The Fort Walton Beach City Council set a maximum tentative millage rate of 5.69 mills at a special meeting Tuesday, June 23, and voted on a series of service outsourcing proposals carried over from the previous week’s budget workshop. 

• The rate sets the ceiling for the FY 2026-27 budget and can be lowered, but not raised, during the remainder of the budget process. Two public hearings on the millage and budget are scheduled for September 9 and September 23.

Six members of the council attended. Council member Bryce Jeter was absent.

The current millage rate is 4.3282 mills. The city is operating under a charter amendment, approved by voters, that established a 3% spending cap on annual increases to personnel costs across all city funds and to operating expenses in the general fund. 

City Manager Jason Davis told the council the city is approximately $500,000 over that cap heading into the FY 2026-27 budget. Tuesday’s meeting was the first of three council votes required to adopt a final millage and budget.

Enterprise fund staffing emerges as a possible path forward

The meeting opened with a discussion of how city enterprise fund personnel are counted against the operating cap. Davis told the council that all city personnel costs currently count against the cap, including the salaries of employees whose work is fully funded by enterprise funds such as utilities and sanitation. He said he had not seen that arrangement in his prior municipal experience.

“Enterprise fund staff falls under the operating cap, and it’s already funded by the enterprise fund, so it’s totally separate,” Davis said. “I’ve had…I don’t know how many enterprise fund operations over the years, and the two never were mixed in any capacity.”

Mayor Nic Allegretto offered a plain-language version for the public. “The guy that picks up the trash is under an enterprise fund because it’s paid for separately,” he said. “So right now, he counts against the total cap number of employees. If it was changed around to where enterprise funds were separate from the cap, then we wouldn’t have this problem that we have right now.”

City Attorney Jeff Burns told the council that a meeting with the FWB Watch Group, which advocated for the spending cap, could be scheduled within the next one to two weeks, with results back in time for the August budget meeting. Burns clarified, in response to a question from Councilman Ben Merrell, that members who voted in favor of any service cuts approved Tuesday could move at the August meeting to reconsider those decisions if the enterprise fund staffing arrangement changes.

• “You have the right as council to reconsider everything that y’all voted on, especially if you voted on the winning side,” Burns said.

The framing carried through the rest of the meeting. Several council members noted during subsequent votes that they were prepared to walk back specific cuts if a path emerges through the enterprise fund discussions.

Youth sports outsourcing fails

Councilman David Schmidt opened the service-line discussion with a motion to transition the city’s youth sports programs to outside contract providers. The change would have removed approximately $106,488 from the operating cap calculation, with the same coaches and facilities continuing under different organizational structures such as a local Little League charter.

“We are currently breaking the law,” Schmidt said, referring to the city’s current position over the spending cap. “And what I just heard our city manager say, this would help us get within the law.”

A city staff slide presented during the discussion stated the change would result in higher fees for residents, with scholarships offered by outside providers as a possible offset. Davis acknowledged the city’s daycare and youth sports programs are priced below market and that outside operators would need to charge more to cover their costs.

• “It will be higher fees, but there are scholarships possible,” Davis told the council.

Allegretto, who as mayor votes only to break a tie, used the discussion to advocate against the change. “I really wish that you would find $106,488 somewhere else,” he said. “I think youth sports is so important in our area, and the harder that we make it for kids who are more apt to getting on a tablet, a phone, behind a video screen, sitting inside in the air conditioning, the harder that we make it for parents to accomplish getting those kids into these programs, which does include higher fees to residents.”

The mayor pointed to current price differences as illustration. “It’s $100 for a kid to play baseball in Shalimar Little League,” he said. “I’ve signed up many kids for them a bunch of times.”

Councilman Payne Walker pushed back. “The program’s not going away,” he said. “We’re still gonna have it, it’s just gonna be ran by others.” Walker said scholarships and a larger volunteer-driven organizational base could keep costs accessible.

The motion failed 2-4, with Schmidt and Walker the only members in favor. 

Daycare and aftercare moved to third-party operator

The council voted 5-1 to bring in a third-party operator to provide daycare and aftercare services from the city’s existing recreation facility. Councilwoman Debi Riley was the lone no vote. The change removes approximately $177,000 from the city’s operating cap calculation.

Schmidt initially moved to get the city out of the daycare business and outsource the service. Councilman Logan Browning offered a friendly amendment to clarify that the city’s facility space would be made available to a third-party operator and the program preserved.

• “My amendment was to save the aftercare/daycare business,” Browning said. “Every single one of my kids, besides my three-year-old, has gone to aftercare, summer camp, VPK. There was other appetite to get rid of it, so I’m going to a third party because I don’t wanna provide it. I’m going to a third party to preserve it.”

Davis told the council that current city daycare staff would have the option to remain with the city in a repurposed role or to work for the incoming provider, retaining benefits in either case. “She can keep her city benefits and insurance and all that jive, or she can go work for the third party,” Davis said, referring to a long-tenured staff member at the program.

Councilwoman Gloria DeBerry, who initially favored ending the service entirely rather than outsourcing it, said the city should not be in the daycare business when private alternatives exist nearby. “We have a daycare network just 100 yards down the street,” she said.

Riley spoke against any change to the program. “Childcare is very important. We have single moms working every day. We have double families as well, mother and father families, but daycare is one of the top-notch issues when it comes to working parents,” she said. “For me, this is an added enhancement for our city. I’m simply not gonna support it.”

Walker said the disagreement reflected a difference in philosophy on the role of government. “I think we fundamentally disagree on who should provide that,” he said. “Taxpayers providing childcare to other people, or should that be a private function?”

Senior programming moves to direct-pay model

The council voted 5-1, with Riley again opposed, to outsource senior programming. The change removes approximately $58,732 from the city’s operating cap.

Wendy Riggs of the Recreation Department clarified the operational mechanics. The change applies only to programs in which the city currently collects participant payments and then pays the instructor. Under the new model, the instructor will collect payment directly and pay the city a portion. Programs without paid instructors will continue without change.

“In the senior program, nothing will change, except they will collect the money themselves,” Riggs told the council. “They collect 100 percent.”

Senior programming offerings discussed during the meeting include arts and crafts, bingo, chair yoga, mahjong, Pilates, Tai Chi, line dancing and several dance fitness classes.

Chamber, EDC and pool funding preserved

Walker moved to remove the city’s annual contributions to the Greater Fort Walton Beach Chamber of Commerce ($20,000), One Okaloosa Economic Development Council ($20,000) and the Emerald Coast Fitness Foundation pool ($25,000). Schmidt seconded the motion for discussion. 

• The motion failed 2-4. Walker and Merrell voted in favor of cutting the funding. Schmidt, DeBerry, Riley and Browning voted to keep it in place.

Walker framed his motion as a question of fairness to taxpayers. “Why should taxpayers who are already struggling with daily expenses, taxes and insurance and all the other costs be responsible for giving organizations in the community their money when those organizations themselves have revenue in excess of, or approximately, a million dollars a year?” he said.

DeBerry spoke at length against the motion. “I support donating the money to all three, especially the ECFF, the pool,” she said. “I’m there every day, and many seniors are there every day. Many youngsters are there every day. Babies are there every day. We live on the water here, and they teach how to prevent drowning.”

Merrell, who voted in favor of cutting the funding, said he did so reluctantly and pointed to the constraints of the operating cap. 

“I agree there’s a lot of investment done by these organizations that is just going to be hard to replace,” he told the council. “As we move forward, we have to be under this cap. As we explore options, maybe to find other ways to do this, we still need to move forward. So while this may or may not move forward, it doesn’t represent what many of us want, and hopefully we can find a solution. But we can’t put our staff and the city in the situation where we would be liable or in a non-compliant state.”

Nathan Sparks, president and CEO of One Okaloosa EDC, came forward during public comment. Sparks was scheduled to give a quarterly update at the council’s regular meeting later in the evening and stepped in early when he learned the funding was up for a vote.

• “The way that One Okaloosa EDC sees our role in support of your city is we see ourselves as your outsourced economic development department,” Sparks told the council. “And we think for $20,000 a year, you’re getting a pretty darn good return on investment.”

Sparks said One Okaloosa EDC had been directly involved in facilitating $75.5 million in business investment in Fort Walton Beach over the past 18 months. He cited the TalkingParents and Bit Wizards relocation to Freedom Tech Center, a $16 million project bringing 100 new jobs at an average wage of $75,000; the Beastcode global headquarters at Freedom Tech Center, a $12 million project retaining 240 jobs; Precision Measurement’s new $2 million Commerce and Tech Park headquarters, which added an estimated 20 new jobs and $700,000 in salaries; and Project Normandy, a $43.5 million aerospace expansion with 186 projected new jobs at an average wage of $67,842.

Davis told the council during this item that he had understated the EDC’s contributions during the previous week’s workshop and apologized to Sparks.

Fireworks, concerts and parades removed from city funding

The council voted 5-1, with Riley opposed, on a motion by Schmidt to remove city funding for Fourth of July fireworks ($30,830), Concerts at The Landing ($60,000) and city parade support ($16,000), and to direct staff to pursue sponsorships and other funding mechanisms in their place.

Davis told the council during the discussion that the figures do not include staff overtime for police, fire and parks cleanup associated with each event. He said staff continues to pursue sponsorship dollars to offset costs, and that one possibility raised at the prior week’s workshop was to partner with local high schools on free community concerts in place of the paid series at The Landing.

Schmidt said he hoped the items could return to the city’s budget in subsequent years.

• “No one likes taking away Santa Claus or fireworks or things like that, but I’d feel much better once we get underneath this operational issue,” he said. “We gotta get underneath that 500,000.”

Schmidt added that he would advocate for restoring the funding as soon as the operational cap math allows, with this item near the top of his priority list. He flagged community traditions including the Fourth of July fireworks and city parades.

Online billing proposal withdrawn

Davis told the council that staff had reviewed the proposal to eliminate in-person cash and check payments at the city’s utility billing office and determined the return did not justify inconveniencing residents who prefer those payment methods. The proposal was withdrawn from consideration. Davis said the issue may be revisited in December 2027, when the related contract expires.

Cuts already in place

Davis presented a list of cuts the city has already made or built into the FY 2027 budget:

• Christmas bonuses for staff: $15,000 (eliminated because they are not allowable under Florida statute)
• Meetings, Christmas and Billy Bowlegs food, candy and beads: $11,500
• Employee morale: $15,000 (allowable under statute but cut)
• FWB365 employee logo apparel program: $10,740
• Fire Department open house: $25,000
• Growth Management Department office consumables: $9,190

“I’m literally trying to cut everything we can,” Davis said.

Property values and projected revenue

The Okaloosa County Property Appraiser’s preliminary assessment, dated May 15, 2026, projects the city’s total taxable value for the 2026 tax year at $2,511,529,806, an increase of $90,868,717 or 3.75% over the 2025 final total taxable value of $2,420,661,089. The figure includes $39,736,498 in net taxable new construction.

At the current 4.3282 millage rate, staff projects a 3.48%, or $288,801, increase in ad valorem revenue to the general fund and a 5.16%, or $84,832, increase to the Community Redevelopment Agency fund. The property appraiser will certify final values on or before July 1.

Three millage scenarios presented

Davis and Finance Director Nicole Nabors then presented three millage scenarios, each tied to a different level of capital improvement project funding in the general fund.

• Scenario 1 (staff recommendation, the maximum): 5.69 mills. Funds all $2,918,541 in proposed FY 2027 general fund capital improvement projects. Monthly impact to a homesteaded resident estimated at $5.66 and to a non-homesteaded resident at $11.32.
• Scenario 2: 5.595 mills. Funds A-tier and B-tier projects totaling $2,752,541. Monthly impact estimated at $5.27 homesteaded and $10.53 non-homesteaded.
• Scenario 3: 4.88 mills. Funds only A-tier projects totaling $1,224,103. Monthly impact estimated at $2.29 homesteaded and $4.57 non-homesteaded.

A-tier projects identified by staff as required to move forward include IT software approval controls and server infrastructure updates, fire department bay door replacement, a gear extractor, PFAS-free turnout gear, sports lighting and a re-roof of the city auditorium and adjacent public restrooms. 

B-tier projects include a city campus camera systems overhaul, park improvements at fields used for rentals and league play, and several golf course capital items. 

C-tier projects include a police department carport and parking lot, the Garnier’s Beach swim area update, library lockers, the police department kitchen remodel and demolition of old golf course buildings.

Nabors emphasized that the council was only setting the ceiling for the millage rate. “We can lower it at any time in the budget process,” she said. “This is to set the max rate that we can go up, because we have to turn in our forms.”

The millage vote

Browning made the motion to set the maximum tentative millage at 5.69 mills, the staff recommendation. Merrell seconded.

“We have the projects. We have time to discuss them,” Merrell said. “Why not set it so we can discuss them? We can peel back from there.”

Walker said he had calculated the rate as a 31.6% increase from the current 4.3282 mills and could not support setting that ceiling. Schmidt said he would advocate for holding the rate at the current 4.3282 or lower as the budget process continues, and that he wanted to give staff that direction.

Riley said she had concluded a rate increase was unavoidable.

• “I will support this because I don’t see us getting around it,” she said. “The millage rate’s gonna have to be raised. You can’t rob Peter to pay Paul. So you got a 3% cap out there.”

The motion passed 4-3. Riley joined Browning and Merrell in support. Schmidt, Walker and DeBerry opposed. Allegretto cast the tiebreaking yes vote that carried the motion.

Next steps

The property appraiser will certify final taxable values on or before July 1. The council will receive a full budget presentation at its August meeting, where members can reconsider items voted on Tuesday and where the results of the enterprise fund staffing discussions may be presented. 

Two public hearings on the FY 2026-27 millage and budget are scheduled as special city council meetings on September 9 and September 23, both at 5:01 p.m.