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City administrator warns of possible bankruptcy as council begins 2026 budget process
Summary
City staff presented preliminary 2026 revenue projections showing a modest increase but not enough to close a prior deficit; the city administrator said staff reductions are under consideration to stabilize finances and warned the city could face insolvency in about five years if current trends continue.
City staff presented preliminary revenue estimates for the 2026 budget and the city administrator told the council that staff reductions and other cuts will likely be needed to stabilize Aberdeen’s finances.
Tara Denver, contract CPA, walked the council through preliminary general-fund revenue projections, saying the budget projects an approximate 2.6% increase — about $557,000 — over the 2025 budget but noted a slight decrease when comparing 2025 actuals to 2026 projections. Denver cautioned that much of the higher sales-tax receipts in 2025 are tied to construction and may not reflect sustained retail growth.
The city administrator told the council that the city has historically spent more than it has brought in, has drawn down reserves, and “we will possibly look into bankruptcy in about 5 years” if corrective steps are not taken. The administrator and Denver said the proposed 2026 budget will reflect necessary cuts to move toward solvency.
Key figures summarized at the meeting: staff projected roughly $556,000 in additional general-fund revenue for 2026; the 2025 general-fund budget included an $800,000 deficit that has been covered by reserves and transfers; and 9-1-1 call volume increases will raise monthly costs to approximately $27,655 per month in 2026. Denver also noted that grant revenue is expected to increase by about $150,000 for a state-funded police officer through 2027 and that interest revenue assumptions were reduced in the projection.
Council members and staff emphasized that projected revenue increases will not cover cost-of-living adjustments or potential medical insurance increases and that the administration will return a preliminary budget and updated revenue estimates in October with any revisions. The administration said it will present full revenue estimates for all funds at the second meeting in October alongside the mayor’s preliminary budget.
