.2% -10.5%

-5.0%

-10.0%

-15.0%

FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

The overall increase in values of $3.9 billion, or 6.9%, is comprised of $2.9 billion, or 5.1%, increase in existing values and a $1.0 billion increase in new construction values.

Existing Property Value Trend

30.0% 25.8%

25.0%

16.8%

20.0%

12.3%

15.0%

9.3%

6.5%

10.0%

4.5%

5.0%

-0.6%

-1.0%

0.0%

-5.0%

-12.7% -14.8%

-10.0%

-15.0%

-20.0%

FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

11.2%10.8%

9.4%

7.8%

6.9%

4.0% 3.1% 4.1%

0.3%

9.5% 10.3% 8.8%

9.2%

5.3%

5.1%

3.5%

2.3%

0.8%

-0.2%

New Construction Value Trend

$2.0

$1.8

$1.8

$1.6

$1.4

$1.2

$ Billion

$1.0

$0.8

$0.8

$0.6

$0.6

$0.3

$0.4

$0.2

$0.2

$0.1 $0.1 $0.1

$0.2

$-

FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

GENERAL FUND BUDGET

The General Fund is the primary source of funding for many City services that are provided such as Police and Fire, as well as Parks and Recreation, Public Works, Code Compliance, among other services. Revenues that fund these services and the various other City services in the General Fund are comprised of ad valorem property taxes, franchise and utility taxes, business license and permit fees, revenue sharing from various statewide taxes, intergovernmental revenues from Miami-Dade County, user fees for services, fines, rents and concession fees, and interest income. Additionally, the City’s 2% Resort Tax Fund contributes funding annually for tourism-related services provided by General Fund departments.

At the July 11, 2025 Finance and Economic Resiliency Committee (FERC) Budget Briefing, the Mayor and City Commission were briefed regarding the preliminary FY 2026 General Fund budget. The preliminary budget represents the cost of providing the same level of services as in the prior year and serves as the baseline of funding for the annual budget development process.

FY 2026 Based on July 1 st Values

General Fund

Revenues

$478,367,000

Expenditures

477,513,000

Surplus/Gap)

$854,000

The Administration also identified and recommended a combination of budget reductions/efficiencies, one-time and recurring expenditure enhancements, as well as revenue and expenditure refinements, which, if endorsed by the FERC, would have resulted in a balanced General Fund budget for FY 2026.

$1.3

$1.2

$1.0

$0.9

$0.7

$0.3

$0.3

$0.3

$0.2

$0.2

$0.2

FY 2026 General Fund Balancing Strategies

$

Preliminary Surplus/(Gap) $854,000

Recommended Recurring Reductions/Efficiencies 1,343,000

Recommended “One-Time” Expenditure Enhancements (1,886,000)

Recommended Recurring Expenditure Enhancements (2,485,000)

Revenue Refinements 4,567,000

Expenditure Refinements (2,393,000)

Net Surplus/(Gap) $ -

The FERC endorsed most of the Administration’s recommendations summarized above and proposed several additional reductions/efficiencies and expenditure enhancements to be included in the FY 2026 General Fund budget.

Adjustments Subsequent to Budget Briefings

Following the FERC’s recommendations from the July 11, 2025 Budget Briefing and the finalization of the proposed FY 2026 General Fund budget, the Administration made further updates and refinements to the FY 2026 General Fund budget. These updates are detailed further below.

FY 2026 General Fund Balancing Strategies

$

Surplus/(Gap) as of July 11, 2025 FERC Budget Briefing $ -

Recommended Recurring Reductions/Efficiencies 292,000

Recommended Recurring Expenditure Enhancements (261,000)

Revenue Refinements 475,000

Expenditure Refinements (506,000)

Net Surplus/(Gap) $ -

Recommended Recurring General Fund Reductions/Efficiencies – $292,000  At the July 11, 2025 Budget Briefing, the FERC recommended the following adjustments to the recurring General Fund reductions/efficiencies: o Eliminate the Employee Wellness Program – $190,000 (General Fund Impact) o Eliminate additional Commission Aide position of one Commissioner – $120,000 o Withdraw recommendation to reduce funding for senior events at the Miami Beach Convention Center from four events per year to three – ($18,000)

Recommended Recurring General Fund Expenditure Enhancements – ($261,000)  At the July 11, 2025 Budget Briefing, the FERC recommended funding for the following recurring General Fund enhancements: o Extension of Wraparound Palm Tree Lighting on 71 st Street to the East of Normandy Fountain and Collins Avenue – ($129,000) o Sanitation Fund Contribution for Dedicated Pressure Washing Services on Lincoln Road from Washington to Collins Avenue – ($120,000)  Finalization of Recommended FY 2026 Living Wage Increase Impact – ($12,000) (General Fund Impact)

General Fund Revenue Refinements – $475,000  Adjustment in FY 2026 Resort Tax contribution to General Fund for tourism-eligible expenditures based on finalization of the proposed FY 2026 Resort Tax Budget – $316,000  Finalization of FY 2026 General Fund administrative fees based on cost allocation study – $190,000  Refinement of other miscellaneous General Fund revenues based on finalization of the proposed FY 2026 General Fund budget – ($31,000)

General Fund Expenditure Refinements – ($506,000)  Finalization of FY 2026 Internal Services Funds budgets and allocations – ($140,000)  Refinement of other miscellaneous General Fund expenditures based on finalization of the proposed FY 2026 General Fund budget – ($5,000)  Adjustment in FY 2026 General Fund budgeted set aside for reserves – ($361,000)

PROPOSED FY 2026 GENERAL FUND BUDGET

Based on discussion and direction from the May 27, 2025 Commission Budget Retreat and the two (2) FERC Budget Briefings that were held on June 13, 2025 and July 11, 2025, as well as the additional adjustments that were made over the summer recess, the Administration proposes the following FY 2026 General Fund budget, which, if approved by the Mayor and City Commission, will result in a balanced budget that includes the expenditure reductions/efficiencies and enhancements listed below.

September 17, 2025 Proposed Budget

$

Revenues $483,409,000

Expenditures 483,409,000

Surplus/(Gap) $-

The charts below reflect the major revenue and expenditure categories of the FY 2026 General Fund budget totaling $483,409,000, as proposed.

FY 2026 GENERAL FUND REVENUES

Resort Tax Contribution 9%

Other Taxes 6%

Licenses & Permits 5%

FY 2026 Proposed $483,409,000

Property Taxes 62%

Charges For Services 4%

Miscellaneous 3%

Non-Operating Revenues 3% Intergovernmental 3%

Use of General Fund Reserves/Prior Year Surplus 1% Other Revenues 4%

FY 2026 GENERAL FUND EXPENDITURES

Parks & Recreation 11%

Fire 27%

Public Works 4%

FY 2026 Proposed $483,409,000

Other 23%

Police 35%

Recommended Recurring Attachment A – $1,635,000 General Fund

After an extensive review of the submissions from departments based on discussions at the FY 2026 Commission Budget Retreat and the two (2) FERC Budget Briefings, Attachment A reflects a listing of all FY 2026 expenditure reductions/efficiencies with detailed descriptions. The recurring reductions/efficiencies summarized below reflect those recommended in FY 2026 in the General Fund.

Reallocation of Three (3) Finance Department Customer Service Center Positions that provide services to the Parking Department from the General Fund to the Parking Fund

Eliminate Cashiering Window at City Hall Two (2) Full-Time Financial Analyst I Positions

Expenditure Reductions/Efficiencies –

$ FY 2026

$ FY 2027

($232,000)

($297,000)

(151,000)

(196,000)

(147,000)

(155,000)

(120,000)

(120,000)

(103,000)

(132,000)

Item

Recurring General Fund Reductions/Efficiencies

12

10

Elimination of One (1) Full-Time G.O. Bond Assistant Director and One (1) Full-Time Community Info Manager Position (General Fund Portion) Eliminate One (1) Full-Time Additional Commission Aide Position Eliminate One (1) Full-Time Senior GIS Analyst Position

1

14

17

Eliminate One (1) Full-Time Customer Service Representative Position from the Customer Service Center

(103,000) (129,000)

Reduce Asset Management Division’s Professional Services Operating Expenditures for Miscellaneous Appraisals, Assessments, Audit Leases, and Market Studies

(100,000) (100,000)

Reduce Grants Management Division’s Operating Expenditures for Grant Consulting Services

(75,000) (75,000)

Elimination of the Restroom Index, Sidewalk Cafe Index, and Service Shopper Index, as well as the reallocation of the Garage Indexes and Mystery Rider Index to the Parking Enterprise and Transportation Special Revenue Funds.

(47,000) (49,000)

Reduce Funding for the Commercial Lease Subsidy Program (40,000) (40,000)

Eliminate Drug Prevention and Intervention, Flu Vaccine, SAT/ACT Mock Testing, and Substitute Teacher Incentive Programs

(29,000) (29,000)

Eliminate Resident Guide Printing and Only Push Online Version (23,000) (23,000)

Reduce Funding for Paid College Interns (20,000) (20,000)

Reallocation of Full-Time Management Analyst Position Responsible for the Excellence Assessors Program Between General Fund, Sanitation, Parking, and Transportation Funds

(17,000) (18,000)

Reduce Frequency of Update for General Fund Cost Allocation Plan from annually to every three years Reduce Funding for Miscellaneous Parks and Recreation Programming Reduce Funding for School Graduations Program

(13,000) (13,000)

(13,000) (13,000)

(10,000) (10,000)

Sub-Total ($1,243,000) ($1,419,000)

Impact of Proposed Internal Services Reductions/Efficiencies (392,000) (371,000)

Total ($1,635,000) ($1,790,000)

Recommended “One-Time” General Fund Expenditure Enhancements – Attachment B – ($1,886,000)

After an extensive review of the enhancements requested by departments, requests originating from the City’s various Commission Committees, and direction provided by the City Commission, Attachment B reflects a listing of all FY 2026 one-time expenditure enhancements with detailed descriptions. The one-time enhancements summarized below reflect those recommended for funding in FY 2026 in the General Fund.

Item

One-Time General Fund Enhancements

18

Police High Visibility Overtime Detail

11

Park View Island Garden Project

6

City Resident Miami-Dade College Scholarship Program

14

Records Storage and Retrieval Services (over 3 years)

1

Open Heart, Inc. Grant for Miami Beach Cancer Walk

Recommended Recurring General Fund Expenditure Enhancements – Attachment C – ($2,757,000)

Similar to the one-time expenditure enhancements, Attachment C reflects a listing of all recurring FY 2026 expenditure enhancements with detailed descriptions. The recurring enhancements summarized below reflect those recommended for funding in FY 2026 in the General Fund.

$ FY 2026

$ FY 2027

$1,800,000

$ -

35,000

-

30,000

-

16,000

16,000

5,000

-

$1,886,000 $16,000 Total

Item

Recurring General Fund Enhancements

61

Property and Evidence Off-Site Storage Facility Lease

2

Sidewalk & Asphalt Renewal and Replacement Fund

62

Axon Fusus Real-Time Operations Platform

36

Summer Camp at South Shore Community Center

28

South Shore Community Center Senior Meals Program

66

CCTV/LPR Cameras Maintenance

Extension of Wraparound Palm Tree Lighting on 71st Street to the East of Normandy Fountain and Collins Avenue

79

One (1) Full-Time Fire Protection Radio Systems Administrator – (cost be offset by proposed new inspection fee) Contribution to the Sanitation Fund for Dedicated Pressure Washing Services on Lincoln Road from Washington to Collins Avenue

23

5

12

Additional Funding for the Job Creation Incentive Program*

55

Additional Funding for Rhythm Foundation

39

Janitorial Services for UNIDAD Restroom

Fire Department Mental Health and Wellness Coordinator Services*

22

Collins Park Artist Workforce Housing (rent for ground floor sublease)

16

11

Style Saves Back-to-School Program Grant

Living Wage Increase for Contractors (General Fund Portion)

1

65

Advance Mobile ALPR and in Car Video Contract - Ten (10)

38

Funding to Continue Chess Programing

14 & 75

One (1) Full-Time Digital Media Specialist Position (General Fund Portion) – Split-funded

Impact of Proposed Internal Services Enhancements

Items with asterisk (*) are recommended for funding as one-time in FY 2026

GENERAL FUND RESERVES

The General Fund reserve as of September 30, 2024 is $114.0 million, which is the equivalent of three (3) months, or 25.0%, based on the adopted FY 2025 General Fund budget of $456.2 million. The current reserve policy for the General Fund is a requirement of two (2) months with a goal of three (3) months pursuant to Resolution No. 2024-33340 that was adopted by the City Commission on October 30, 2024. As of the fiscal year ending September 30, 2024, the City has achieved the 3 month, or 25.0%, General Fund reserve goal.

Based on the General Fund budget proposed for FY 2026, the reserve goal for the General Fund increases by approximately $6.8 million to $120.8 million, which is the equivalent of three (3) months, or 25%, of the proposed FY 2026 budget of $483.4 million.

Of the additional $6.8 million General Fund reserve goal based on the General Fund budget proposed for FY 2026, approximately $3.1 million is included in the current year General Fund budget, resulting in a difference of approximately $3.7 million that will be re-evaluated as part of the year end process for FY 2025.

$ FY 2026

$ FY 2027

$478,000

$501,000

360,000

371,000

300,000

200,000

257,000

317,000

175,000

175,000

150,000

150,000

129,000

26,000

121,000

109,000

120,000

120,000

120,000

-

99,000

99,000

96,000

96,000

80,000

-

63,000

65,000

60,000

60,000

63,000

63,000

35,000

35,000

20,000

20,000

10,000

13,000

Sub-Total $2,736,000 $2,420,000

21,000

21,000

Total $2,757,000 $2,441,000

RESORT TAX FUND

The Resort Tax Fund is a Special Revenue Fund that consists of three main components:

1. A 2% Resort Tax that is comprised of a 2% Bed Tax and 2% Food & Beverage Tax 2. A 1% Bed Tax for Quality of Life (QOL) capital projects, transportation initiatives, and arts and culture 3. A 1% Bed Tax for the repayment of outstanding debt service for Resort Tax bonds issued as part of the most recent Convention Center renovation and expansion project, as well as funding for renewal and replacement of Convention Center assets

2% Resort Tax

At the July 11, 2025 FERC Budget Briefing, the Mayor and City Commission were briefed regarding the preliminary FY 2026 2% Resort Tax Fund budget. Based on actual 2% Resort Tax collections as of April 2025, which assumed FY 2026 Resort Tax collections remaining flat over FY 2025 projections and the offsetting expenditure adjustments that were presented, the FY 2026 2% Resort Tax budget was balanced.

2% Resort Tax

FY 2026

Revenues

$76,541,000

Expenditures

76,541,000

Surplus/(Gap)

$ -

Approach to Balance

Although the preliminary 2% Resort Tax budget that was presented at the July 11, 2025 FERC Budget Briefing was balanced, the Administration recommended a combination of one-time and recurring enhancements and reductions/efficiencies, as well as revenue and expenditure refinements that would result in a balanced 2% Resort Tax Fund budget, if approved by the FERC.

FY 2026 2% Resort Tax Balancing Strategies

$

Preliminary Surplus/(Gap) $ -

Recommended Recurring Reductions/Efficiencies 879,000

Recommended “One-Time” Expenditure Enhancements (1,910,000)

Recommended Recurring Expenditure Enhancements (27,000)

Revenue Refinements 1,665,000

Expenditure Refinements (607,000)

Net Surplus/(Gap) $ -

The FERC endorsed most of the Administration’s recommendations summarized above and proposed certain adjustments to the recommended expenditure enhancements to be included in the FY 2026 2% Resort Tax budget.

Adjustments Subsequent to Budget Briefings

Based on the FERC’s recommendations from the July 11, 2025 Budget Briefing, items that were adopted by the Mayor and City Commission at the July 23, 2025 Commission meeting, and the finalization of the proposed FY 2026 2% Resort Tax budget, the Administration made further updates and refinements to the FY 2026 2% Resort Tax budget. These updates are detailed further below.

FY 2026 2% Resort Tax Fund Balancing Strategies

Surplus/(Gap) as of July 11, 2025 FERC Budget Briefing

Recommended Recurring Reductions/Efficiencies

Recommended “One-Time” Expenditure Enhancements

Recommended Recurring Expenditure Enhancements

Revenue Refinements

Expenditure Refinements

Net Surplus/(Gap)

Recommended Recurring 2% Resort Tax Reductions/Efficiencies – $5,000  At the July 11, 2025 Budget Briefing, the FERC recommended the following adjustments to the recurring 2% Resort Tax reductions/efficiencies: o Eliminate the Employee Wellness Program – $5,000 (Estimated 2% Resort Tax Impact)

Recommended “One-Time” 2% Resort Tax Expenditure Enhancements – $1,000,000  At the July 23, 2025 City Commission meeting, the Mayor and City Commission adopted Resolution No. 2025-33847, approving a sponsorship agreement between the City and the Greater Miami Sports Commission (FIFA Host Committee) for 2026 FIFA World Cup-related events in Miami Beach. Under the terms of the approved sponsorship agreement, the maximum cash sponsorship was reduced from $1,500,000 to $1,250,000, of which $750,000 is to be paid in the current fiscal year, resulting in a balance of $500,000 to be budgeted in FY 2026 instead of $1,500,000 that was recommended to be budgeted in FY 2026 at the July 11, 2025 FERC Budget Briefing.

Recommended Recurring 2% Resort Tax Expenditure Enhancements – $25,000  At the July 11, 2025 Budget Briefing, the FERC recommended the following adjustments to the recurring 2% Resort Tax enhancements: o Withdraw recommendation to fund the sponsorship for the South Beach Seafood Festival on a one-time basis – $25,000

2% Resort Tax Revenue Refinements – ($750,000)  Adjustment in the use of 2% Resort Tax reserves for the FIFA sponsorship agreement approved by the Mayor and City Commission at the July 23, 2025 City Commission meeting to account for the first portion of the cash sponsorship that is to be paid in the current fiscal year instead of in FY 2026.

2% Resort Tax Expenditure Refinements – ($280,000)  Finalization of FY 2026 Internal Services Funds Budgets and Allocations – ($33,000)  Adjustment in the FY 2026 Resort Tax contribution to the General Fund for tourism- eligible expenditures based on finalization of the proposed FY 2026 2% Resort Tax Budget – ($247,000)

$

$ -

5,000

1,000,000

25,000

(750,000)

(280,000)

$ -

PROPOSED FY 2026 2% RESORT TAX BUDGET

Based on discussion and direction given at the May 27, 2025 Commission Budget Retreat and the two (2) FERC Budget Briefings that were held on June 13, 2025 and July 11, 2025, as well as additional adjustments that were made over the summer recess, the Administration proposes the following FY 2026 2% Resort Tax budget, which, if approved by the Mayor and City Commission, will result in a balanced budget that includes the expenditure reductions/efficiencies and enhancements listed below.

September 17, 2025 Proposed Budget

Revenues

Expenditures

Surplus/(Gap)

Recommended Recurring 2% Resort Tax Expenditure Reductions/Efficiencies – Attachment A – $884,000

After an extensive review of the submissions from departments based on discussions at the FY 2026 Commission Budget Retreat and the two (2) FERC Budget Briefings, Attachment A reflects a listing of all FY 2026 expenditure reductions/efficiencies with detailed descriptions. The recurring reductions/efficiencies summarized below reflect those recommended in FY 2026 in the 2% Resort Tax budget.

Item

Recurring 2% Resort Tax Reductions/Efficiencies

24

Reduction in Police High-Impact Overtime for Memorial Day

19

Reduction in Holiday Lighting and Decorations

Reduction in Code High Impact Overtime for Halloween, Memorial Day, and July 4 th

18

20

Elimination of the Sidewalk Cafe Index

23

Reduction in Lummus Park Activations

Reduce frequency of Update for Resort Tax Cost Allocation Plan from Annually to Every Three Years

22

Reduction in Miscellaneous Inspector General Operating Expenditures

21

Impact of Proposed Internal Services Reductions/Efficiencies

$

$75,791,000

75,791,000

$ -

$ FY 2026

$ FY 2027

($600,000)

($600,000)

(100,000)

(100,000)

(63,000)

(63,000)

(54,000)

(56,000)

(45,000)

(45,000)

(8,000)

(8,000)

(4,000)

(4,000)

Sub-Total ($874,000) ($876,000)

(10,000)

(9,000)

Total ($884,000) ($885,000)

Recommended “One-Time” 2% Resort Tax Expenditure Enhancements – Attachment B – ($910,000)

After an extensive review of the enhancements requested by departments, requests originating from the City’s various Commission Committees, and direction provided by the City Commission, Attachment B reflects a listing of all FY 2026 one-time expenditure enhancements with detailed descriptions. The one-time enhancements summarized below reflect those recommended for funding in FY 2026 in the 2% Resort Tax budget.

Item

One-Time 2% Resort Tax Enhancements

30

2026 FIFA World Cup Sponsorship

28

March Fitness Festival Large Scale Event

33

Women's History Month

Recommended Recurring 2% Resort Tax Expenditure Enhancements – Attachment C – ($2,000)

Similar to the one-time expenditure enhancements, Attachment C reflects a listing of all recurring FY 2026 expenditure enhancements with detailed descriptions. The recurring enhancements summarized below reflect those recommended for funding in FY 2026 in the 2% Resort Tax budget.

Item

Recurring Enhancements (2% Resort Tax)

Living Wage Increase for Contractors (2% Resort Tax Portion)

84

Impact of Proposed Internal Services Enhancements

RESORT TAX RESERVES

The 2% Resort Tax reserve as of September 30, 2024 is $38.3 million, which is the equivalent of six (6) months, or 50%, based on the adopted FY 2025 2% Resort Tax budget of $76.6 million. The current reserve policy for the 2% Resort Tax budget is a minimum of two (2) months with a goal of six (6) months pursuant to Resolution No. 2019-30664 that was adopted by the City Commission on January 16, 2019. As of the fiscal year ending September 30, 2024, the City has achieved the six (6) month, or 50%, Resort Tax Fund reserve goal.

Based on the 2% Resort Tax budget proposed for FY 2026, the updated reserve goal for the 2% Resort Tax Fund decreases by approximately $0.4 million to $37.9 million, which is the equivalent of six (6) months, or 50%, of the proposed FY 2026 2% Resort Tax budget of $75.8 million.

The City’s 2% Resort Tax reserves will be re-evaluated again as part of the year-end process for FY 2025.

$ FY 2026

$ FY 2027

$500,000

$ -

400,000

-

10,000

-

$910,000 $ - Total

$ FY 2026

$ FY 2027

$1,000

$1,000

Sub-Total $1,000 $1,000

1,000

1,000

Total $2,000 $2,000

PROPOSED FY 2026 ENTERPRISE FUNDS BUDGETS

The City accounts for those goods and services provided by a particular department to external users for which a fee is charged as Enterprise Funds. The City’s Water, Sewer, Storm Water, Building, Parking, Convention Center, and Sanitation operations comprise this category of proprietary funds. The proposed FY 2026 Enterprise Funds budgets total $312.0 million. This represents an increase of approximately $12.3 million, or 4.1%, from the adopted FY 2025 Enterprise Funds budgets totaling $299.7 million, primarily due to the following:



Water reflects an overall increase of approximately $2.7 million, or 5.8%, primarily due to an increase in the costs for wholesale water purchased from Miami-Dade County’s Water and Sewer Department (WASD) based on projected consumption and an increase in the rates for wholesale water purchased in FY 2026 from WASD. In addition, the FY 2026 budget includes an increase in the budgeted set aside for future renewal and replacement of capital assets and reserves for future projects that is based on projected revenues in excess of expenditures for FY 2026.



Sewer reflects an overall increase of approximately $4.8 million, or 7.5%, primarily due to an increase in the costs for sanitary sewer treatment services provided by Miami-Dade County’s Water and Sewer Department (WASD) based on projected usage. In addition, the FY 2026 budget includes an increase in the budgeted set aside for future renewal and replacement of capital assets and reserves for future projects that is based on projected revenues in excess of expenditures for FY 2026.



Storm Water reflects an overall increase of approximately $1.2 million, or 3.0%, primarily due to an increase in the budgeted set aside for future renewal and replacement of capital assets and reserves for future projects that is based on projected revenues in excess of expenditures for FY 2026.



Building reflects an overall increase of $2.4 million, or 12.4%, primarily due to personnel and technology-related enhancements that are proposed as part of the FY 2026 budget to enhance and streamline services in the Building Department.



Parking reflects an overall increase of approximately $3.2 million, or 5.9%, primarily due to an increase in the budgeted set aside for reserves for future projects that is based on projected revenues in excess of expenditures for FY 2026.



The Convention Center Fund reflects an overall decrease of $2.0 million, or 4.2%, primarily due to a decrease in the City’s projected FY 2026 Convention Development Tax (CDT) bonus from Miami-Dade County pursuant to Resolution No. 2014-28836 and the Amended and Restated Interlocal Agreement, resulting in a decrease in the budgeted set aside for future renewal and replacement of capital assets.

PROPOSED FY 2026 INTERNAL SERVICES FUNDS BUDGETS

The City accounts for goods and services provided by one department to other departments citywide on a cost reimbursement basis as Internal Services Funds. Central Services, Facilities and Fleet Management, Information Technology, Risk Management, Medical and Dental, and the Office of the Inspector General comprise this category of proprietary funds. The proposed FY 2026 budgets for the Internal Services Funds total $146.2 million, which is an increase of $10.0 million, or 7.3%, over the total budgets for the Internal Services Funds adopted for FY 2025 of $136.2 million, primarily due to the following:



Central Services reflects an overall decrease of $13,000, or 1.1%, primarily due to one- time expenditures that were budgeted in FY 2025 based on the scheduled replacement of vehicles, machinery, and equipment.



Facilities Management reflects an overall decrease of $370,000, or 2.8%, primarily due to one-time expenditures that were budgeted in FY 2025 based on the scheduled replacement of vehicles, machinery, and equipment.



Fleet Management reflects an overall increase of $2.0 million, or 10.2%, primarily due to the costs associated with vehicles, machinery, and equipment that are scheduled for replacement in FY 2026.



Information Technology reflects an overall increase of $1.3 million, or 6.5%, primarily due to increases in the renewals to maintain public safety and citywide enterprise software licenses.



Risk Management reflects an overall increase of approximately $2.0 million, 7.3%, primarily due to projected increases in workers’ compensation and liability payments based on claims experience and actuarial projections.



The Medical and Dental Fund budget increased by approximately $4.8 million, or 9.2%, primarily due to projected increases in paid medical and prescription claims based on current year actuarial projections and claims experience.



The Office of the Inspector General reflects an overall increase of $220,000, or 11.3%, primarily due to increases in personnel services expenditures resulting from applicable merit and cost of living adjustment increases, as well as increases in professional services related to future audits and investigations, including outside audit assistance, technical engineering support and contract oversight.

Internal Service costs are mostly allocated to the General Fund and Enterprise Fund departments, as well as Special Revenue Funds. The Risk Management Fund does, however, reimburse the General Fund for the cost of legal services provided.

Attachments A, B, and C reflect a complete list with detailed descriptions of all the FY 2026 reductions/efficiencies, one-time expenditure enhancements, and recurring expenditure enhancements, respectively, requested for the Enterprise, Internal Service, and Special Revenue Funds budgets, as well as those proposed for funding in the respective FY 2026 budgets.

USE OF ONE-TIME REVENUES FOR RECURRING EXPENDITURES

The City’s current policy regarding the use of one-time revenues states that “the City of Miami Beach will use one-time, non-recurring revenue for capital expenditures or one-time expenditures and not subsidize recurring personnel, operations, and maintenance costs.” The FY 2026 budgets for the Building, Sanitation, and Sustainability Funds require the use of fund balance for recurring operating expenditures as set forth in the proposed budgets presented for FY 2026.

As a result, it is recommended that the Mayor and City Commission waive this policy, as adopted by Resolution No. 2006-26341, providing for the one-time use of fund balance to be utilized for the FY 2026 Building, Sanitation, and Sustainability Fund budgets for recurring personnel, operations, and maintenance costs. The Administration continues to explore and recommend further actions to ensure that these funds move toward being structurally balanced.

POSITION TRENDS

Based on the proposed enhancements detailed above for FY 2026, as well as the enhancements and other adjustments that have been approved mid-year during FY 2025, the full-time position count proposed is 40 full-time positions, or 1.7%, more in FY 2026 than in FY 2025, which is comprised of sixteen (16) additional public safety positions and twenty-four (24) non-public safety positions.

Public safety positions reflect fifteen (15) additional full-time Firefighter positions in the Fire Department in accordance with the Collective Bargaining Agreement that was ratified through Resolution No. 2024-33349. The staffing increase is a direct result of the implementation of the “A+ Day,” which adjusted the average pay period for personnel working 24-hour shifts from 90 hours to 84 hours over a 14-day cycle. In addition, one (1) full-time Fire Protection Radio Systems Administrator position was added to oversee the installation and performance of in-building radio systems to ensure compliance with the Florida Building Code; the cost of which will be offset by a proposed new inspection fee.

Non-public safety position enhancements include one (1) full-time position added in the Office of the Mayor and City Commission to better serve the public, nine (9) full-time positions added in Building to enhance and streamline services, reduce the number of delays in inspections, and comply with regulatory standards, ten (10) full-time positions added in Parking to enhance cleanliness in the City’s garages and customer support in the City’s call center, as well as the continuation of the North Beach Restricted Residential Parking Permit Zone program, two (2) positions in the Parks and Recreation Department for summer camp programming at the South Shore Community Center, one (1) position to address increased demand for digital media in the Office of Marketing and Communications, and (1) one position in the Information Technology Department based on operational efficiencies identified by the Department.

FEE SCHEDULE

On September 25, 2019, the Mayor and City Commission adopted Ordinance No. 2019-4299, which established an annual adjustment for certain specified City fees and charges to reflect increases indexed to the Consumer Price Index (CPI). It also established that certain other fees and charges shall be subject to adjustment as otherwise provided in the City code.

This fiscally responsible policy ensures that the City’s fee structure remains aligned with inflationary trends and adequately recovers the costs of delivering high-quality services to residents and customers. From a best practices standpoint, smaller incremental increases over time help avoid future "rate shock" and large "catch up" rate increases that would be looked upon favorably by credit rating agencies and help position the City for higher credit ratings and lower interest rates.

On November 20, 2024, the Mayor and City Commission adopted Ordinance No. 2024-4657, which approved several changes to the original 2019 Ordinance such as commencing in FY 2026, all applicable fees would be tied to the Consumer Price Index (CPI) for annual adjustments, with a cap of 3%, except for certain exclusions. Additionally, it established that parking fees would follow the CPI adjustment with the same 3% cap, and fees would be rounded to the nearest cent, replacing the previous rounding to the nearest dollar. It also removed the practice of adjusting certain parking fees every five years.

Applicable City fees that are indexed to the Consumer Price Index (CPI) for annual adjustments are recommended to be adjusted by 2.8% as part of the proposed FY 2026 budget. This is based on the December 2024 Consumer Price Index for the Miami-Fort Lauderdale-West Palm Beach, Florida area, as published by the Bureau of Labor Statistics of the United States Department of Labor and represents approximately $5.3 million in revenues that are included across the City’s various funds in FY 2026, including approximately $1.3 million in the General Fund, $1.3 million

in the Parking Funds, $1.1 million in the Water and Sewer Fund, $1.1 million in the Storm Water Fund, and $0.5 million in the Building Fund.

Attachment D reflects a listing of all applicable City fees, including those proposed to be adjusted by 2.8% in FY 2026 in accordance with Resolution No. 2025-33471 that was adopted by the Mayor and City Commission on February 3, 2025. This Resolution directed the Administration to include a comprehensive list detailing all increases to City fees that are scheduled to take effect in the upcoming fiscal year in the Proposed Budget Book.

ADDITIONAL REDUCTIONS

At the July 11, 2025 FERC Budget Briefing, the Administration was directed to compile and present additional programs and/or positions that could be considered for reduction and/or elimination as part of the FY 2026 budget.

In response, Attachment E provides a detailed listing of additional programs and/or positions that could be considered for reduction and/or elimination. This document builds upon the reductions/efficiencies detailed in Attachment A. It is important to note that the Administration is not recommending any of the items listed in Attachment E, which were solely compiled based on the direction received from the July 11, 2025 FERC Budget Briefing.

FISCAL IMPACT STATEMENT

See the information provided above.

Does this Ordinance require a Business Impact Estimate? (FOR ORDINANCES ONLY)

If applicable, the Business Impact Estimate (BIE) was published on: See BIE at: https://www.miamibeachfl.gov/city-hall/city-clerk/meeting-notices/

FINANCIAL INFORMATION

See the information provided above.

CONCLUSION

The Administration recommends that the Mayor and City Commission adopt the attached Resolution which establishes the tentative budgets for the General, G.O. Debt Service, City Center RDA Ad Valorem Taxes, North Beach CRA Ad Valorem Taxes, Enterprise, Internal Service, and Special Revenue Funds budgets for FY 2026, subject to a second and final public hearing to be held on Tuesday, September 30, 2025, at 5:01 P.M., in the City Commissioner Chambers at 1700 Convention Center Drive, 3 rd Floor, Miami Beach, Florida 33139.

Attachment A – FY 2026 Recurring Expenditure Reductions/Efficiencies Attachment B – FY 2026 One-Time Expenditure Enhancements Attachment C – FY 2026 Recurring Expenditure Enhancements Attachment D – FY 2026 Fee Schedule Attachment E – FY 2026 Additional List of Reductions/Efficiencies

EC/JDG/TOS/RA

Applicable Area

Citywide

Was this Agenda Item initially requested by a lobbyist which, as defined in Code Sec. 2-481, includes a principal engaged in lobbying? No

If so, specify the name of lobbyist(s) and principal(s):

Department

Management and Budget

Sponsor(s)

Co-sponsor(s)

Condensed Title

5:01 p.m. 1st Rdg PH, Adopt Tentative Budgets-Gen/GO/RDA/NBCRA/Ent/Int/SR Funds. OMB

Previous Action (For City Clerk Use Only)