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Big Blue’s subsidy of Vero city budget is nearing an end


For the first time in four decades, property owners within the Vero Beach city limits will be funding almost all the costs of municipal staff, facilities, programs and amenities this fall.


The “glide path” designed to wean Vero off nearly $6 million in annual electric utility transfers to the city’s general fund – a sum long borne heavily by electric customers in Indian River Shores, South Beach and mainland unincorporated Indian River County – has all but run out.

Only $500,000 remains from the electric sale proceeds that were set aside to facilitate a soft(er) landing for city taxpayers. In the 2023-24 budget year, the Big Blue dowry will be totally gone.  Zero glide path money will be left to cushion the general fund.

Taxable property values in the city of Vero Beach increased 11.8 percent this past year, but the remaining cushion alone won’t be enough to fund all the expenditures.

Taxes are set to increase as much as 9 percent on top of those higher real estate assessments, netting an extra $1.8 million in property taxes. That’s a nearly 22 percent tax increase in total, and it will require at least four out of five council members’ votes by Florida Statute to hike tax revenues and expenses that much.

The city still holds more than $21 million cash from the sale of Vero electric to Florida Power & Light – funds meant to redevelop the riverfront power plant and sewer plant sites. But since City Manager Monte Falls declared that the riverfront project must be “revenue neutral,” how city leaders plan to use most of that windfall now is unknown.

In the audited financial statements, the cash is listed as “Capital and Infrastructure Reserve”; $2 million is being transferred to the marina to help build a new dry storage building, leaving $19 million of taxpayer money in that council-directed reserve fund.

Vero Beach is looking to spend $28.5 million on general city government functions in the coming year, plus another $36.5 million on the city’s “enterprise funds” like the marina, airport, solid waste and utilities for a total combined budget of $65 million, including capital projects and stormwater management.

That $65 million would be spent on a city of 16,354 people, according to the Vero’s own population number printed in the budget packet. That works out to general fund expenditures for one year of $3,974.56 for every man, woman and child living in the city.

Finance Director Cindy Lawson told the Vero Beach City Council during budget workshops in mid-July that 85 percent of the general fund budget goes to personnel costs – salaries, health insurance benefits, pension contributions, other post-employment benefits, and payroll taxes.

The coming year’s proposed budget includes a 5 percent salary increase for higher-wage employees, or a $1 per hour increase for employees earning less than $15 per hour, so the city can get in compliance ahead of schedule with Florida’s $15 mandatory minimum wage effective September 2026. The salary increase in the budget is less than half the 12 percent that the Teamsters Union has requested for the employees it represents, but the city is in the midst of those labor negotiations.

Police salaries have also been boosted to a starting pay of more than $48,000 for a new recruit, and the months of service required between salary “steps” has been reduced so Vero can be competitive for quality candidates.

More than 10 percent of the 57-member sworn police force ended their employment with Vero in the past year, either from termination, retirement or resignation. Chief David Currey said he’s looking to fill those positions with new graduates from the academy, or with experienced officers relocating from out of state who expect to be paid more than rookies.

Vero currently has 213 employees paid out of the general fund. This number has remained fairly stable compared. With all departments added in, the city employs 330 full-time workers.

The airport, marina, solid waste department, water-sewer utility enterprise funds are run like businesses, but they all contribute heavily to the general fund. The airport and cemetery only pay an “administrative fee” to fund the salaries at City Hall. Those fees from all five enterprise funds will add up to $2,419,334 in the coming year.

On top of that, Vero’s water-sewer utility, marina and solid waste department contribute a total of $1.34 million in direct transfers to the general fund, bringing the total transfers up to more than $3.75 million.

Residents of Indian River Shores and unincorporated sections of South Beach pitch in roughly $1.32 million (40 percent of a total $3.3 million in utility transfers) through their monthly water and sewer bills. Vero looks at this money as the city’s fair return on its investment, since it owns the water-sewer utility that currently serves these areas.

Marina and airport revenues are derived from users and tenants of those facilities, pumping $880,000 into the general fund annually to help reduce property taxes.

This off-loads some tax burden onto tourists who rent space at the marina, and onto local, non-city boaters who fuel up or purchase supplies there. On the flip side, the general fund has bailed the marina out from time to time when it operates in the red. This coming year, $2 million from the general fund’s pot of money for capital and infrastructure is being invested in marina improvements, including a massive dry-storage building being constructed to keep up with heavy demand.

The solid waste department only serves city residents and businesses, so trash collection fees and transfers of money from solid waste into the general fund are just a different way to tax people within Vero proper to have this service performed by full-time, career city employees instead of a private vendor like Waste Management, WastePro or Republic Services.

Vero residents pay for all the vehicles, fuel and maintenance, equipment, buildings, waste disposal, salaries, benefits and pensions instead of paying a trash hauler a set fee for its services.

Crestlawn Cemetery is a self-supporting entity, but should the cemetery fall short of funds, the general fund would be tapped to maintain the facility, as a matter of public trust. That only seems right, since the cemetery pays the general fund $70,663 per year out of its $300,000 budget to help cover City Hall overhead.

Nearly $1 million in American Rescue Plan grant money (not free money, as it’s funded by your federal taxes) is being strategically applied to fund stormwater management, and $1 million more federal ARP money is available to use for capital projects this year.  But that pandemic-driven grant money will presumably dry up soon, too, deepening Vero’s budget deficit in the coming years, and leaving those priorities unfunded.

To balance the coming year’s budget, the council could also opt to dip into reserves. But chief number-cruncher Lawson told council members that if they used a non-recurring revenue source like reserves to fund recurring expenses like personnel, instead of increasing property taxes significantly, they would leave the city in an even bigger hole next year.

There will be three city council seats on the November ballot. That will leave the city open to new faces on the city council who might opt to remedy the budget deficit by cutting expenses, Lawson told the council.

Councilman Bob McCabe, Councilwoman Honey Minuse and Mayor Robbie Brackett’s two-year terms are ending. Brackett – the most fiscally conservative on the council, but usually in the minority on budget matters – is expected to handily win the Florida House GOP primary in August, likely sending him to Tallahassee in November and leaving an open seat. Neither Minuse nor McCabe has yet filed to run for re-election.

Lawson reminded the council that cuts had been made in the past to balance the budget when members were opposed to raising taxes. She didn’t name names, but fiscally conservative council members like former mayors Pilar Turner, Craig Fletcher, Val Zudans and Harry Howle did a terrific job keeping city spending from getting out of hand during their terms in office.

The No. 1 priority of the current council majority’s voting bloc is maintaining the high level of city services, staffing levels and salary increases. The status quo (or better) is their legacy, so floating the possibility of a slate of budget-hawks taking control next year – and upending their unspoken “Keep Vero Vero” agenda – was a mighty powerful argument.

The council was set to pick up the budget discussion in a special call meeting Wednesday morning, plus there will be two public hearings of the budget in September.

Ironically, if McCabe and Minuse vote for what amounts to a double-digit tax increase, they leave themselves vulnerable to challenges from candidates with a more conservative fiscal agenda – exactly the type of people they don’t want to hand the city budget over to in 2023.