| Year | Total Revenue | Total Expenditure | Surplus/(Deficit) | % Change in Fund Balance |
|---|---|---|---|---|
| 2025 | $203.26M | $216.67M | ($13.41M) | -18.2% |
| 2026 | $180.46M | $186.13M | ($5.67M) | -9.4% |
- Deficits in both years mean that reserves (fund balance) are being used to cover some expenditures.
- The city’s fund balance declines by $13.41 million in 2025 and $5.67 million in 2026, meaning it is spending more than it is collecting.
General Fund Analysis
The General Fund, which pays for core services like police, fire, parks, and city operations, is also running a deficit:
| Year | Beginning Balance | Revenue | Expenditures | Ending Balance | % Change Balance |
|---|---|---|---|---|---|
| 2024 | $22.44M | $63.42M | $65.28M | $14.73M | -12.6% |
| 2025 | $14.73M | $63.42M | $65.28M | $12.87M | -12.6% |
| 2026 | $12.87M | $62.13M | $65.99M | $9.00M | -30.1% |
| 2027 (Projected) | $9.00M | $61.50M | $67.50M | $3.00M% | -66.6% |
| 2028 (Projected) | $3M | $60.50M | $69.00M | -$5.50M | Insolvent |
- The General Fund is depleting its reserves each year.
- A 30.1% drop in reserves by 2026 is concerning and may require budget adjustments.
Key Revenue and Expense Trends
| Revenue Source | Estimated Share (%) | Description |
|---|---|---|
| Sales Tax | 35 – 40% | Primary revenue from retail, restaurant, and business sales. |
| Property Tax (Excise) | 25 – 30% | Real Estate Excise Tax (Sales) |
| Utility Taxes | 15 – 20% | Taxes on electricity, gas, water, telecom and garbage |
| Business Licenses & Permits | 5 – 7 % | Fees from businesses, construction permit and zoning |
| Charges for Services | 5% | Fees for city programs, parks, recreation and public safety |
| Fines & Penalties | 2 – 4% | Court fines, traffic tickets, and code enforcement. |
| Intergovernmental Revenue | 5% | State-shared revenues, grants, and federal/state aid. |
| Other Revenue | 2 – 3% | Miscellaneous sources (investment interest, rentals etc.,). |
- Sales Tax is declining: 30% of general fund revenue comes from sales tax. Down 4% year-over-year, projected growth of only 3% annually.
- Real Estate Excise Tax (REET) dropped 30-40%: Due to a slowdown in home sales, impacting infrastructure funding.
- Property Tax growth is capped at 1%: While property values have risen 6-13% per year, revenue can only grow at 1%, causing a budget squeeze.
Rising Expenses
- Public Safety:
- $4.5 million in jail costs (up $2.3M).
- $250,000 annual increase in police body camera contracts.
- Adding 4 new police officers and a lieutenant.
- Debt Service:
- $5.8 million for the new Maintenance & Operations (M&O) Facility.
- Infrastructure & Maintenance:
- $53 million for the new M&O Facility.
- Ongoing street repairs & parks maintenance.
- Inflation & Staffing Costs:
- Employee wages and benefits are rising.
- Healthcare premiums increased by $484,000 per year.
Will This Cause a Budget Crisis?
- The city has enough reserves for now, but continuing deficits could lead to financial instability.
- If revenues do not increase, potential actions include:
- Reducing expenses (cutting programs, delaying infrastructure projects).
- Increasing taxes (e.g., a potential property tax levy increase).
- Seeking more external funding (grants, state/federal aid).
Conclusion
The 2025-2026 budget relies on reserves to balance expenses, which is not sustainable long-term. Without increased revenues or spending cuts, the city will face financial strain beyond 2026.