The City of Coral Gables has proposed a $308.2 million budget for fiscal year 2025–2026, maintaining its millage rate for the eleventh straight year while drawing heavily on reserves and expanding its workforce. On paper, the numbers suggest stability and investment. A deeper reading of the 442-page budget, however, reveals trade-offs that merit scrutiny—particularly as the city draws from reserves to sustain service growth and infrastructure.

A closer look at the numbers

City leaders unveiled a proposed budget that projects $137 million in property tax revenue, based on an assessed valuation of $26 billion. The operating budget, including general fund, enterprise funds and special revenue sources, totals $245.6 million. Capital spending reaches $52 million and debt service accounts for another $10.6 million.

The millage rate remains at 5.559, unchanged since FY 2014–15. That decision, politically popular, requires the city to pull $31.2 million from reserves and carryover balances to fund major projects and balance one-time expenses.

Reserves under pressure

While the budget technically balances, the underlying strategy—especially the use of $8.6 million from the General Capital Improvement Fund and $10 million from General Fund reserves—suggests a city that is sustaining growth and service expansion through accumulated surpluses. These funds are finite.

“We’re bringing in $8.6 million, which is a result of prior year surpluses that were brought in from the general fund to the capital fund from two years prior,” said Assistant Finance Director for Management & Budget Paula Rodriguez, representing Finance Director Diana Gomez at the city’s July 2 annual budget workshop.

The $8.6 million drawn from capital reserves is financing 42 discrete capital projects. Among them are long-anticipated initiatives like the Riviera Park development ($500,000), unspecified parking garage modernization ($950,000) and a $1 million allocation toward City Hall infrastructure improvements. These are real upgrades with long-term value—but without a plan to replenish the reserves at a similar pace, the city’s capital flexibility narrows with each cycle.

Costs rising

The budget reflects a city in transition. Service demand is rising. Despite increasing labor costs, Coral Gables plans to add seven full-time positions—on top of the 20 new roles already added to the Building Division this year. Three of the new hires are part-time-to-full-time conversions, such as a procurement contract specialist and a grants and audit coordinator. Four new roles will be added outright: a parking compliance officer, tree trimmer, facilities maintenance worker and fleet maintenance mechanic.

The staffing plan reinforces the city’s preference for in-house services—a longstanding position reaffirmed in the proposed budget.

But as headcount grows, so does the burden of fixed costs. Personnel services and related benefits account for more than 60 percent of General Fund expenditures. The city also anticipates increased contributions to its defined benefit pension plan, which will require steady contributions even if investment returns decline.

Clarity and transparency

One notable change in this year’s presentation is a clear distinction between recurring revenue and one-time transfers. That added transparency strengthens public understanding, while also revealing how much the city relies on prior-year balances to fund current needs.

“We’ve had this discussion before where we take the (FY)24 surpluses and use those to plan the (FY)26 budget,” Rodriguez said.

The approach is deliberate and skillful. Yet without a sustainable funding mechanism, its effectiveness may be short-lived.

Capital needs and future risks

The city’s $10.6 million in debt service reflects a growing obligation. Coral Gables now carries $99.5 million in outstanding principal, with total debt service obligations exceeding $132 million. Although no major new debt issuances are forecast in the FY26 budget, the proposed budget does not rule out future borrowing—and past budget discussions have featured debate over how quickly to repay past debt, especially bonds issued to support pension adjustments.

The decision to continue funding trolley operations with $3.4 million in parking fund transfers is another balancing act. These funds, though earmarked, are limited. The same is true of the $4.4 million transferred from the sanitary sewer fund. Both transfers illustrate the city’s dependence on enterprise operations to support general mobility and development goals.

Additionally, there are warning signals in the five-year capital improvement plan. While funding is in place for FY26 projects, major infrastructure needs remain underfunded beyond that horizon. For example, the budget identifies the need for a new sanitation site by 2026 due to the expiration of the city’s agreement with the Miami-Dade transfer station. But no long-term funding mechanism has yet been approved.

Budget growth in context

The FY26 proposal reflects a significant decrease in capital spending compared to the previous year’s amended budget. FY25 included more than $100 million in capital carryforward—the result of unspent appropriations from prior years being re-budgeted—bringing total FY25 capital expenditures to approximately $180 million. By contrast, the proposed FY26 capital spending of $52 million marks a 71 percent decrease.

This drop signals a tightening pipeline of ready-to-go projects, as well as the possible exhaustion of large capital balances that had accumulated over time. It also reflects the city’s effort to right-size its capital program to better match current revenues.

Relying on reserves

In years past, the city’s budget messaging focused on conservative fiscal management and revenue growth. That remains true. But this year’s proposal reflects a city more actively engaged in fiscal engineering—redeploying accumulated balances to maintain services, hold the line on taxes and complete long-stalled projects.

Residents will need to pay close attention in September when the two budget hearings are held. While the millage rate remains flat, the city is becoming more dependent on reserves and one-time funds.