CITY GOVERNMENT

Preview of FY 2027 City Budget

Mayor says the general fund will actually shrink by $256,400 next fiscal year as flattening tax revenue forces a 2% average COLA and new rules for filling vacant city jobs.

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Pensacola Mayor D.C. Reeves used a Wednesday press conference to preview the broad strokes of his proposed 2026-27 budget, telling reporters the city’s general fund will be $256,400 smaller than last year, employees will see a staggered cost-of-living raise that averages out to about two percent, and city departments will face new hurdles before refilling vacant positions.

• The budget still has to go through a council workshop and public hearings before adoption, and Reeves was careful to frame everything he presented Wednesday as a proposal, not a done deal.

A Budget Built on Flattening Revenue

Reeves said the budget leans mainly on property tax and sales tax revenue, and both have flattened compared to prior years. Property tax revenue is up 5.3% overall, but that gain is offset by reductions in franchise fees and a smaller transfer from Pensacola Energy into the general fund, at the city council’s request.

The millage rate remains the same as it has since 2011. Reeves said the city is trying to get ahead of that revenue picture now, in part because of the possibility of state property tax reform down the road if Amendment 3 passes in November.

“We have $250,000 less in the twenty twenty-six general fund than we had at Fiscal Y 2026. That did not mean that lumber costs went down or the price to build prefab bathrooms went down. Everything continues to go up.”

Staggered Raises, No Across-the-Board COLA

Rather than a flat city-wide cost-of-living adjustment of 3%, Reeves is proposing a tiered structure based on salary:

• Employees earning under $75,000 — 2.5% COLA
• Employees earning $75,000 to $125,000 — 2% COLA
• Employees earning above $125,000 — 1% COLA

Reeves said the goal was to soften the hit on lower-paid staff, who make up most of the city’s roughly 875 employees, at a time when affordability is squeezing workers hardest. Averaged across the whole workforce, he said, the raise comes out to roughly 2%.

The tiered structure applies only to non-union employees; fire, police and other employees covered by union contracts will get whatever raises are already spelled out in those agreements. Reeves noted PPD alone needs a $1.3 million increase to cover contractually required salary adjustments.

Hiring Freeze Comes With an Asterisk

Reeves announced new protocols for refilling vacant positions starting September 1, noting it won’t be a blanket freeze. Departments will have to justify to the city administrator why a vacant position is essential before it can be refilled.

What it does not mean, Reeves said, is that department director positions will go unfilled. Those will continue to be staffed as needed to keep the organization running. The new scrutiny is aimed at lower-priority vacancies.

• He also said that the city routinely reviews positions that have sat vacant for more than a year as part of every budget cycle, and that some longer-vacant positions have already been eliminated from this year’s proposed budget. Reeves said he would follow up with an exact number of affected positions rather than risk misquoting it on the spot.

Alongside the hiring protocols, the city is also freezing non-mandated overtime for both full-time and temporary employees, a directive Reeves said has already gone out to department heads and supervisors.

What Stays Flat, and What Doesn’t

Reeves said nearly every department’s operating budget is static, dollar-for-dollar compared to last year, with two exceptions: facilities maintenance and public safety.

• Facilities maintenance is being protected, he said, because the city didn’t have a real maintenance plan when he took office. He pointed to Bluffs Park as an example of what happens without a recurring maintenance budget, and said the city has since built out a centralized facilities department to stay ahead of problems like aging HVAC systems before they turn into expensive emergency repairs.

On the public safety side, rising fuel and vehicle repair costs are driving the increases: $200,000 more for PPD and $45,000 more for fire department vehicle repairs. Community center repairs and renovations are also up $206,000.

Still Just a Proposal

Reeves repeatedly stressed that everything outlined Wednesday is what his administration is bringing to the council, not a finished product. He said the goal is to walk into the budget workshop with a balanced budget the administration can defend, but that council could still reshape it significantly during workshop discussions and public hearings.

• “It’s the council’s budget to adopt,” Reeves said, adding that if council pushes back hard on any piece of the proposal, “then now everything’s on the table.”