Fort Walton Beach — Annual Comprehensive Financial Report, September 30, 2025 — reading text

2024 2025 2024 2025 2024 Revenues Program Revenue: Charges for Services $ 5,440,279 $ 5,099,923 $ 18,971,073 $ 17,804,055 $ 24,411,352 $ 22,903,978 Operating Grants & Contributions 1,239,109 1,089,161 - - 1,239,109 1,089,161 Capital Grants & Contributions 243,432 789,571 1,082,695 3,721,220 1,326,127 4,510,791 General Revenue: - - Property Taxes 7,693,921 7,750,534 - - 7,693,921 7,750,534 Other Taxes 13,038,481 13,793,955 - - 13,038,481 13,793,955 Tax Increments for Redevelopment 2,887,289 2,842,113 - - 2,887,289 2,842,113 Other Revenue 4,509,270 5,230,022 683,572 1,149,888 5,192,842 6,379,910 Total Revenues 35,051,781 36,595,279 20,737,340 22,675,163 55,789,121 59,270,442 Expenses Function/Program Activities General Government 6,893,053 5,612,265 - - 6,893,053 5,612,265 Public Safety 16,698,910 15,594,706 - - 16,698,910 15,594,706 Physical Environment 401,575 425,314 - - 401,575 425,314 Transportation 1,004,089 1,318,838 - - 1,004,089 1,318,838 Economic Environment 1,275,342 1,463,389 - - 1,275,342 1,463,389 Culture & Recreation 6,726,220 6,912,043 - - 6,726,220 6,912,043 Debt Service Interest 668,906 705,158 - - 668,906 705,158 Utilities - - 11,080,697 11,238,837 11,080,697 11,238,837 Sanitation - - 4,745,877 4,580,016 4,745,877 4,580,016 Other - - 1,048,423 1,196,475 1,048,423 1,196,475 Total Expenses 33,668,095 32,031,713 16,874,997 17,015,328 50,543,092 49,047,041 Change in Net Position Before Transfers 1,383,686 4,563,566 3,862,343 5,659,835 5,246,029 10,223,401 Transfers 1,985,575 1,848,670 (1,985,575) (1,848,670) - - Change in Net Position 3,369,261 6,412,236 1,876,768 3,811,165 5,246,029 10,223,401 Net Position – Beginning * 59,550,339 53,138,103 34,163,194 30,352,029 93,713,533 83,490,132 Net Position – Ending $ 62,919,600 $ 59,550,339 $ 36,039,962 $ 34,163,194 $ 98,959,562 $ 93,713,533 * As restated due to implementation of GASBS No. 101, Compensated Absences. Current Year Impacts – Governmental Activities Governmental activities increased the City’s net position by $3.4 million for the fiscal year ended September 30, 2025. Key elements of this change are as follows:  Total revenues decreased by $1.5 million, or 4.2%, which is primarily attributable to a decrease in investment earnings as a result of a decrease in market interest rates.  Public safety expenses increased $1.1 million, or 7.1%. This is primarily attributable to an increase in payroll and related taxes and employee benefit costs.  Total expenses increased by $1.6 million, or 5.1%, which was largely due to inflationary pressures on payroll and maintenance costs. 8  C hart 1 Program Revenues & Expenses - Governmental Activities (in millions) $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 General Government Public Safety Physical Environment Transportation Economic Environment Culture & Recreation Debt Service Interest Revenues Expenses C hart 2 Interest & Investment Revenues by Source - Governmental Activities Earnings $2,167,478 Other Revenue $622,229 Charges for Services Other Intergovernmental $5,440,279 $1,719,563 Franchise Fees Operating Grants & $2,387,255 Contributions $1,239,109 Capital Grants & Contributions $243,432 Utility Service Taxes $4,716,511 Ad Valorem Taxes $7,693,921 Sales Taxes Tax Increments for $5,934,715 Redevelopment $2,887,289 Current Year Impacts – Business-Type Activities Business-type activities increased the City’s net position by $1.9 million for the fiscal year ended September 30, 2025. Key elements of this change are as follows:  Capital grants and contributions decreased by $2.6 million, or 70.9%, which is primary attributable to expending American Rescue Plan Act (ARPA) grant funding of $3.7 million on a water meter replacement project during the prior fiscal year.  Sanitation expenses increased $165,861, or 3.6%, which is primarily attributable to an increase in in payroll and related taxes and employee benefit costs. 9  Chart 3 Program Revenues and Expenses - Business-Type Activities $16 $14 $12 Millions $10 $8 $6 $4 $2 $0 Utilities Sanitation Stormwater Revenues Expenses Chart 4 Revenues by Source - Business-Type Activities Capital Grants & Contributions $1,082,695 Interest & Investment Earnings $670,706 Other Revenue Charges for Services $12,866 $18,971,073 10 FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of available resources. Such information is useful in assessing the City’s financing requirements. Unrestricted fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of September 30, 2025, the City’s governmental funds have combined ending fund balances of $39.7 million, a decrease of $4.0 million from the prior year. Approximately 21.6% of this amount, or $8.6 million, is available for spending at the discretion of City Council. The remainder of fund balance is non-spendable, restricted, or committed. Details of the fund balance classifications can be found Note 16 to the financial statements. The General Fund is the chief operating fund of the City. At the end of the fiscal year, assigned and unassigned fund balance of the General Fund was $8.6 million, while total fund balance was $27.9 million. As a measure of the General Fund’s liquidity, it may be useful to compare both assigned and unassigned fund balance and total fund balance to total expenditures. Total assigned and unassigned fund balances represent 22.4% of the General Fund’s total expenditures, while total fund balance represents 72.7% of the General Fund’s total expenditures. During the current fiscal year, the fund balance of the City’s General Fund decreased by $4.2 million. This decrease is primarily attributable to several ongoing major capital projects. The fund balance in the CRA Fund decreased by $442,902. This decrease is primarily attributable to two ongoing capital projects for the Fort Walton Beach Landing improvements and a museum addition at the Heritage Park and Cultural Center. The fund balance in the Beal Memorial Cemetery Perpetual Care Fund increased by $530,920. This increase is primarily attributable to earnings from the investment portfolio exceeding cemetery maintenance expenditures. Proprietary Funds The City’s proprietary funds provide the same type of