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Finance staff outlines 2026 budget challenges; council asks for comparative scenarios
Summary
City finance staff presented early budget context for 2026, citing rising construction and personnel costs, a $380,000 pension increase and a 6% rise in health-care expenses; council asked staff for concrete examples, tax-rate scenarios, and peer revenue comparisons.
Batavia finance staff presented an early overview of the 2026 budget environment at the Committee of the Whole meeting Sept. 9 and briefed council members on structural pressures including inflation-driven construction costs, rising pension and health-care obligations, and limited staffing capacity.
Betsy, a city staff member leading the presentation, said, “A municipal budget is required to be balanced. We can't operate at a deficit.” She described the budget as a plan and financial-management document that reflects council priorities and legal constraints.
Why it matters: Betsy told the committee that rising construction costs—estimated at roughly 8% per year—and higher interest rates increase the cost of capital projects. The city's pension obligation will rise by about $380,000 this year, and health-care costs are projected to grow by 6%.
Key figures and context presented: staff reported a general-fund reserve of $22,356,117 (about 232 days of operating reserves) and noted the electric utility reserve is roughly $17 million but tied to multi-year capital plans. Staff said the pavements program is behind: the city would need to resurface roughly 100,000 square yards per year to maintain a 20-year cycle; the city has fallen short in recent years and expects deferred maintenance to raise costs in future years. A budget-history slide illustrated that past years have sometimes closed with a surplus because planned projects were not executed, not because operations cost less.
Council direction and requests: Council members asked for more concrete examples of what cuts or investments would look like, comparisons showing the effect of a 5¢ or 10¢ change in the tax rate, and peer-city revenue profiles. Councilmember Abby asked staff to show how differences in taxable EAV, retail and industrial tax bases, and property values affect effective tax rates in neighboring cities. Staff agreed to email the presentation and said it would prepare comparative scenarios and concrete lists of projects that could be delayed or prioritized.
Budget choices outlined: Betsy framed the options as pursuing new revenues (to fund staffing, capital and grants match obligations) versus austerity/cuts, noting that about 75% of city expenditures are people-related and that operating reserves should be used for emergencies or one-time investments, not recurring costs.
Ending: Staff said it will provide the council with additional materials before the Sept. 20 retreat including scenario comparisons (tax-rate impacts) and concrete examples of deferred projects and project-by-project cost implications. Council members also asked for periodic updates on facility-needs findings and staffing implications.
