Delray Beach reviews budget scenarios that would use millage increases, fund balance or deep cuts to close a potential $19.5M gap

City of Delray Beach officials on June 9 laid out alternatives to balance a projected fiscal‑year 2026–27 budget, showing a baseline shortfall of about $19.5 million if the city holds its current millage (6.1611) and maintains the present level of services.

Chief Financial Officer Henry Dawitis presented results of a zero‑based budgeting exercise that produced three scenarios: minimum operations, a "most likely" scenario that largely maintains current service levels with a few approved enhancements, and an increased‑service scenario. Dawitis said projected tax revenue would rise from $132.3 million in the adopted prior year to about $140.4 million (roughly 6.2% higher), driven by an assessor estimate that taxable values could increase about 6.9%.

Dawitis identified expense pressures including police (projected to increase about 10.8%, from $56M to $62.8M) because of contractual obligations and certifications; conservative budgeting for fire due to upcoming union negotiations; and higher fleet costs tied to petroleum prices. He also noted a projected decline in fines and forfeitures (from $1.2M to $721,000) linked to fewer parking tickets and related fees.

Using audited financials, staff reported $47.13 million in undesignated fund balance (about 22.47% of expenditures). Under the most likely scenario, total revenues were modeled near $209.7 million while proposed expenses were about $229 million, producing the roughly $19.5 million gap Dawitis described as the amount of "efficiencies" the city would need to identify to produce a balanced budget.

The presentation showed multiple balancing strategies: modest millage increases (for example, raising 0.2 mills to 6.3611 producing roughly $10.6M gross but about $7.7M net after CRA payments), drawing down fund balance to various policy levels (staff modeled draws down to policy minima or lower in hypothetical scenarios), and identifying operational efficiencies (the modeled efficiencies ranged down to about $5.2M under the most aggressive revenue options). Dawitis cautioned the numbers depend on many inputs and the treatment of CRA payments.

Commissioners asked detailed questions. One commissioner warned that a $19.5 million shortfall would likely affect paving and park maintenance: "19.5 million is coming from somewhere else. Where is it coming from? It's coming from paving our streets. It's coming from our park maintenance," the commissioner said. Another member emphasized the city’s current fund balance policy and asked how much staff could draw without violating that policy; staff replied the policy is reviewed annually and modifications could be considered during the budget process.

City Manager Terrence Moore and the finance team committed to further analysis and outreach to commissioners before the July 14 workshop, including private collection of commissioners' preferences on millage options and a deeper effort to develop a full cost‑accounting approach for services. Staff said they will return with refined recommendations and noted the potential need to consider fees, interlocal agreements or shared services if state legislation reduces local taxing authority.

Next procedural steps: staff will refine the analysis, accept commissioner input over the coming weeks, and present a formal proposed budget recommendation at the July 14 workshop.