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Council hears fiscal-26 revenue scenarios; staff recommends cautious approach
Summary
Town staff presented multiple revenue and expenditure scenarios for fiscal 2026 showing possible revenue shortfalls between about $40,000 and $350,000 under downside assumptions; council asked staff for conservative planning and scheduled further review of police staffing and utility funding.
Town staff walked the Middleburg Town Council through scenarios that model changes to revenue and expenditures for fiscal year 2026, stressing both the town's strong reserves and the uncertainty created by regional and national economic shifts.
Town Manager Danny Davis said staff ran a set of revenue scenarios to test sensitivity to softer meals tax, transient-occupancy tax (TOT) and business-license receipts. He said staff's proposed budget assumes modest growth but offered alternatives: trimming projected growth by 5% or 10%, reverting to fiscal-25 budgeted amounts, or using fiscal-24 actuals as a conservative baseline. Davis summarized the possible impact: "You can see the impact on the table below. That's anywhere from a reduction of 400,000 plus to a hundred and $30,000, give or take," and, under combined downside assumptions, a potential structural shortfall ranging from about $40,000 up to just over $350,000.
On the expenditure side, staff modeled 5% and 10% increases in tariff- or inflation-sensitive line items (equipment, supplies, energy). Because salary and benefits account for nearly half the town's spending, Davis said that even a 10% increase in selected lines produces only a modest overall expenditure rise; the larger fiscal risk was falling revenues. Davis also reminded council the town currently holds robust reserves — described as about 125% of annual expenditures, roughly 15 months of operating expenses — and an additional $4 million-plus in funds, some of which are committed to projects.
Council members urged caution. Council Member Cindy Pearson and others said rising consumer prices and layoffs in the region could depress restaurant and tourism activity, softening meals and occupancy tax growth. Council Member Peter Lennon Morgan and others asked staff to prepare more-conservative revenue assumptions for upcoming budget hearings. The council directed staff to consider procurement-timing options to mitigate tariffs and to present a draft police program review and departmental budget material at the next meeting.
Staff set a schedule for continued review: the next council meeting will focus on public safety and a police program review; utility-fund and debt discussions are expected in April, including potential action on a line-of-credit term-out that must be resolved by June 30 if council pursues debt issuance.
