City budget faces $5.6 million gap despite revenue growth

In a recent government meeting, officials outlined the financial framework for the upcoming fiscal year 2025 (FY 25), highlighting a significant reliance on property taxes, which account for approximately 52% of the general fund revenue. The board approved maintaining the current millage rate at 8.1308, projecting an increase in tax revenue of $12.6 million, contributing to a total general fund revenue of $20.6 million.

The meeting also addressed a millage reduction plan initiated in FY 23, aimed at decreasing the city's operating millage rate from 8.3465 to below 8.0 by FY 26. However, due to budgetary constraints and rising expenses, the board decided to forego the third phase of this reduction, which would have further impacted tax revenue.

Budget discussions revealed a projected increase in expenses totaling $26.2 million, primarily driven by personnel costs, which are expected to rise by $21.3 million. This creates a budget gap of $5.6 million, prompting officials to adjust discretionary operating items rather than cut departmental budgets. Notably, the vehicle replacement program funding was modified, with a shift from $5 million to $2 million in the operating budget, supplemented by one-time funding.

The draft budget, totaling approximately $263.6 million, preserves essential city services and includes funding for various community programs, such as the \"Soul in the City\" event, police bike expansion, and initiatives aimed at homelessness and community engagement. Additionally, the budget incorporates cost-of-living adjustments for employees and elected officials, alongside the introduction of new positions to support the mayor's office and enhance small business programs.

As negotiations continue, the budget remains in draft form, with officials emphasizing the importance of balancing expenses with revenues to comply with legal requirements. The meeting underscored the city's commitment to maintaining core services while navigating financial challenges and planning for future growth.