Inflation in South Florida is at an all-time high averaging 9%. And, in some categories such as insurance that affect an association’s budget, much higher. Associations will not be able to rely on “standard” budget raises and expect to be able to pay their bills and be properly reserved in 2023.
Every board should start their budget process earlier than normal. Do not fall into the trap of saying inflation is x% therefore the budget will go up x%. This year, more than ever you will need to go line by line. Some lines may not change at all, but some such as insurance may be up 20% or more. When going to do your budget this year, it is important to over-estimate, don’t underestimate the costs for certain budget categories.Most affected budget categories for associations:
It is also important for the board to recognize that security, property management and landscaping are not commodities; they are personnel businesses. If your board isn’t prepared to pay the going rate to acquire and retain good employees, then your association will likely have high turnover and the worst employees.
We recently held a webinar to discuss inflation and its affect on association budgets. This webinar can be viewed here.
The inflation storm is going to make this budget season extremely tough. Having a plan and communicating early with residents through newsletters, emails and a townhall budget meeting is a good way to prepare everyone for increases.
Holding a townhall budget meeting via Zoom is a great way to educate residents on what’s coming. You can include experts at your meetings to explain why certain categories have gone up so much. For more information on holding virtual meetings for your association, click here.
Throughout the remainder of 2022, we will have a blog post each month discussing this inflation storm and offer tips for your association to ride it out.