A Fort Walton Beach budget workshop last Tuesday produced discussion of potential outsourcing for several city services, a rejected proposal to bring back a fire assessment fee and a range of revenue concepts as the council works to close a roughly $500,000 gap in its operating budget and prepare for a potential $1.7 million revenue loss in 2027.

• Four members of the council attended. Mayor Pro Tem David Schmidt presided, joined by council members Debi Riley, Gloria DeBerry and Logan Browning. Mayor Nic Allegretto, who had previously announced he would not attend, and council members Payne Walker, Ben Merrell and Bryce Jeter were absent. Statements from absent members were read into the record by City Manager Jason Davis at the start of the meeting.

The workshop was called to address two financial pressures: a current operating budget approximately $500,000 over the 3% spending cap voters added to the city’s charter, and a potential $1.7 million revenue loss if Florida voters approve an additional homestead exemption in November.

“I feel like we have to raise the millage this year,” Davis told the council. “I don’t want to raise it next year and the year after. I can always lower it.”

Riley said she had reached the same conclusion. “It just don’t appear that we’re gonna be able to get through this 3% cap without raising the millage rate,” she said. “I just don’t see any way of getting around it.”

Services discussed for potential outside providers

The clearest direction to emerge was discussion of shifting several city-operated programs toward outside providers, with three of the largest service-line items receiving consensus to come back for further discussion.

Youth sports programming, a roughly $100,000 hit to the operating cap, would move to contract providers such as AYSO, Little League, and others. Davis told the council the same coaches would likely run the programs under different jerseys, and noted that several providers offer scholarship programs for families who cannot pay.

Daycare and aftercare, a roughly $189,000 cap impact, drew two competing concepts: ending the service entirely or bringing in a third-party operator that would lease space from the city. DeBerry said she would prefer to eliminate the program altogether, pointing to an existing daycare network nearby on Jet Drive. Riley and Browning supported the third-party model.

Senior programming, a roughly $58,000 cap impact, was also moved forward under a similar outsourcing framework. The program includes arts and crafts, bingo, chair yoga, line dancing, Pilates, Tai Chi and other recurring classes.

In each case, Davis said the goal was to keep services available to residents while removing the operating-cost burden from the city’s books.

Fireworks, concerts and parades

Roughly $95,000 in city-funded community events was placed in what Davis called a tentative yes column. 

The figure includes $25,000 for Fourth of July fireworks, $60,000 for the Concerts at The Landing series and $9,750 in city support for the Billy Bowlegs Pirate Festival parade, which is organized by the Krewe of Bowlegs rather than the city. The city’s own annual parade, the Fort Walton Beach Christmas Parade, was not addressed during the workshop. The $95,000 figure does not include staff overtime for police, fire and parks cleanup.

DeBerry advocated for retaining the concert series in particular. Davis said the events would likely fit back into the budget if the larger service-line outsourcing items proceed as discussed.

Chamber, EDC and pool funding

The city’s annual contributions to the Greater Fort Walton Beach Chamber of Commerce ($20,000), the Economic Development Council ($20,000) and the Emerald Coast Fitness Foundation pool ($25,000) drew the night’s most divided discussion. 

Schmidt advocated a “tactical pause” on all three contributions for this budget cycle, citing the looming homestead exemption and the city’s current cap overage. Riley, DeBerry and Browning supported bringing the funding back for further discussion, with DeBerry suggesting reduced amounts if full funding is not feasible.

Kathi Heapy, who operates the pool through the Emerald Coast Fitness Foundation, told the council she would trade the fireworks for continued pool funding. “No one ever died because they don’t know how to play baseball, but people die because they don’t know how to swim,” she said.

Library staying, but a public-private partnership floated

All four council members declined to consider getting out of the library business, which carries a roughly $450,000 to $470,000 annual cap impact against $18,000 to $21,000 in revenue.

Davis presented a longer-term concept under which the current library site could be redeveloped through a public-private partnership into a mixed-use project including first-floor retail, a parking garage and a hotel. 

As part of the deal, the private partner would build the city a new library, sized closer to the 10,000 to 12,000 square feet typical for a city of Fort Walton Beach’s population and including a dedicated teen center. Davis suggested the midtown property the city is acquiring through a land swap with Okaloosa County as one possible site for a relocated library, citing the current building’s layout, cooling costs and walkability for students.

The concept will return as part of a broader public-private partnership discussion.

Revenue concepts

Several potential revenue streams were forwarded for further analysis. Davis recommended waiting on Okaloosa County’s pending request for proposals for a parking and boat ramp management vendor before the city moves on its own ramp fees. Schmidt floated charging non-county users for boat ramp access, noting that residents already pay for ramp maintenance through ad valorem taxes.

Recreation center fees drew a split. Memberships are currently free for city residents and range from $128.40 to $267.50 annually for non-residents, depending on age and family status. About 70% of rec center users are non-residents, according to staff. Schmidt and DeBerry supported raising only non-resident rates. Riley and Browning said they were open to revisiting resident fees as well. Browning said it did not make sense to him to pursue a third-party daycare model that would raise costs on families with children while continuing to allow all other residents to use the rec center for free.

City Attorney Jeff Burns proposed turning the city’s rental property portfolio into a brokerage enterprise fund, citing several below-market leases on city-owned property. Davis said he had been initially skeptical of the city remaining in the landlord business but described the current market as supporting the concept.

Davis also said the city is overdue for rate studies on water, sewer, sanitation and other fee-based services, and that several city programs, including daycare, are priced below market.

Online billing only

The council directed staff to bring back a proposal to move utility billing fully online, eliminating in-person cash and check payments at City Hall. 

Approximately 9% of city utility customers pay in person and 14.3% pay by mail, according to figures presented at the meeting. The walk-up payment kiosk at City Hall would remain. 

Davis said the change would free utility billing staff to support other city operations, including the expanded golf course programming planned with the addition of indoor Trackman. DeBerry raised concerns about scam exposure for residents not familiar with online billing. Davis said a transition period of three to four months would allow staff to coach customers through the setup.

Fire assessment fee rejected

The most decisive action of the night was a 3-1 rejection of bringing back a proposed fire assessment fee for further consideration. Riley was the only member in favor.

Davis presented the fee as a path to fund needed fire department capital and operating costs, including a $1.2 million replacement fire engine with a delivery window of two and a half to three years, a new fire station near the city golf course, and new state-mandated cancer-safe gear at more than $300,000 for the city’s 39 line firefighters. 

• He said the fee would be drafted by a third-party consultant, would apply only to businesses, and would use tiered rates based on building size. He noted that revenue from a fire assessment fee can be spent only on fire suppression equipment and personnel.

Schmidt said he would not support the concept, citing the voter mandate on the spending cap and a preference for pursuing other revenue streams. DeBerry recalled the city’s prior fire assessment fee, saying low-income residents had been charged despite signing waiver paperwork, and said the proposal “leaves a bad taste in my mouth.” Browning said he could not support adding to the burden on businesses, particularly with the additional homestead exemption potentially passing in November.

Davis noted that the fire department costs themselves are unavoidable and will now be drawn from the general fund.

Enterprise fund staffing and the cap

Davis told the council that staff already funded by city enterprise funds are also counted against the city’s operating cap, an arrangement he estimated at approximately $5 million in operating headroom. He said he had requested a meeting with the FWB Watch Group, which advocated for the spending cap, to discuss the issue, and that the meeting will be recorded at his request.

Schmidt suggested putting a referendum before voters to formally exempt enterprise-fund personnel costs from the cap, framing the change as consistent with how enterprise funds operate elsewhere. Davis said the earliest such a referendum could appear on a ballot would be March, with implementation no sooner than the following October.

A statement read into the record from Councilman Payne Walker emphasized that the city’s millage rate and its spending cap are separate mechanisms, with the millage rate funding projects and operations and the spending cap governing how the city spends within two capped categories. Walker’s statement asked staff and council to clearly distinguish the two in public messaging.

A statement read into the record from Councilman Ben Merrell proposed amending the existing 3% cap to a 5% cap, with Consumer Price Index adjustments above that amount requiring a public vote of the council and a tie to measurable economic conditions. Merrell presented the proposal as a way to preserve voter intent for fiscal restraint while accounting for inflation, insurance and construction costs that local governments do not control.

Surplus property and next steps

Davis presented a multi-page list of city-owned properties as potential candidates for surplus and proposed a dedicated future workshop to work through the list. He noted that the city faces roughly $4 million in upcoming debt obligations, including a $3 million balloon payment, that surplus property revenue could help offset. Schmidt cautioned against selling waterfront access points or properties that provide parking for water access.

Downtown property owner Candace Tanner raised concerns during public comment about the potential loss of public parking if the Miracle Strip lot, located next to Beach Weekend Coffee and across from The Landing, is sold.

Resident Barry Gray urged the city to pursue available federal designations, including brownfield designations, opportunity zones and the city’s existing hub zone, to bring tax credits and development incentives into the budget conversation.

The next budget-related meeting is the city’s millage rate discussion scheduled for June 23. Davis said the items moved forward at Tuesday’s workshop will return at that meeting and at subsequent sessions.