Elgin adopts FY2026 budget, raises tax rate amid $1.3 million EMS shortfall; council approves 4% COLA for police step plan

Elgin City Council on Sept. 16 approved the city's fiscal year 2026 budget and set a property tax rate intended to cover an estimated $1.3 million shortfall tied to emergency medical services (EMS) funding, while also voting to add a 4% cost-of-living adjustment for sworn police staff on the department's step pay plan. The budget ordinance covers the fiscal year Oct. 1, 2025'Sept. 30, 2026; council then adopted an ordinance levying a total tax rate of 0.619296 per $100 valuation.

The vote to ratify the property-tax increase reflected in the proposed budget passed after public council discussion; the motion to add the 4% COLA specifically for police step-plan staff was moved and approved as an amendment before final approval of the budget ordinance. Finance and city staff told council that the budget as proposed assumes a 4% property-tax projection and a 7% sales-tax projection, funds the city's 180 existing positions with no new positions, and uses fund balance for one-time items such as a compensation-and-benefits study.

Why it matters: City staff told council the higher tax rate was necessary to avoid using general-fund reserves to pay recurring costs if the city must provide EMS services that otherwise might be borne by an Emergency Services District (ESD). Council members were sharply split on whether to set the tax at the maximum level presented; proponents said the rate preserves services and builds reserves, opponents said it risks overtaxing residents.

City staff and presenters explained the $1.3 million shortfall largely reflects the city's potential obligation to finance EMS services if voters or intergovernmental steps do not move the cost to an ESD. The city manager and finance staff told council that keeping the tax rate at the proposed level would position the city to cover that liability without depleting the general fund; staff said keeping the current rate would cover roughly 56% of the shortfall and leave about a $600,000 gap.

Police pay discussion and COLA amendment: Council reviewed a police step pay plan that was revised earlier in 2025 and that includes anniversary-step increases ranging from roughly 3% to 5%. City staff said continuing the step program for fiscal 2026 would cost about $61,386 and that a separate proposal to increase COLA impact on step-plan employees would cost about $88,903 and was not included in the initial draft. Council moved and approved an amendment to add the 4% COLA for police staff on the step plan; that motion passed by recorded roll call.

Tax rate and next steps: Council approved the ordinance levying the tax at 0.619296 per $100 valuation, composed of a maintenance-and-operations component of 0.501934 and an interest-and-sinking component of 0.117362. City staff noted ESD collections, if approved by voters, would not start to generate material revenue until the 2027 collection cycle; staff said any midyear adjustments could be considered based on actual revenue collection and ESD outcomes.

Budget safeguards: Staff emphasized the principle that ongoing expenses should be supported by ongoing revenue and that fund balance should be used for one-time items. The council instructed staff to monitor revenues, consider a midyear budget review, and return with updates as collections and the ESD timetable become clear.

Council votes and formal actions recorded in the meeting minutes were used for these outcomes.