Pensacola’s property‑tax rate will remain the same this year, but many property owners should still expect higher bills. At a state‑required budget hearing Wednesday, the City Council voted 5‑0 to tentatively adopt its fiscal 2026 budget and to set the city’s millage at 4.2895 and the Downtown Improvement Board (DIB) at 2.0 mills — both unchanged from last year. Because taxable values climbed, the total take is 8.06% above the “rollback” level that would have kept overall collections flat year over year.
A "mill" is $1 of tax for every $1,000 of taxable value. The “rollback rate” is the rate that would raise the same total amount as last year, after excluding new construction and some other changes. When property values rise, even an unchanged millage brings in more dollars. Florida’s homestead rules partially cushion that: for a primary residence, the taxable value generally can’t increase by more than 3% a year, even if market prices jump faster. (When a home is sold, that cap resets for the new owner.)
District 2 Councilman Charles Bare summed up the practical effect: “While there isn’t an increase in the millage rate, there’s still an increase in the tax burden for people because the valuations went up,” he noted.
The hearing — one of two required under Florida’s Truth in Millage (TRIM) law — drew little public comment beyond a labor plea tied to the Saenger Theatre’s fee schedule. A second and final hearing is set for Sept. 10 at 5:30 p.m. Under TRIM, tentative rates adopted now cannot be raised at the final hearing.
Why bills are rising
City leaders described the increase above the rollback level as the cost of keeping basic services operating in a higher‑cost environment (wages, insurance, utilities, fuel and more).
“The reason for the proposed increase over the rollback rate is to maintain services and to meet increased costs,” Budget Director Amy LaVoy said.
The administration also reworked parts of the plan after an August workshop. One key change: less reliance on money moved from the city‑owned natural gas utility into the general fund. (That transfer helps pay for general services like police, parks, and public works.) In August, staff floated a transfer equal to 20% of Pensacola Energy’s net revenues. Council pushed back. On Wednesday, LaVoy said the team reduced the dependence and rebalanced the budget; the transfer is now set at 17.5%.
Using reserves — what and why
The budget also leans on reserves — essentially the city’s savings accounts — to smooth the plan. Here are the two big pieces, decoded:
- Local Option Gas Tax (LOGT) reserve. LOGT is a state‑authorized fuel tax that local governments dedicate to transportation projects. The city will tap its LOGT reserve a year earlier than planned to pay eligible costs now. That choice means that in fiscal 2027, the city will need to make a scheduled debt‑service payment (think loan payment) from ongoing LOGT revenues instead of from the reserve.
- Police pension reserve (city‑held). The city set aside a balance inside the police pension trust to help phase in union‑negotiated raises. LaVoy said the city will continue using that set‑aside; the move doesn’t change what the pension system owes to current and future retirees.
On insurance, the city will continue to buy a commercial auto‑liability policy to ensure coverage when vehicles cross state lines. Next year’s $318,000 premium will come from the city’s insurance reserve.
“We’re going to spend those reserves down next fiscal year, not to exhaustion, but we’re going to spend them down by $318,000,” LaVoy said.
Offsets, trims, and program changes
To help the numbers balance, staff also made smaller shifts:
- Traffic‑camera revenue: Raised to $500,000 based on year‑to‑date collections.
- Parks & Recreation utilities: a planned $42,000 increase was removed.
- Legal costs: Costs tied to specific cases will be charged to the projects that generate them, rather than to the legal department’s base budget.
- Tuition reimbursement: a planned $50,000 increase was pulled; the program is expected to be funded, as in prior years, through a January carry‑forward.
- Golf Fund: the annual general fund subsidy is cut by $100,000. Staff said course revenues are up; if they soften, the likely impact would be delaying future capital projects rather than cutting service immediately.
- Technology: general‑fund computer purchases were trimmed by $277,700.
One quiet pressure point sits in the sanitation enterprise fund (the self‑supporting account that runs trash, recycling, and related services). This year, the city moved to once‑weekly trash collection with curbside recycling, setting the residential rate at $24.99. According to Wednesday's budget presentation, sanitation reserves are now about 5.06% of annual spending — well below the city’s 15% target for enterprise funds. Thin reserves make it harder to replace trucks on time and leave the fund more exposed to fuel spikes or storm‑debris costs.
Public comment: stagehands say fee hikes aren’t reaching workers
Only one resident spoke: Lonnie Hawkins, treasurer of IATSE Local 60, which represents stagehands and riggers who work the Saenger’s shows.
“We are the people behind the shows,” he said, arguing the proposed fee schedule raises should flow to workers’ pay. He questioned why clients would pay more per hour while union members are told management can offer no more than a $1 raise.
“Where’s that other $1.18 going?” he asked, adding: “What I would like for you to do is ask the management to at least pass those increases on to their employees.”
Mayor D.C. Reeves responded that the city relies on the Saenger’s operator to set competitive compensation.
“We appreciate you bringing that up," he said, "and just want to be clear, as you can imagine with schedules like this, we obviously are taking direction from the operator ... Certainly, we’re not in the business of knowing what the competitive pay is." He added that staff would follow up with the venue management.
Sidewalks, school safety, and neighborhood priorities
Beyond the numbers, several council members urged the administration to carve out a dedicated slice of the sidewalk budget to finish “safe routes” gaps near schools.
“Kids literally are dumped out into the middle of the road with cars turning around,” District 1 Councilwoman Jennifer Brahier said. Members also discussed reviving a small grant pot for neighborhood‑initiated safety petitions and projects, which went unused this cycle after groups missed the prior December request deadline.
Statewide backdrop: property taxes under the microscope
The workshop unfolded as Gov. Ron DeSantis continues pushing to reduce local property taxes and as his Department of Government Efficiency (DOGE) initiative audits municipal spending around Florida, including in Pensacola, in recent weeks. City leaders say rising costs — from labor contracts to insurance and utilities — and public expectations for service are colliding with that push. The budget adopted Wednesday reflects that tension: rates unchanged, bills rising due to valuations, and a mix of transfers, trims, and reserve timing to keep core services funded.
The council’s votes on Wednesday were all tentative. The final public hearing, where the council will adopt the millage and budget for fiscal 2026, is set for Sept. 10 at 5:30 p.m.
