GRU Stops Payment for Shared Services; Gainesville Dips Into Contingency Funds To Fill Gap

GAINESVILLE, Fla. (Feb. 6, 2024) – As of February 1, Gainesville Regional Utilities (GRU) stopped paying the City of Gainesville for services the utility received in fiscal year 2022. This leaves the city with a revenue shortfall of $1,447,252 in the middle of the current fiscal year and is a departure from the methodology that formed the foundation of this year’s balanced budget.

As GRU and the city outlined in agreements that underpinned this year’s city budget, the $1.4 million was payment for work done two years in arrears by staff from departments including the Clerk’s Office, the City Auditor’s Office, the Office of Equity & Inclusion and the Office of Communications & Marketing.

The issue was addressed at today’s meeting of the Gainesville City Commission’s Finance Committee, where members approved a recommendation from Gainesville City Manager Cynthia W. Curry to rebalance the budget by using the city’s contingency funds and set-asides. This would preserve the budgets of impacted departments at their adopted levels for the remainder of the fiscal year despite the loss of payment for shared services.

The recommendation to manage the revenue reduction involves the following budget line items:

• $600,754 from the operational contingency fund – 100-percent reduction
• $250,000 from the set-aside for at-risk youth – 100-percent reduction
• $150,000 from the set-aside for gun violence prevention – 100-percent reduction
• $511,501 from the $630,872 personnel contingency fund – 81-percent reduction

“The fiscal year 2024 budget includes contingency reserves and set-asides for other projects,” said City Manager Curry. “These funds can be tapped to compensate for the payments no longer being received from Gainesville Regional Utilities. However, it is unfortunate we have to move into our reserves and use funds for programs and causes that are very important to our community.”

This mid-year budget reversal is the latest challenge for a commission already making substantial reductions. Following the city’s appearance before the Florida Legislature’s Joint Legislative Auditing Committee (JLAC) in February 2023, Gainesville City Commissioners lowered the Government Services Contribution (GSC) by $19 million, a reduction of 55 percent from the prior fiscal year. This led to changes in fiscal year 2024 that included city departmental consolidations, a slew of new operational efficiencies, and the elimination of 125.5 full-time equivalent employee positions.

Commissioners are expected to vote on the recommendation at the February 15 Gainesville City Commission meeting. However, these reductions in revenue will continue to drive budget discussions for fiscal year 2025, as the commission and staff will face hard decisions about funding levels for departments that will no longer provide shared services to the utility. 

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