Atlantic Beach officials are taking proactive steps to maintain a healthy budget ahead of the property tax referendum. City Manager Kevin Hogencamp discussed plans to navigate the challenges of the upcoming fiscal year at the June 29 budget workshop, including the impact on the city's general fund if the referendum is approved.
"The rubber is meeting the road here," he said, urging the city commissioners to participate in the process and initiate a dialogue with staff and constituents to determine what should be included in and eliminated from the proposed budget. "I've already heard from some of you on both."
Hogencamp said additional workshops will be held July 20 and Aug. 19. The City Commission will approve the budget and millage rate on Sept. 28, with the fiscal year beginning Oct. 1, 2026.
"Your input and the community's input will guide us every step of the way," he said.
Atlantic Beach maintains one of the lowest millage rates among similar-sized cities in Northeast Florida, at 2.7499 mills. "It's going to stay that way moving into the next fiscal year unless the City Commission guides me otherwise or in the event that there's something catastrophic between now and then," said Hogencamp.
Property taxes fund essential capital and operating expenses that support the city's general fund. For example, a home valued at $322,000 generates approximately $750 in property tax revenue for Atlantic Beach, which represents 15% of the homeowner's total tax bill. The city of Jacksonville receives 44%, with an additional 38% going to the Duval County School System, the St. Johns River Water Management District and the Florida Inland Navigation District.
"Even though property taxes are going to be a primary theme in all of these meetings, it's much more than property taxes. We have enterprise funds. These are funds that pay for themselves, water and sewer utilities and sanitation, for example," said Hogencamp, adding that restricted funds are earmarked for specific purposes, such as building, gas and bed tax funds, while unrestricted funds, including property taxes, can be used for any type of expense.
The city's general fund is $21.6 million of the total budget of $57.6 million. The projected reserves for the unrestricted general fund budget are estimated at $4 million, or 30%, for fiscal year 2025. Finance Director Brittany Pursell said the figure reflects the city's operating reserves, bringing the total reserve balance to 55%.
Commissioner Bruce Bole said it's important to maintain a healthy reserve balance with big changes expected at the state level. "This is going to be an emergency fund," he said. "That is critical for us this year."
Hogencamp said the "elephant in the room" is the proposed reduction in property taxes, which will be on the November ballot.
The state Legislature is seeking to increase homestead exemptions, which would cost the city an estimated $4.5 million in today's dollars if the referendum passes with 60% of the vote.
Looking ahead, that could mean a reduction in city services, an increase in fees, special assessments for anything from street resurfacing to fire protection and a millage increase to make up the reduction in city revenue.
Hogencamp said the city is already planning for that long-term possibility.
"If we were to lose all of our homestead exemptions, we are looking at a 1.5% millage increase [to maintain our current budget], if indeed we try to raise all the revenue that way," Hogencamp said. "That is long-term that we're already thinking about and preparing for just in case it happens."
If the measure is approved by voters, staff's projections indicate a possible loss of roughly $1.06 million in the first year under one projection and an estimated $1.8 million after a second-year change to exemptions. The first round would be a $150,000 homestead exemption, with a second round at $250,000, up from the current $50,000.
"The city is at a critical financial crossroads. Managing our structural revenue shifts requires a balanced dual strategy of aggressive internal cost containment and targeted modest adjustments to user fees," said Hogencamp.
"Comprehensive policy development is a key responsibility that we're undertaking. By taking proactive, measured steps now, we can further stabilize our fiscal foundation, absorb upcoming revenue losses and ensure the uninterrupted delivery of municipal services to our residents."
