KEY WEST, Fla. — City commissioners unanimously approved a $331.4 million tentative budget Thursday, Sept. 10, advancing a spending plan that eliminates 18 vacant positions and invests heavily in infrastructure while leaving difficult questions about future borrowing costs and transit funding.
Commissioners also supported restoring $45,000 for youth sports leagues in the final budget, reversing a proposed reduction that would have lowered their combined allocation from $125,000 to $80,000.
Earlier Thursday, commissioners voted unanimously to adopt a proposed fiscal 2026-27 millage rate at rollback on first reading. The rate of 1.8848 mills represents approximately $1.88 per $1,000 of taxable property value.
The budget vote followed nearly an hour of discussion about spending priorities, reserves, a proposed Fire Station No. 3 replacement and the prospect of additional property taxes for debt payments beginning in fiscal 2028. The new firehouse will be named in memorial of former Key West Fire Fighter Alex Vega.
Commissioner Chris Massicotte moved to approve the tentative budget, and Commissioner Mark Rossi seconded. Commissioners Lissette Carey, Aaron Castillo, Monica Haskell and Vice Mayor Donie Lee joined Massicotte, Rossi and Mayor Sam Kaufman in voting yes.
The tentative approval advances the spending plan toward a final budget hearing, identified during the meeting as Sept. 22.
Capital Projects Drive Budget Growth
The $331,385,560 all-funds budget represents a 15.6% increase over fiscal 2026, Finance Director Christina Bervaldi said. She attributed the growth primarily to capital investments, grant-funded projects and planned borrowing.
The general fund, which supports core city operations, totals $103,555,905, an increase of 2.1%.
The proposed budget includes $35.4 million in grant funding and $89.4 million in capital equipment and infrastructure investments. It authorizes no new positions and eliminates 18 positions that are already vacant.
The spending plan also includes employee raises. Cost-of-living adjustments are budgeted at 4% for Teamsters, fire and emergency medical services personnel and general employees, and 5% for police. Eligible employees would also receive applicable step or merit increases.
Because the City Commission allowed the 120-day notice deadline to pass, City Manager Brian Barroso’s contract will automatically renew for another two years in January. Barroso already received a $35,000 raise in February, when commissioners increased his base salary from $230,000 to $265,000 — a 15.2% increase. The automatic renewal is set to add another 5%, or $13,250, bringing his base salary to $278,250.
Castillo praised the proposal.
“This is probably the best budget I’ve seen since becoming a commissioner,” he said.
Bervaldi projected approximately $20.6 million in general fund reserves at the end of fiscal 2027, equivalent to about 92 days of operating expenses. She said those reserves help protect the city against disasters, reimbursement delays and revenue uncertainty.
Barroso warned that additional spending requests would require commissioners to identify cuts elsewhere or draw from reserves.
“What we would like to just articulate today is we truly feel we’ve cut everywhere that we can,” Barroso said. “It’s indicative of the budget that we’re putting in front of you.”
Commissioners Support Restoring Youth Sports Funding
The proposed reduction in youth league funding drew support from commissioners, who discussed using reserves to restore $45,000 in the final spending plan.
Bervaldi said the restoration was not included in the $331.4 million proposal presented Thursday and would need to be incorporated into the next version.
Castillo said he receives calls every day about youth programs. He emphasized the importance of providing places for young people to play, keeping them out of trouble and supporting those who leave for college and return home.
Describing the $45,000 restoration as a small expense relative to the city’s budget, Castillo thanked the other commissioners and Kaufman for supporting youth sports.
Commissioners Haskell, Vice Mayor Lee, Massicotte, and Rossi reiterated Castillo’s comments.
“I totally support restoring the youth league funding to the current levels,” said Haskell. “So I totally support that. And I did hear from football someone speaking for the youth football league.”
“Thank you, Mr. Mayor. I too heard from football, so I fully support restoring the funding to where it is,” said Massicotte. “It sends a good message to our community, and I do want to support that.”
Lee followed suit.
“I support adding the $45,000 back,” said Lee, the former KWPD chief and Police Athletic League booster.
As did Rossi. “I’m with Donie on the $45,000.”
“Sounds very reasonable to me, and sends a really good message to the community and support the kids and youth funding,” Kaufman said. “So I would support it.”
Carey questioned whether league leaders had requested the additional money and whether staff had verified their needs, while Barroso backpedaled saying that the city had notified organizations earlier in the year that funding could be reduced and had not received a request from league officials to restore it. Bervaldi said the request under discussion originated with a resident and came through the mayor.
Near the end of the meeting, Carey said the Key West Junior Football League had contacted her to clarify that the request had not come from the league or one of its representatives.
“We should be very cautious when we get emails for requests for money,” Carey said.
The discussion established support for restoring the money, with details to be addressed before final adoption — and one less tedious session of questions that had been answered in previous meetings.
Carey and Barroso’s ploy to hang the cuts to funding for youth sports died a censorious, waspish death on the floor before the dais.
Fire Station Price Draws Scrutiny
Commissioners questioned a $27 million allocation associated with replacing Fire Station No. 3, seeking a more detailed explanation of costs and opportunities to reduce borrowing.
Rossi said residents had raised concerns about the price.
“I too would like to seriously sit down and go over this piece by piece, so we know exactly what’s going on,” Rossi said. “We know that we need the fire station.”
When asked by Above the Fold how a fire station could cost between $25 and $27 million, Rossi responded “That right there is the $64-million question.”
Rossi said that he was just getting his feet wet but planned to do a deep dive on the station and other capital projects.
Barroso clarified that the allocation included $25 million for the permanent station and $2 million for a temporary facility. Staff was working with K2M to reduce costs, he said.
“But please understand that we’re not building the fire station for 27 million,” Barroso said. “That’s not an accurate statement.”
Bervaldi said the city had applied for a grant of approximately $12.5 million for the project and expected to learn whether it would receive the award in March 2027.
Vice Mayor Lee urged the city to move quickly while reducing the potential burden on taxpayers. The presentation estimated annual debt service of approximately $1.7 million for the fire station borrowing.
“I think it will be significantly reduced,” Lee said. “And if it’s not, I would. I’m going to do everything I can to reduce that burden to the taxpayers.”
Lee also raised the possibility of using reserves to help reduce the burden. Kaufman cautioned that recurring debt payments require a long-term funding solution.
Commissioners sought a dedicated presentation on the project. Barroso said staff needed more time to develop the design and cost information.
Haskell Warns of Future Tax Pressure
The rollback operating rate does not include the additional bond-related taxes staff said would begin in fiscal 2028.
Bervaldi discussed borrowing for the Jose Marti project, Fire Station No. 3 and street improvements. She said a competitively bid interest rate of approximately 3.953% had been accepted for the Jose Marti bond, although it had not yet been issued.
Haskell warned that future debt payments could force commissioners to make deeper operating cuts if they wanted to offset the additional taxes.
“So when next year comes around, you know if we don’t want to saddle the citizens with extra tax burden, we’re going to have to slash even more from the regular budget,” Haskell said.
Bervaldi said staff would seek to mitigate the impact but reminded commissioners that voters had authorized the borrowing.
Barroso said grant applications were part of the city’s strategy to reduce the debt obligation.
Haskell also proposed an efficiency review of city staffing and operations before the next round of budget reductions.
“I would like to put some money in this year’s budget or direct the city manager to take it out of funds that he has the ability to spend to do during this fiscal year an efficiency review of city staffing and operations,” Haskell said.
Kaufman encouraged her to bring the proposal to a future commission meeting with supporting information and options. No specific allocation for the review was adopted during the discussion.
Transit Plan Advances, Funding Questions Remain
The budget includes an Island Hopper transit proposal with service approximately every 45 minutes in both directions, beginning at 6 a.m. and ending around 8 p.m.
Transit Director Rogelio Hernandez said the route would serve the college, Lower Keys Medical Center and Garden View Apartments on the city side of Stock Island.
On the unincorporated side, service would be limited to two stops along U.S. 1, rather than extending into the neighborhood.
Haskell urged county participation in funding additional service. Kaufman said the county had indicated it would revisit the issue in December.
Barroso said city staff had provided the county with a detailed cost analysis for additional stops.
Kaufman also questioned whether the transit plan had sustainable funding beyond the coming year.
“Will the one will the island hopper survive? Not just this year. Will we have it in 2028?” Kaufman asked.
Hernandez said recurring funding was available for local routes, but future support was uncertain.
“I wish I had an answer for that, and really we don’t know,” Hernandez said. “So things are changing constantly with FDOT, and at the federal level, we do apply for reoccurring funds, those funds will be there.”
“But there’s no guarantee,” he added.
Bervaldi distinguished identified recurring support from additional services for which the city does not necessarily have dedicated funding.
Asked about using Tourist Development Council money for the Duval Loop, Bervaldi and Barroso said staff had received guidance that the funding could not be used for those operations.
Water Quality, Stormwater and Waterfront Projects Included
Bervaldi outlined investments in water quality, stormwater improvements, waterfront facilities and housing.
The proposal includes $250,000 for water quality in fiscal 2027, in addition to other related investments she identified, including testing at marinas and stormwater outfalls.
During public comment, Sarah Compton urged commissioners to include testing in District IV canals and a lake, citing residents’ concerns about fish die-offs.
“I would love to see water quality testing there,” Compton said.
Bervaldi said $2 million in recently received stewardship funding had been incorporated into the stormwater budget. Another $1 million had not yet been assigned to projects or added to the proposal.
Kaufman requested a future presentation on stormwater priorities so commissioners could help pursue additional legislative funding.
Other projects discussed included Mallory Square waterfront rehabilitation, Higgs Beach improvements, bus shelters, ferry terminal work and parking facility improvements.
Questions About Reserves and Building Repairs
Haskell raised concerns about the Key West Bight’s reserves and its approximately $6 million transfer to the city.
Bervaldi disputed the suggestion that projections showed the Bight exhausting all reserves. She said the forecast concerned excess reserves, with operating and capital reserves remaining.
Rossi suggested setting aside money over time for potential disaster recovery.
During public comment, resident Tom Malone questioned planned roof, air-conditioning and fire escape work at City Hall, asking whether warranties or contractor guarantees could help cover the expense.
He also questioned spending on the existing hockey rink while the city considered a rink at Higgs Beach.
Kaufman said he would follow up on the public’s comments.
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