City Council Budget Work Session – March 11, 2025

City Council Begins FY26 Budget Discussions: A Look Ahead

On March 11, 2025, the City Council convened for the first of three work sessions dedicated to crafting the budget for the upcoming fiscal year (FY26). Led by City Manager Deborah Campbell, this session provided an overview of the current fiscal year's challenges and a preliminary look at potential budget hurdles for FY26, aiming to gather initial direction from the Council. The meeting was attended by key staff members including Finance Director Tony McDowell and Budget Manager Lindsay Spangler, and incorporated feedback gathered from recent community engagement efforts.

A significant portion of the discussion centered on the current fiscal year (FY25) and its unexpected challenges, largely stemming from the impact of Hurricane Helene. While a state cash flow loan has been secured to navigate these immediate difficulties, the Council acknowledged that FY26 presents its own set of potential revenue shortfalls. Staff presented early projections indicating a need for a "flat" budget, meaning no significant increases in spending, despite unavoidable cost escalations. While there was positive news regarding the Harrah's Enterprise Fund – event revenue losses were significantly lower than initially feared – uncertainty remains regarding sales tax revenues. The Council also discussed the ongoing implementation of a three-year phased approach to water rate adjustments, designed to ensure financial stability for the city’s water system and address inequities in rates.

Community input played a vital role in shaping the discussion. Results from a recent community survey were presented, revealing residents' top priorities: strengthening infrastructure, addressing housing needs, supporting economic recovery, ensuring food security, and promoting sustainability. Earlier public comments from a February 25th hearing echoed these sentiments, with residents advocating for climate action, a living wage for city employees, and expanded transit services. The Council emphasized the importance of aligning budget decisions with these community priorities while maintaining essential services and maximizing value for residents. A proposal to introduce a new fee for groups utilizing the renovated Memorial Stadium track was also presented, sparking initial discussion.

While no formal votes were taken during this work session, the Council provided valuable direction to staff. Members generally supported a cautious approach focused on identifying cost-saving measures and continuing with the planned water rate adjustments. A key priority emerged: maintaining a healthy fund balance, aiming for a minimum of 15%, to safeguard the city's financial stability and maintain a strong credit rating. Council members repeatedly stressed the need for transparency with the community throughout this process, acknowledging that difficult decisions will likely be necessary.

Looking ahead, City staff has several key action items to address before the next work session on April 8th. They will be developing and presenting compensation scenarios for employee adjustments, providing more detailed information on the OPEB (Other Post-Employment Benefits) trust fund and potential impacts of cost-saving measures on service delivery, and bringing forward fee adjustments for Council approval. The April 8th meeting will also focus on capital planning and further refine revenue projections as more data becomes available. Residents are encouraged to stay informed about the budget process and provide feedback as decisions move forward, ensuring that the final FY26 budget reflects the needs and priorities of our community.