Commissioners approved a 6.4% electric rate increase and property tax increase that could be as high as 11.5%.

After months of deliberations, Gainesville’s elected leaders on Wednesday decided to increase electric rates and property taxes to make up what’s left of a budget shortfall.

The Gainesville City Commission voted 4-3 to increase electric rates by 6.4% and bump property taxes up 11.5%, an increase that will cost most city residents hundreds more a year. Commissioners Gail Johnson, Harvey Ward and Gigi Simmons voted in dissent.

The City Commission will vote again in July and September to finalize the increases.

The electric increase is higher than what Gainesville Regional Utilities officials initially requested and eats up savings customers had seen from the $754 million biomass plant purchase in 2017.

Though currently the lowest in the county, the city's proposed property tax rate would be the highest it's been in 25 years. The increase puts Gainesville at the second lowest, behind Archer, and would add almost $4 million to the city's budget.

Property values have gone up roughly 6% in Alachua County in the past year.

Those in attendance asked city leaders to think about cutting the budget before considering increases on taxpayers and pointed to GRU customers' charges and rates that are already at or near the highest in the state.

The proposed revenue increases will cover the city’s remaining $3.2 million budget deficit — a hole that started at $12 million. The city's budget also includes new commission initiatives and 16.5 full-time employees at a cost of $1.2 million, which interim City Manager Deborah Bowie said were not a factor in the deficit.

Throughout the budget process, the commission has not made any cuts to its budget, with the exception of about $790,000 in reduced pension payments.

Commissioners on Wednesday agreed to consider up to $1.5 million in department cuts at an upcoming meeting, a suggestion they rejected in February.

Mayor Lauren Poe said the city has been “very conservative” on spending and that the city has done everything possible to lower rates or keep them steady, despite increasing rates in each of the last three years.

“You cannot starve government into greatness,” Poe said. “We cannot address the challenges we have as a community by reducing the level of service that our customers both expect and need.”

Poe also said an upcoming renters' rights ordinance will have the most significant and positive impact on electric bills.

Earlier in the year, it was suggested that GRU and the City Hall side of government would share the $12 million deficit. GRU had refinanced its debt, adding $114 million in new debt, to make up most of the deficit.

After Wednesday’s meeting, it was clear that property owners and GRU customers will be forced to make up the difference with increases in their property taxes and utility bills.

The utility’s general manager, Ed Bielarski, asked the city to cut about $3 million from the general fund transfer — money that moves from GRU to City Hall to pay for various services. The GFT currently sits around $38 million and typically grows about 1.5% each year. GRU had initially requested commissioners lower the GFT by $6 million, instead of increasing it, so customers weren't impacted as much. In the end, commissioners kept the GFT flat, resulting in a higher electric rate increase.

Bielarski estimates the increases, for those who use 1,000 kWh, will make customer’s electric bills go up 4.25% and about 2.5% on the overall bill.

“I know for some people that’s difficult for them,” Bielarski said. “But it is something that the utility needs to maintain its fleet of assets and to keep its financial strength intact.”

In April, the utility had the third-highest residential bills and by far the highest commercial bills in the state.

GRU customers also will see increases for other utility services.

Gas rates will increase 0.57%, water 0.44% and wastewater 0.42% to make up for employee raises previously approved by the commission last month. In April, GRU had also increased its fuel adjustment charge by $3.50 per 1,000 kWh.

Commissioners also agreed to increase the fire assessment fee by up to 32% percent to make up for rising costs. The proposed increase was initially $11.

If approved in July, the city will charge $133 per fire protection unit.