Gainesville City Manager Cynthia Curry has issued a warning to community organizations as the city approaches its next budget cycle, and city departments—including first responders—have also been put on alert.

A Friday email from Curry recommends community-based service providers not rely on city support in their budgets next year. Curry said the city remains uncertain about its own funding sources as the newly appointed Gainesville Regional Utilities Authority surveys its options, including a reduction or elimination of the general services contribution.  

The general services contribution, formerly the general fund transfer, is money sent from the utility to the general government to support city operations. These transfers are common in municipal utilities, but Gainesville’s transfer came under fire from state legislators because the city had no formula to calculate the annual transfer.  

The annual transfer totaled $34 million in the 2022-2023 fiscal year. Meanwhile, the utility faces high debt, $1.7 billion, and customers have borne the brunt of high bills.  

For the current budget, the Gainesville City Commission took a $19 million cut from the transfer, including more than $16 million from the new formula. But after passage of House Bill 1645, the City Commission no longer controls Gainesville Regional Utilities (GRU).  

The future of the annual transfer now depends on the new authority created by the bill and sworn into action on Oct. 4.

The transfer was the second largest funding source for Gainesville general government, after only taxes. With the transfer amount in question, Curry said the city may not have the ability to support community organizations and to maintain the same level of services as in past years.  

“This will surely impact our ability to maintain current funding levels for General Government programs, services, and the level of outside agency support you have come to rely on,” Curry said in her Friday statement. 

An internal memo from Curry says outside agency funding has been reduced to zero for planning. If it continues unfunded, Gainesville’s support would end for GRACE Marketplace, the Early Learning Coalition, the Hippodrome Theatre, Cultural Arts Coalition and the Gainesville Fine Arts Association. 

“Make no mistake, the FY 2025 budget development process will be more difficult, as most Departments have already reduced operational expenses and a large number of vacant positions have already been eliminated,” Curry told staff in the memo obtained by Mainstreet. 

Curry mentions that 13 of 20 government funded departments had operational budgets cut last year along with 125.5 budgeted positions eliminated. She said the city tried to spare cuts to public safety—fire and police actually had overall budget increases.  

But, this year, public safety might also get hit.  

“All department operations, including public safety, must be evaluated in FY 2025,” Curry said. 

In an email to Mainstreet Daily News, Gainesville Commissioner Bryan Eastman said the reductions would have greater impact on the largest city departments—police and fire.  

“If cut proportionate to the across-the-board GSC reduction, that would mean an over $4 million cut to police and nearly $3 million cut to fire, which will mean layoffs,” Eastman said in the email. 

The GRU Authority looked at several options for the general services contribution transfer during a workshop Thursday night. The authority’s main concerns are high debt and high rates inherited from the City Commission only months ago. 

The authority hasn’t settled on a concrete path for the general services contribution, but the board members previously directed staff to look into the powers it had to alter or eliminate the transfer. That legal analysis is still ongoing. 

Curry referenced the authority workshop in her memo and said that the city budget will remain uncertain until the authority votes on the transfer. 

By cutting the transfer for the next decade, GRU could save $165 million. The authority could leverage those savings to tackle debt, directly offset utility bills, or a combination. If the transfer amount stayed at the current level, the authority could save $12.2 million over the next decade as opposed to the current plan.  

The current plan—established in April by GRU and general government staff and approved by the City Commission—has slight increases over the next decade, rising from the current $15.3 million to $17.1 million by 2033.  

At the time, the City Commission also approved a debt reduction plan, aiming to cut debt by $315 million over the next decade. That plan includes rate increases for electricity and wastewater through 2027. 

While the new authority has kept the plan in place, members have said the debt plan forms the minimum for the utility. The authority would like to accelerate the plan and make it more aggressive.  

Being more aggressive could impact the city budget, Curry noted in her email.  

“I share this information with you in the spirit of transparency as you begin to prepare your budgets and develop your fundraising plans for the upcoming year,” Curry said.  

During the past budget season, the city eliminated the Reichert House Youth Academy and reduced funding for GRACE Marketplace. The initial cut from GRACE Marketplace received some pushback, and the city increased funding, but Alachua County had to step in to bring the nonprofit up to 100% funding. 

Curry also highlighted another budget shortage based on GRU’s Thursday workshop. In the memo, Curry said GRU may look to reduce its financing of the cost allocation plan—which gives GRU money to  

support the city clerk, City Commission, city attorney, city auditor and office of equity and inclusion. 

Curry says cuts from those reductions could range from $212,750, the amount currently being paid to the city commission department, to nearly $2 million if all other departments are added.  

On its side of the ledger, the authority only has limited financial levers to pull to earn money and pay off debt—raising rates and cutting costs. Cutting the transfer cost for a decade would allow a 50% acceleration of the current debt plan.  

Authority Chair Craig Carter has already asked GRU staff to look into what the utility currently pays to the general government in the cost allocation plan. As a department of the city, GRU and the general government side have a lot of overlap and shared services.  

Previous Gainesville commissioners had asked city staff to find redundant services between GRU and general government to eliminate, but the new authority has looked to distance itself from the city and ensure each deal is in the utility’s interest.  

General Manager Tony Cunningham received flak from the authority last week for a contract signed between GRU and the general government for IT services. GRU has historically provided those services to the general government side but doesn’t earn the full cost of the work—a budget deficit for the utility.  

The contract approved by Cunningham doubles the amount GRU will receive—up to nearly $3 million—but still falls short of the cost to provide the services as calculated.  

Carter has also asked how the authority could recoup funds from the general government side that have been moved from GRU in the past.  

At a past meeting, Carter said the general government had milked GRU dry in the past years of management. He said he’s partly to blame as a former city commissioner.