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Finance staff presents FY2026 budget plan; warns of possible grant cuts and highlights pension funding move
Summary
Finance staff presented the proposed FY2026 budget and projected FY2025 year‑end figures, noting anticipated federal grant reductions, a planned transfer to a pension reserve fund and capital projects at risk if grants are cut.
Finance staff outlined the proposed fiscal year 2026 budget and projected year‑end fiscal 2025 results during the finance committee meeting on Monday, and highlighted a series of federal grants at risk of not arriving under the current federal budget outlook.
Finance Director Joyner and city staff provided line‑by‑line summaries: the general fund is projected to end FY2025 with about $34.06 million in revenue and expenditures below that level; the proposed FY2026 general fund budget projects roughly $32.18 million in revenue. The water fund will see a significant revenue drop in FY2026 because one‑time loan proceeds tied to the Sixteenth & Campbell project end; staff estimated the water fund year‑end revenue at about $15.7 million for FY2025 and much lower in FY2026 once loan proceeds stop.
Staff warned the council that several anticipated federal grants (including funds previously expected for the Broadway street project and CDBG sewer‑lining) are at risk following recent federal budget actions. The presentation said some previously approved funding has been pulled and that staff are working with U.S. Sen. Dick Durbin, Sen. Tammy Duckworth and Rep. Brad Schneider to pursue appropriations and clarify possible losses; staff offered to provide a project‑by‑project summary of potential grant losses.
The budget presentation also noted an ongoing effort to build a pension reserve fund. Staff said they plan to transfer funds—largely from casino revenues and home‑rule sales tax—to begin funding pension obligations in a newly created pension reserve, with a targeted multi‑year build to several million dollars. Aldermen asked for options to accelerate pension payment; staff clarified some grant proceeds and debt payments are restricted and cannot be reallocated to pensions without affecting bond or project obligations.
On capital projects, staff said the Broadway street rebuild was previously approved with a congressional allocation; that allocation was cut and the city must decide whether to reallocate other local funds or delay the project. The motor fuel tax and alley programs remain available for other street work; staff said the council will set street priorities for the coming year.
The committee moved to place the FY2026 budget on the next council agenda for a vote after two weeks of followup meetings and any requested changes.
Ending: Staff said it would supply a more detailed list of potential grant losses and meet with aldermen individually before the council vote.
