City Council reviews FY26 budget with $101B proposed increase and unfunded liabilities

In a recent meeting of the Budget and Public Employees Committee held on May 5, 2025, the City Council of St. Louis discussed the fiscal outlook for the upcoming budget year, highlighting both challenges and improvements in the city's financial health. The meeting underscored the importance of addressing unfunded liabilities and maintaining adequate reserves as the city prepares for its fiscal year 2026 budget.

A key point of discussion was the city's unfunded liabilities, which currently stand at approximately $632.6 million. This figure raises concerns about the long-term financial obligations the city faces. However, the council noted a significant improvement in the unreserved general fund balance, which has reached $153.6 million, representing 25.3% of the fiscal year 2026 budget. This is a notable increase from previous years, addressing past criticisms from rating agencies regarding insufficient reserves.

The proposed budget for fiscal year 2026 totals $101.41 billion, reflecting a 5.4% increase from the previous year. The General Fund is set at $607.4 million, a 4.6% increase, which includes adjustments for anticipated revenue shortfalls due to payroll tax refunds. Despite these challenges, the budget accommodates full-year costs for employee pay increases, including a 3% raise for general city employees and additional adjustments for police and firefighters.

The meeting also highlighted specific allocations within the budget, such as $10 million for anticipated employee pay adjustments, $2.9 million for the corrections division, and $1.9 million for juvenile detention services. Additionally, the capital budget is funded at $61.4 million, which, while smaller than in previous years, remains robust.

As the city navigates these financial complexities, the council's efforts to balance the budget amidst slowing revenue growth and potential risks from tax refunds will be crucial. The discussions from this meeting reflect a proactive approach to managing the city's finances, ensuring that St. Louis can meet its obligations while continuing to support its workforce and essential services. The committee's ongoing deliberations will be vital as they seek to finalize the budget and address any remaining uncertainties.