City Manager Tash Stowe and finance staff presented the City of Evanston’s proposed fiscal 2026 budget and an accompanying five-year Capital Improvement Program to the City Council on Oct. 13, outlining measures to close a structural shortfall and a slate of major infrastructure projects.

The proposed budget totals about $342,000,000 excluding interfund operating transfers, and staff told council the general fund faces a projected 2025 year‑end deficit and a structural shortfall that will require a mix of reserves, spending reductions and a proposed property tax levy increase. “We think the general fund is projected to end with a deficit between $1,800,000 and $7,000,000,” Deputy CFO Clayton Black said during the presentation.

City staff said the budget would protect core services while responding to a sustained rise in personnel, pension and capital costs. The staff presentation singled out (a) a $700,000 increase in the city’s required annual public-safety pension contribution, (b) a recurring $2.6 million annual rent to operate the new civic center at 909 Davis, and (c) a $700,000 triennial tree‑inoculation program as among the larger new costs embedded in the general fund plan.

Why this matters: staff told council one‑time revenues tied to Northwestern University permits have temporarily bolstered reserves but will not recur, distorting the city’s fiscal picture unless the city adopts more sustainable revenue measures. “When you pull them out, you can start to see this drop off,” Black said of the Northwestern‑related revenues, calling them a factor that has “distorted our true financial picture.”

How staff would close the gap: the proposed fiscal 2026 plan uses about $9.1 million in general‑fund reserves, reallocates or cuts roughly $1.8 million in operating expenses, assumes a 4% vacancy rate across the organization and includes a $4,000,000 proposed property tax levy increase targeted mainly to parks and public‑safety pensions. Staff estimated the levy change would amount to about $269 per year for the median Evanston home on current assessments.

New funds and program changes: staff proposes creating a separate Parks and Recreation Fund to isolate programmatic operating costs and improve transparency; it would be supported by a roughly $1,000,000 property tax increase and a $5.6 million transfer from the general fund in the proposal. The human services fund would receive a levy increase to support roughly $6.6 million in programs including the mayor’s summer youth program and care‑team outreach.

Solid waste and user fees: the budget includes a change to yard‑waste and special pickup fees intended to move closer to cost recovery. Under the proposal yard‑waste and special pickup would move to a $1 per month, citywide charge that would replace the current model of two scheduled free pickups plus an on‑call paid option, staff said.

Water and sewer rates: staff said a planned 13.5% water rate increase could be deferred a year given current fund balances and capital timing; sewer and water rates can be held flat for the coming year, but staff warned further increases will be needed in later years to fund large capital projects and lead service‑line replacement.

Capital plan highlights: City Engineer Laura Biggs presented a $90.5 million CIP with major projects including corridor improvements on Chicago Avenue and Church Street (design and later construction), a multi‑year program to replace lead service lines and 3.2 miles of water main, the Lincoln Street Bridge design and future construction, replacement of aging traffic signals, and park renovations including James Park and a public canoe launch adjacent to the Ecology Center. Biggs said the city is under a legislative mandate to replace lead service lines and is targeting mitigation of about 500 lead service lines per year.

Council questions and next steps: council members pressed staff for detail on fund balances, the proposed levy allocation, the timing and risk of relying on reserves, the proposed parks accounting change, and the city’s debt issuance strategy. Council member Kelly pressed staff on solid‑waste fund balances and whether increases are needed given an apparent excess as of June 30; Black and CFO Hitesh Desai said staff will provide a memo with more detail. Staff also previewed a 0‑based budgeting report scheduled for a late‑October council briefing.

Public engagement and schedule: staff said the proposal is the first in a multiweek process and identified upcoming joint‑ward meetings, a truth‑in‑taxation hearing on Nov. 3, introduction of tax‑levy ordinances on Nov. 10 and a target levy adoption on Nov. 24. Staff asked residents to use ward meetings and posted budget memos to bring questions.

Outlook: staff characterized the 2026 proposal as an effort to begin addressing a structural imbalance rather than as a final solution; council members signaled that more public engagement and follow‑up memos will be required before final adoption.