Those projections predict the city could end up more than $78 million in the red next year and more than $100 million in the red as early as 2028.
Those projections don’t even include the potential $94 million investment for the community benefit agreement or the cost of restoring the police and fire pension next year.
Council Finance Chair Ron Salem (R-Group 2 At-Large) argued that means the city would either have to make massive cuts or dip into reserves to cover operating costs.
“And using reserves this year, when we have $73 million of new money is just unacceptable to me,” said Salem.
The mayor wants to use $47 million from the city’s reserve fund this year to fund a loan to the Jacksonville Port Authority, new public safety vehicles and equipment, DIA and economic development grants, a housing loan fund and a project to reduce utility expenditures.
That’s nearly five times more than the roughly $10 million the city has pulled from reserves over each of the past 12 years on average.
The most taken out in a single year during that time frame happened in 2017, when more than $22 million was used.
It equated to about 15 percent of the total reserves at the time.
With a record $470 million currently in the rainy day fund, the mayor’s proposed $47 million is less than was used in 2017 on a percentage basis.
The $47M expenditure is also not the largest dip into reserves the city has seen. In the 2004 budget, $72M was pulled from reserves.
“Last year we added $76 million dollars to our general reserves: our family savings account. Even with the dollars we are taking out of savings, we still have double the amount in that account that we targeted to save. Double. We haven’t and won’t touch a dime of emergency reserves,” said Mayor Donna Deegan in an emailed statement.
But Salem argued if spending isn’t reduced now and the reserves aren’t maintained, they would quickly dry up down the road when times are expected to get much tougher.
“My focus as the chairman of the finance committee is to reduce that $47 million down to as far as I can, even below zero if necessary,” said Salem.
The bleak new financial projections already have Councilmembers like Nick Howland (R-Group 3 At-Large) looking for potential areas to cut.
“We’re going to have to make some tough decisions as a city council this August on where we focus our priorities,” said Howland.
Howland, who just finished up a stint as Finance Chair, suggested one of the first places council members will look to potentially make cuts is the proposed $94 million Community Benefits Agreement, which is meant to invest millions in homelessness, workforce development, affordable house and the Eastside over the next several years.
“These projections kind of give new light, a new lens to how we look at the Community Benefits Agreement spending,” said Howland.
The mayor pushed back on suggestions major cuts are necessary.
“Now is not the time to stall our forward progress. Doing what we’ve always done will only result in giving us what we’ve always had. Lots of unrealized potential,” said Deegan.
The gloomy financial forecast comes just after the mayor and council approved $925 million for the stadium renovation and parks projects.
Howland and Salem both argued the financing scheme utilized for the stadium, which involves allowing an existing sales tax to continue through 2030, rather than expiring early, essentially made that spending a wash, as the city would have lost the tax revenue sooner if the stadium deal didn’t happen.
“So, that really does not impact what we’re looking at today,” said Salem.
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