Vero Beach residents may see a greater than expected increase in their property taxes this fall after the City Council unanimously approved a tentative millage rate that would increase the current rate by the maximum to fund additional staffing and growing personnel costs.
The council voted 5-0 last week to set a not-to-exceed property tax rate of 2.9816 mills – or $2.98 per $1,000 of taxable value – a 7.7 percent increase over the current rate of 2.76 mills. Coupled with a nearly 6 percent rise in property values, the higher rate would generate about $1.75 million more in property tax revenue compared to 2024.
For a home with a $500,000 taxable value, the proposed rate would mean an additional $106.80 in city taxes next year.
City Manager Monte Falls told council members that keeping the current tax rate would leave five positions – including two police officers – unfunded. He recommended setting a slightly higher tentative rate until public budget hearings in September.
Instead, the council opted to go further, setting a rate that would not only fund those five roles but also add two or three more “wish list” positions, including in engineering and community policing.
The proposed $39.9 million general fund operating budget includes $1.8 million in transfers from the city’s water-sewer utility and $1 million from airport and marina revenue. Water-sewer customers outside the city, including in Indian River Shores and South Beach, contribute to the general fund through their utility bills.
Personnel expenses are driving the budget increase, with an 8.6 percent jump in salaries and payroll taxes adding $1.5 million. Health insurance costs are projected to rise another $550,000. These increases total more than $2 million, even before new positions are added.
Council members also approved raising the cost-of-living adjustment for city retirees from 1 percent to 2 percent.
Departments seeing the largest funding boosts include police, public works, finance and the city clerk’s office.
The only major staffing proposal rejected by the council was Police Chief David Currey’s request to add a captain’s position, which he said would allow for internal promotion among five lieutenants. Council members were not convinced of the need for more upper management.
“I’d rather see more boots on the ground,” said Councilman John Carroll, echoing the council’s preference for additional community policing officers and potentially a crime analyst instead.
To offset some costs, the council is considering reducing lifeguard coverage to only South Beach Park and Jaycee Beach, a move that could save $240,000. The reduction is also intended to encourage Indian River County to share part of its Tourist Development Tax revenue, most of which is collected from hotels within city limits.
Other rising expenses include a $153,000 increase for software maintenance, a $188,000 hike in liability insurance premiums, and higher janitorial costs after the city switched service providers.
Spending on the Three Corners project is set to drop from $400,000 to $220,000 as the city prepares for negotiations with a developer.
Councilman Aaron Vos acknowledged the impact on taxpayers but said the increase is necessary.
“We are all taxpayers in the city, and I personally don’t take this lightly,” Carroll said. “But unfortunately, I think we’re in that position where we have to do something to maintain our level of service.”
Vos, in his weekly email newsletter, noted the proposed millage rate still won’t cover all departmental staffing requests.
Councilman John Carroll said, “We have the lowest millage rate in comparable-sized cities that we’d like to compare ourselves to.”
The pitch for an assistant city manager died for lack of support as council members ranked new positions in order of importance, and Mayor John Cotugno’s proposal to hire a city communications coordinator did not make it into the budget.
In his previous week’s newsletter, Vos had announced that a portion of Vero’s losses due to its failure to submit its 2022-23 audited financial reports on time has been covered by insurance.
“According to City Manager Monte Falls, the City received a $100,000 insurance payment this week from a Faithful Performance (Errors & Omissions) claim related to the April shortfall in the 0.5 percent sales tax. The total tax revenue loss was $133,254, resulting in a loss to the city of $33,254 after the insurance reimbursement,” Vos said.
The proposed millage rate for the next tax year will appear on residents’ TRIM notices which will be mailed in August. The final rate will be set following public hearings on Sept. 16, ahead of the fiscal year beginning Oct. 1.
The council has yet to formally review the city’s capital budget, which is scheduled for discussion at an Aug. 9 meeting.
