Prior Manager Yates approved a costly policy change in 2023: While Ted Yates was village manager, without Council approval, he changed employee insurance coverage to include spouses, domestic partners, and children, with the Village covering nearly all of the added premium costs.  

Deception? In a final budget amendment approved by Council in December 2023, the employee insurance costs as changed by Yates were shown to have increased by $328,000 from the original $995,100 (to a total cost: $1,323,100) for the budget year. The staff report simply said the purpose of the amendment was “to reflect changes based on activity in the fiscal year.” No mention of the Yates policy change.

Continuing Impact: As more employee families are added, the costs have continued to escalate.  Insurance for employees has gone from the original $995,100 in the 2022-2023 budget to $2,296,804 in the proposed General Fund budget for 2025-2026.  There are also similar increases in employee insurance costs in Enterprise funds, covered by user fees, not taxes. (building department, wastewater, marina)

The current council does not believe it would be appropriate to take away this insurance benefit from current employees but have discussed not offering the same coverage for future employees.

During last year’s budget workshops, the council was provided a chart to show the cost to taxpayers of employee and family health insurance.  We could not find a similar chart for the 25 - 26 budget. Click here to see the cost of coverage for employee family members in current budget. Basically taxpayers now pay 100% of employees’ insurance and approximately 97% of insurance for family members.

Cost of Yate’s Action: The change in policy adopted by then Manager Ted Yates, without Council approval, may be now costing the Village as much as $1 million/year.

Lawsuit with Yates: In May 2024, Yates filed a lawsuit against the Village seeking monetary funds in excess of $100,000, and other relief, as a result of the Village failing to renew his contract in July 2023.

Status of lawsuit: The most recent court filing was a report on a mediation session 7/30/2025. Rules of confidentiality apply to the mediation, however, the report filed by the mediator stated: “The outcome was:   IMPASSE”  

We wonder: What is the penalty when a manager makes a decision, without authorization, that could cost taxpayers hundreds of thousands of dollars year after year after year? Perhaps the Village should sue Yates.

If you didn’t attend or watch the budget workshops, let us give a summary of some things you missed!  

Personnel Costs: This coming year - $14,668,000, up $795,000 over last year’s budget; with no raises budgeted for coming year - YET.  Personnel costs are 53% of total projected expenditures.

Employee Benefits: of the total cost for personnel, only 56% is for salaries, 44% is for employee benefits.

Firefighters retirement benefit: taxpayers contribute to retirement funding, 35.19% of firefights/EMS employees salary, as special risk employees ($1,581,000 for coming year) as required by Village participation in the Florida Retirement Service (FRS).

Did you know?

The Village has several Enterprise Funds: Expenses to be covered by users, not property taxes: Marina, Wastewater, Building Department.  All had deficits last year - the Village needs to review fees charged for services provided.

*Building Fund is classified as Special Revenue but is required to be self-supporting

The Village has two grounds maintenance crews: one with Public Works for roadways, etc; one for Founders Park, different departments, different set of mowing equipment.

FDOT is responsible for maintaining U.S. One Right of Way: They pay the Village $65,000 per year to do it for them (same charge for a number of years now). Public Works cost to maintain Right of Way - apparently over $300,000. Council discussed checking with local businesses to see if they can do it for less.

Sheriff, Cost of contract: Islamorada’s current budget for the sheriff, $3,079,678 is $425,000 more than Marathon’s. Marathon is larger than Islamorada.  Same sheriff.

Cost for Sheriff services in coming year: $3,618,490, up almost $540,000 in one year.

Cost for Fire/EMS: Proposed 2025-2026 budget: $8,897,923, up $464,789 in one year.

Marina Rates: Council commented that our rates should not be less than rates at competing marinas.  

Village Marina: transient 40’ boat $220/night; long term $1120/month

Three Waters: transient 40’ boat $240/night; long term $2400/month (Nov - May)

The Fills: The Village no longer has a lease for the Right of Way along the Fills. The weekend Public Works overtime is not in the 2025-2026 budget. The state parks are hoping to have kayak launches, one on the ocean side and one on the bay side for access to Indian Key and Lignumvitae Key.

Promised reduction in tax rate: Taxpayers were assured the tentative tax rate of 3 mills approved last month would be decreased before the final budget is approved in September. At the third budget workshop, Manager Ron Saunders provided an amended budget with the millage rate reduced to 2.65.  However, few operational expenses were reduced - a majority of cuts were to one-time capital projects ($1.5 million) and a $1.2 million reduction in the fund balance.  

Line of Credit:Instead of maintaining a $14 million fund balance budgeted last year, the tentative fund balance is reduced by $2 million to just under $12 million.  A $20 million line of credit is proposed to cover extraordinary costs in case of a natural disaster or other unanticipated emergency.

Possible Future Concerns about reducing fund balance:

• Possibility of a destructive storm with ever changing weather patterns

• Possible change (decrease) in FEMA reimbursements for storm damage

• The state of Florida has contemplated major changes in property taxes - perhaps eliminating them for homesteaded properties, thus dramatically impacting local property tax revenues.

• Downturn in tourist industry creating decrease in numerous revenue sources.

They are expected to change the zoning from Public and Semi-public Services to Highway Commercial to maximize the sale value. At the same time, they want to have a say in any future uses. They have discussed deed restrictions to limit future uses.  Some on council are hoping a developer will use the site for affordable housing.  The property is 8/10 of an acre and can accommodate an 8,700 sq ft nonresidential building in addition to a maximum of 12 affordable residential units.  

The council indicated the sale proceeds would be used to replenish the fund balance (the primary source of funding when the church was purchased last year.)

Manager Saunders indicated he would schedule a community workshop to receive feedback from the public regarding the church property as well as the potential uses for other village owned sites.  The church property will then be on the agenda in September for an official decision by council as to possible re-zoning and sale.

Interesting: The Village contracted with Miller Legg for $175,750 to create a master plan for Founders Park.  The draft plan presented at a recent workshop included a huge two-story Community Center costing nearly $35 million.  Perhaps the Church, with needed renovations of $1 million, would be a better option in the long term.

Or find a developer to build housing with a land lease.

Matecumbe Historical Trust presents "Keys Worst Hurricanes"

Tuesday, August 12, 6pm. The Islamorada Public Library, 81830 Overseas Highway. The presentation is free and open to the public.For more information call 305-393-0940.

The presentation "Keys Worst Hurricanes" is from the Irving R Eyster collection and will show several of our local hurricanes starting with the 1733 Spanish Treasure Fleet, leading up to the 1935 Hurricane, Hurricane Donna in 1960 and Hurricane Irma in 2017. These were some of the most destructive hurricanes in Florida Keys history with the 1935 Hurricane being the strongest storm of the century.

What’s the Plan for the Village’s $4 million investment?

The Village paid full price for the church and allowed the church to continue using the building for a year while their new church building was under construction. The new Island Community Church will have its grand opening August 10, 2025.  And now the Village will have possession of the 15,972 sq ft building with a large auditorium and two stories of offices and classrooms.  

To purchase the church last August, the Village used $1.5 million from the general fund, reducing the fund balance and used $2.495 million from the Capital Improvement Fund.

In the agenda for the Wednesday, August 6, Budget Workshop #2, the public and council got the first look at the proposed budget for Oct 1, 2025 - Sep 30, 2026.

Reduction in Fund Balance to cover the deficit! The proposed expenses are up $4.8 million over the projected expenses the current year… 21% increase in the general fund costs.  Even at the highest millage rate (3 mills), the Village would need to eat into the fund balance.  

With the possibility of less in reimbursements from FEMA if the Village has damage from a natural disaster, reducing the fund balance may not be wise.

Tab 5 of the agenda provides the projected numbers for current year ending 9/30/25.  They are highlighted in green in the table below.  The next three lines are the projected numbers for the proposed 2025-2026 budget.  

Concerns:

Projectedincrease in general fund expenses this coming year: $4,776 million

Reduction in Fund balance, best case, almost $1 million.  At rollback $4.8 million

Cost of Employee Insurance Benefits: $2,827,857

Increase in Employee Insurance Benefits: almost $920,000 increase in one year.

And again we have major concerns with Wastewater Fund spending.

When taxpayers see their TRIM notices in another couple weeks: Shock might set in.