Columbia officials warn of fiscal 2026 shortfall; council weighs tax options and priorities

Columbia — City finance staff told the Columbia City Council on during a March work session that the city is projected to face a general-fund revenue shortfall beginning in fiscal 2026 and presented a menu of revenue options and priorities for council consideration.

Matthew Lu, director of finance, opened the presentation by saying the staff would “present just basically facts” about the city’s revenue outlook and possible policy choices. He and colleagues described a near-term flat to slow-growth picture for sales tax, steady but small growth for property tax, and several emerging risks to revenues.

The nut of the presentation: using updated first-quarter receipts, finance staff said fiscal 2025 revenue is tracking close to budget but the city’s current projections show a gap beginning in fiscal 2026, driven largely by inflation-driven increases in personnel costs and only modest growth assumptions for major tax streams. “As you can see in ’26 … we will see a shortfall in revenue beginning in ’26,” Lu said.

Why it matters: the general fund supports core city services and salaries. Staff emphasized that options to cover a large revenue shortfall would include service cuts or layoffs if revenue is not replaced, and they presented a range of voter-approved tax mechanisms and other revenue tools the council could consider.

What staff told council

- Sales tax: Staff presented an updated sales-and-use-tax forecast that reflects a recent quarter-over-quarter…