Palm Bay, FL – Two months ago, this publication ended its May 13 budget workshop coverage with three numbers to track. The first was whether the $15 million reduction target would hold once staff had actual revenue projections instead of placeholders. Tuesday night, City Manager Matthew Morton showed up with the receipts.
The answer is yes. Morton presented three millage scenarios built on real property digest data from the Brevard County Property Appraiser, walked the Council through a line-by-line breakdown of where $15 million in cuts would come from, and then recapped a fiscal year’s worth of internal cost reductions that he framed as the city’s own DOGE effort. Council landed on the calculated rollback rate of 6.6015 mills as the proposed rate and directed staff to build the formal budget at 5.5 mills for transparency. Councilman Chandler Langevin was absent.
The Rollback Consensus
Morton laid out three paths. Scenario A: hold the current rate of 6.7000 mills, generating roughly $71.5 million in ad valorem revenue. Scenario B: drop to the calculated rollback rate of 6.6015 mills, producing about $70.5 million, a difference of roughly $1 million. Scenario C: cut to 5.5000 mills, generating approximately $58.7 million, a reduction of nearly $12.8 million from the current rate.
The 6.7000 rate carries a procedural problem. Under new state restrictions, adopting a rate above rollback now requires four out of five council votes. With Langevin absent, the Council had only four members present. Any single dissent would kill the higher rate at final adoption. The rollback rate requires only three of five.
Mayor Rob Medina stated his preference for 6.7000 repeatedly, citing hurricane season uncertainty and the fact that even at the highest rate, the city still faces a $2.6 million budget gap with zero new equipment purchases. “We’re still in a gap. We can’t get police cars. We can’t get anything else,” Medina said.
Councilman Kenny Johnson and Councilman Mike Hammer both initially favored 5.5 mills. Johnson invoked last year’s budget fight, where he and Hammer pushed to lower the rate and were overruled. “I was my mind’s going right back to last year,” Johnson said. He framed the rollback as a “standard of good faith to the residents, to those who will be voting in November.”
Hammer wanted 5.5 but acknowledged the jump would be steep in a single year. “If I had my choice today, I would like the 5.5, but I would like to see the 5.5 in like a three-year period because that’s a big jump. I would be happy with six.”
Deputy Mayor Mike Jaffe landed on the rollback rate. He added a suggestion that would surface later in the discussion: exploring shared health insurance clinics with the Brevard County School Board, a model he said could save the school system more than $10 million. Jaffe proposed the city investigate a joint venture or similar arrangement to reduce health care costs for FY28 if not FY27.
The final consensus: propose 6.6015 on the July 16 legislative memo. Build the actual proposed budget at 5.5 mills so Council and the public can see exactly what gets cut. Budget Program Administrator Jessica Hinchman confirmed the logic: if Council sees too many cuts at 5.5, they have room to add items back up to the 6.6015 ceiling. They cannot go above it.
The $15 Million Breakdown
Morton did not present the $15 million target as a hypothetical. He walked through specific line items, most of which are already built into the budget assumptions.
The largest single item: closing the municipal pool. Morton said the facility costs the city nearly $3 million annually in operations, with an additional $1.5 to $2 million capital deficit for pumps, lining, and equipment. On a unique-user basis, the cost works out to roughly $400 per person per year. Morton said he doubted residents would pay that rate. Staff is exploring alternative operators, including conversations with local schools and Florida Institute of Technology, before recommending closure outright. “I don’t believe in ever just saying no, we’re stopping. What’s the alternative?” Morton said.
Other cuts in the $15 million package: returning the Veterans Service Office to Brevard County ($200,000 annual savings), eliminating the Public Works fleet management fund ($300,000), canceling all website and AI initiatives, potentially shutting down the city website entirely to eliminate ADA compliance and maintenance costs, cutting trade show memberships, eliminating all sponsorships including the Economic Development Commission of the Space Coast, and reducing or eliminating professional memberships for city staff.
Morton identified an additional 18 unfilled general fund positions for elimination, projecting $2 million in ongoing savings. Five city-owned properties have been flagged for liquidation, with five more under review. That real estate revenue would be a one-time disbursement directed toward public safety costs and road maintenance.
Road maintenance itself takes a hit. Morton proposed deferring $1 to $2 million in road maintenance costs in the first year, with the promise that property liquidation revenue would backfill that gap. The $600,000 annual transfer to the fleet replacement fund continues. The $3.25 million road maintenance transfer remains in the budget.
Morton was candid about the math. “That $15 million and those roll-ups gets us a year, year and a half,” he said. The cuts buy time. They do not solve the structural problem.
The DOGE Year in Review
Before asking Council to choose a rate, Morton spent considerable time documenting what staff has already done. The list is substantial.
Through hard and soft hiring freezes, the city has frozen 63 positions across all funds, generating $6.8 million in projected salary savings. Morton used a steam train analogy: “I threw a bucket of water on the coal. We’re going to roll for a while and I can’t tell you when we’re going to roll out of momentum.”
Staff canceled 283 capital projects, reducing the active list to 86 and relieving the city of more than $60 million in future commitment obligations. Morton said staff could not determine why many of those commitments had been made in the first place.
The P-card transition is complete. Staff reduced the number of procurement cards, tightened spending limits, and partnered with 65th North for on-the-spot audits of purchased items. Construction contracting has shifted from lowest-bid to a Construction Manager at Risk (CMAR) guaranteed maximum price model.
For the first time in at least 10 years, according to Morton, city staff made zero fund balance requests during the entire fiscal year. Not only did departments not ask for additional money, they returned funds at every quarter through bar savings. Those returns funded emergencies like the Symphony console upgrade for the Police Department and allowed strategic debt payments.
All salary reclassifications and increases, which Morton said “used to come on a weekly basis,” were held and processed through the budget cycle rather than approved piecemeal. Another first in 10 years, he said.
On the transparency side, Deputy City Manager Brian Robinson’s team is close to launching Version 2 of the GIS project portal. The interactive map will let residents click on any city project and drill down into start dates, projected completion, project numbers, and budgets. Morton showed a preview, noting Robinson “is very mad at me that it’s not ready for prime time yet.”
Pension Pressure and the Next Bond
The pension numbers are the structural driver behind every other budget decision. Hinchman opened the presentation with the headline: the FY27 total police and fire pension obligation exceeds $15 million, a $4.3 million increase from the prior year.
For police, the pension cost runs approximately 41% of salary per position. For fire, it is 46%. The May predecessor article traced the spike to the 35 positions added in FY24, whose actuarial cost is now hitting the budget after the standard lag.
Morton disclosed that the city just paid off the $38 million pension bond issued in 2008. That is the good news. The bad news: “We’re probably talking about another pension bond in the next 12 months, 14 months,” Morton said. “We’re not going to be able to afford it.” He said the city needs to begin “thoroughly investigating” how it apportions pension costs, including employee contribution shares.
Both police and fire union contracts reopen this fiscal year. Fire negotiations begin mid-year; police toward the end. Councilman Hammer, drawing on his procurement background, noted that contracts are typically negotiated for three-year terms. The outcomes of those negotiations will directly shape FY28 and FY29 pension obligations.
The Referendum Shadow
The $250,000 homestead exemption referendum looming on the November ballot cast a long shadow over every scenario Morton presented.
Morton showed Council what the general fund looks like if the exemption passes. By FY29, when the full effect takes hold, the city would lose approximately $26.7 million in ad valorem revenue. At that level, the general fund could cover public safety, some parks and facilities, and some public works. Everything else, including economic development, IT, finance, procurement, the city manager’s office, and the city attorney’s office, would be unfunded.
Morton clarified that the slide was illustrative, not a literal staffing plan. “The idea is to show you order of magnitude of reduction,” he said. You would still need someone to process payroll, and you would still need legal services. But the scale of the loss would force the city to strip operations to a skeleton.
The referendum also threatens the city’s ability to issue general obligation bonds. Morton told Deputy Mayor Jaffe directly: “General obligation bonds might be a thing of the past for the city of Palm Bay.” Without ad valorem revenue to pledge, the city would lose access to that financing tool. Revenue bonds backed by enterprise fund ratepayers, like utilities, would remain viable. GO bonds for general purposes would not.
Palm Bay’s charter compounds the problem. The 3% annual cap on property tax revenue growth means that any rate cut or revenue loss takes 10 to 15 years to recover. Morton stated the math plainly: “With our charter cap provisions the way it is, it would take you 10 to 15 years to get back to that number.”
Councilman Johnson asked whether the Citizens Advisory Task Force had reviewed these scenarios. Morton said no. The CATF has spent its first months receiving a crash course in municipal budgeting: how debt service works, how revenue funds operate, how personnel costs are structured. Morton said the group has not yet moved to the recommendation phase. Johnson asked that the referendum impact be placed on the CATF agenda. “It’s to advise the citizens. This is a key component,” Johnson said.
New Revenue, Same Residents
Morton made clear that cutting alone will not close the structural gap. He outlined several revenue strategies, all aimed at avoiding new taxes on existing homeowners.
A citywide fire assessment is on the table. Morton said staff “will be having conversations” about implementing an assessment to fund fire services if the 5.5 rate or the referendum forces deeper cuts.
Stormwater reform is more urgent. The current collection system, run through utility billing, hits only 50 to 60% of properties. Morton said the city lost $1.5 million last year and nearly $2 million the year before because property transfers allow owners to escape stormwater fees. “We’re bankrupting our stormwater fund,” Morton said. He proposed moving stormwater collection off a utility billing model and putting it back on the ad valorem tax bill, preventing property transfers from escaping unpaid fees.
Growth fees are the third lever. Morton described a cost recovery gap in development review. When the city processes a large subdivision, hundreds of hours of staff time go into engineering review, planning review, and permitting. The city charges roughly $400. “When you go to an engineer and ask for their services, it’s an hourly rate,” Morton said. “We’re giving those services away to some extent.” A fee adjustment to bring development review closer to actual cost recovery is coming.
Garbage rates will also increase. Three general fund employees who work on garbage operations will be moved to full funding out of the garbage enterprise fund. That shift, combined with the annual 3% Republic Services contract escalator, will produce a rate increase for residents. Morton said the proposal has not been drafted but will be brought forward.
Where Each Member Landed
The final positions tell the story of a Council trying to balance fiscal caution against political pressure to cut.
Mayor Medina held at 6.7000 mills throughout. He cited hurricane season, the existing $2.6 million gap even at the highest rate, and the risk of setting a ceiling the city cannot exceed. “If we set it below that, we could never go back to the 67,” he said. He acknowledged he would vote for the rollback if that was the consensus.
Councilman Hammer started at 5.5 but moved to roughly 6.0, based on math he worked out in real time: subtract the $6.8 million freeze savings and $2 million from the 18 unfilled positions, and the effective rate lands near 6.0 with “no changes.” He asked for a three-year glide path to 5.5 rather than a single-year drop.
Councilman Johnson started at 5.5, invoked last year’s budget standoff, then moved to rollback “for the sake of putting this out.” He wanted the lower rate on the record as a good-faith signal to voters ahead of the November referendum. He also pushed for the Citizens Advisory Task Force to weigh in before the first formal vote.
Deputy Mayor Jaffe backed the rollback rate. His most distinctive contribution was the health insurance proposal: have School Board member Matt Susin present to Council on the internal clinic model that Brevard County Schools is implementing, which Jaffe said is projected to save the school system over $10 million. Jaffe said Susin “is not looking to participate, just educate.”
Councilman Langevin was absent.
Palm Bay resident Judy Trandel, the sole public commenter, praised the staff’s work and the Citizens Advisory Task Force. She asked whether the presentation materials would be available online. Morton confirmed they are posted in the meeting agenda.
What’s Next
The legislative memo proposing the 6.6015 rollback rate goes to the full Council at the July 16 regular meeting. That vote requires three of five members.
Staff will publish the proposed budget on July 29. The next budget workshop is August 4, where Council will see the formal budget built at the 5.5 mill rate. The GO bond presentation, originally scheduled for late July, has been pushed to the first meeting in August.
Finance Director Larry Wojciechowski, who Morton noted is retiring in less than 30 days, confirmed the debt service millage dropped from 0.9993 last year to 0.9385 this year. Johnson asked for a list of debt instruments eligible for early payoff. Wojciechowski said bond covenants restrict early payment until approximately 2030 on most obligations, though Morton noted that items like fire engines and LifePack monitors may be satisfiable sooner.
The Citizens Advisory Task Force has not yet made formal recommendations. Morton noted he has personally attended every task force meeting to lead the members through foundational education. The recommendation phase has not started.
Three structural realities now frame every decision ahead. The $15 million cut target held, but Morton said it buys the city a year, maybe a year and a half. The pension obligation will continue climbing, and another pension bond is 12 to 14 months away. And the charter’s 3% cap means any rate cut or revenue loss compounds for a decade or more before the city can recover.
The math from May got more pointed in July, exactly as predicted. It will get more pointed still in August when the 5.5-mill budget shows up on paper and every line item has a name next to it.
This story is also published at news.thepalmbayer.com/news/budget-workshop-2026-07-07/ with additional inline visuals, related coverage links, and a video embed where available.
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