Marathon will look to spend down its year-plus of reserve funds in an effort not to raise taxes in 2025-26, the city council concluded in a budget hearing on Sept. 16.
Fueled by a statement from Vice Mayor Jeff Smith, the council agreed to target the city’s 486 days of operating expenses held in reserve, arguing that funds held by Marathon for use in the wake of disasters such as hurricanes significantly exceed other Keys municipalities. In recent years, they said, budgeted one-time payments had gone unspent, shifting funds instead to expand the city’s reserve.
The decision in Marathon’s first public budget hearing comes as a pivot from an original tax rate of 2.2235 mills – or $222.35 per $100,000 in a home’s taxable assessed value – proposed on Tuesday night, used to help fund a 2025-26 budget of $144.6 million.
Proposed expenses from the city’s general fund total $24.939 million – a $2.474 million increase from Marathon’s adopted 2024-25 budget. Notable increases of $623,462 and $481,682, Finance Director Jennifer Johnson said, were due mostly to union-negotiated or contractual increases for fire/EMS and police services, respectively, along with the addition of a battalion chief position to the city’s fire department.
Other hefty jumps of $574,112, $414,311 and $595,562 were proposed for the city’s general services, IT and public works. Johnson attributed the majority of the increases to professional and contracted services as well as staffing costs. Along with several salaries moving between departments as the city reorganizes its staff, Marathon’s employee base has grown roughly roughly 40%, from 118 to 158, over the last three years – including several high-ranking posts like a deputy city manager and new I.T. director.
Discussions of staffing levels have persisted throughout the year as Marathon weighs additional services taken in-house – such as the maintenance of the U.S. 1 right-of-way – and levels of service provided to residents. Health insurance costs, Johnson said, are up 9% across the board, and a compensation study of similar posts in neighboring governments also informed adjustments to bring city salaries in line with their competitors.
Cost-of-living increases for staff, a thorn in the side of budget discussions in recent years, saw little discussion and are set at 3.1%, in accordance with June cost-of-living data available for Miami-Dade county. An additional 2% of department salaries is reserved for merit increases, as a pooled amount to be distributed by department heads based on performance evaluations.
Councilman Kenny Matlock opened discussions of “fat” in individual line items, calling into question expenses ranging from state lobbyists to travel, vehicles and uniform budgets that he said were unnecessary or routinely went unspent.
“I know we’ve added positions and costs have gone up again. It’s hard to not be in the day-to-day and say, ‘Hey, this (position is) not efficient,’” he said. “I’m hoping that (staff) can start bringing us stuff like that, or just implementing it for efficiency purposes.”
Matlock sought support in reducing the city’s annual nonprofit grants from $150,000 to $75,000, with councilwoman Lynny Del Gaizo agreeing with the idea of a reduction.
Smith said he would support a reduction to the city’s original grant total of $100,000, reinstated in 2023, and agreed with a reduction or change in state lobbyists, calling their effectiveness into question after a state legislative session that saw uncertainty in critical issues for Marathon.
Smith then spearheaded a push to return the city to its rollback tax rate for 2025-26, taking aim at budgeted expenses that had gone unspent in the last three years – swelling the city’s reserves by roughly $9.7 million, even as budgets planned to spend down this total by multiple millions.
He argued that even a return to rollback would leave Marathon with more than 365 days’ worth of operating reserves – a number he said could likely be even further reduced once one-time project expenses were removed from the city’s annual operating estimates.
“What it’s coming out of is budgeted expenses that we haven’t spent, that are one-time expenses that keep rolling over year to year,” he said. “I.T. (upgrades) have been in the budget for three years, and we haven’t spent it. Yet we’ve taxed for it, raised the revenue, and then we put it aside in the reserves because we had it and didn’t spend it.
“(We’re) over-reserved compared to (our) peer group, dramatically, in the Keys. I’m not interested in going anything above rollback, because the historical numbers show me that we’re not even coming close on our actual (expenses) versus what we’re putting in here in the budget. … I don’t see why we would take and punish the public again with a 7.7% increase when we have filled the kitty over the last three years beyond what we expected.”
Smith’s statement drew applause from the room, with Johnson adding that the rollback rate and subsequent deficit spending would still theoretically leave Marathon with 368 days’ worth of operating reserves, even before the cuts directed by council on Tuesday evening.
“I think, on top of that, we can almost DOGE ourselves – where can we save the taxpayers money?” added Matlock.
The council unanimously directed staff to move forward with the rolled-back rate of 2.0631 mills, with a second and final public budget hearing set for Tuesday, Sept. 23 at 5:30 p.m.
