Layoffs, service cuts, higher fees? Fernandina Beach faces $7 million Amendment 3 fallout

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FERNANDINA BEACH — City employees could face layoffs, salary cuts and furloughs, while residents could see reduced services and higher fees as Fernandina Beach prepares for a projected $7 million decline in annual property tax revenue following last week's voter approval of Amendment 3.

City Manager Sarah Campbell presented commissioners with a financial roadmap at Wednesday's city commission meeting that identifies possible hiring freezes, reductions in employee benefits, closures of city facilities, cuts to recreational programs and increases in taxes and fees.
None of the proposed measures has been approved. The roadmap calls for a Dec. 1 commission workshop and a Jan. 13 strategic planning session to help determine how the city will respond to the anticipated revenue losses.
 

According to the city's projections, annual property tax revenue supporting the general fund could fall from approximately $22 million to $15 million by the 2031-32 fiscal year, a decline of nearly 32%.

Campbell said the city should conservatively plan for a 5% reduction in general fund revenue in the first year, followed by another 5% reduction and three successive years of 2% reductions. Those estimates could change depending on property value growth and other financial adjustments.
 

"For the next 5 years, conservatively — now, depending on how values grow — at least for the first year, I think we need to plan for a negative 5% on the budget," Campbell told commissioners.

Personnel costs are among four major areas identified for review in Campbell's roadmap, along with capital spending, city operations and revenue sources.
 

The document specifically lists salary reductions, furloughs, a hiring freeze, departmental reorganizations, elimination of positions through attrition and reductions in force. Employee insurance benefits and pension changes are also identified as possible areas for savings.

 
 

The roadmap does not specify how many positions might be eliminated, which departments could be affected or how much money the personnel changes would save.

Campbell said she intends to meet with city employees to explain the financial outlook and discuss the administration's efforts to develop a response.
 

"I'm also planning a staff update meeting just to reassure them that, while we don't have all the answers yet, we will be working toward some solutions," she said.

The roadmap calls for examining recreation centers, recreational programs, planning and permitting operations, and ocean rescue. Facility closures and departmental reorganizations are among the possibilities.
 

The city will review its major vendors and operating expenses to identify potential savings while ensuring it continues to meet legal requirements.

No specific recreation center or other facility has been identified for closure, and the roadmap does not recommend eliminating ocean rescue or any other named service.
 

City staff will examine the five-year capital improvement plan, consider a spending freeze and establish priorities for future projects.

The roadmap places maintenance of existing equipment and facilities ahead of routine replacement, desired improvements and projects that would create additional operating expenses.
 

That could mean postponing some new construction and improvements while the city concentrates its resources on maintaining existing infrastructure.

Spending reductions are only part of the administration's proposed response.
 

Campbell's roadmap identifies several potential revenue sources, including higher municipal fees, changes to the property tax millage rate and increased franchise fees.

Longer-term options include establishing a fire assessment fee and creating special taxing or assessment districts to finance particular services.
A fire assessment could place some fire protection costs on a separate charge to eligible property owners, depending on how the program is structured.
 

The roadmap also calls for reviewing the city's financial reserves, including existing minimum reserve requirements and funds restricted to particular purposes.

No specific fee increases, tax rates or assessment amounts have been proposed.
 

The city's financial challenge follows overwhelming voter approval of Amendment 3, which received approximately 62% support statewide and 74% in Nassau County.

The constitutional amendment increases the homestead exemption for non-school property taxes to $150,000 in 2027 and $250,000 in 2028.
 

The expanded exemption will reduce the taxable value of qualifying homesteaded properties, cutting revenue available to cities and counties.

For Fernandina Beach, the financial consequences will extend across several budget years.
 

Campbell's plan calls for regular reports to commissioners, either monthly or quarterly, as city departments identify potential savings and revenue adjustments.

The Dec. 1 workshop will allow commissioners to identify which areas they want the administration to examine first. The Jan. 13 strategic planning session is expected to help establish priorities for the city's longer-term response.
 

The administration plans to incorporate selected proposals into the city's 2027-28 budget, with the roadmap setting Oct. 1, 2027, as the target for implementing the first year's adjustments.

Some changes could be implemented during that first budget year. Others, including new assessments and structural changes to city operations, could require additional analysis, consultants and commission action.
 

Campbell acknowledged that the administration has not yet determined which measures will be necessary.

"Not a lot of answers for you tonight," she told commissioners. "I just wanted you to know that we are planning and working and thinking."
 

She compared the challenge to the financial pressures local governments experienced during the 2008 economic downturn and the COVID-19 pandemic in 2020.

"For those of us that were in government in 2008 and again in 2020 for COVID, these are not fun to go through, especially when it's a self-imposed exercise like this," Campbell said.
 

"But we navigated those. Government looked different coming out of both of those, and I feel confident that we will come out of this as well. And it may look a little different, but we will get through it."

Comments

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  • GDecker

    The sky is not falling.

    Yes, millage rates will rise to compensate for a reduced tax base.

    Yes, "nice to have" projects will be delayed.

    No, mass layoffs and existing service reductions will not happen.

    Finally excessive local government growth will be throddled.

    Thanks to the voice of the people.

    3 hours ago Report this

  • dpwagner

    Forget the unnecessary Seaside Park Reno. That will save 1.2 million dollars of FB portion of the project.

    2 hours ago Report this