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Kent County faces $5.7 million FY26 gap as revenues rise modestly
Summary
County finance staff told commissioners the FY26 budget as proposed would require a $5.7 million draw from fund balance to balance, driven by salary, benefit and mandated cost increases despite projected revenue growth largely from property tax and utilities.
Finance staff presented a preliminary FY26 general fund budget showing total revenue growth of about $2.35 million (3.6%) but proposed expenditures that exceed revenues by roughly $5.7 million, which would require drawing that amount from fund balance.
The presentation said property tax collections are the largest single source of the revenue increase: staff described a projected increase of about $1.76 million from property tax and noted public-utilities personal property tax and other allocations push the total property-related gain to around $2.2 million. Income tax growth of roughly 2.3% statewide was used to project an additional roughly $0.5 million for the county. Recordation and transfer taxes were described as leveling off compared with recent years.
On the expenditure side, staff attributed the larger increase (about $4.5 million) mostly to new state mandates, salary and benefit changes, and department operating and capital requests. New state responsibilities mentioned included increased local shares of teacher retirement, costs for the property tax assessment office and community college retirement obligations, together estimated at about $438,000. Kent County Public Schools’ “minimum local appropriation” in the current draft is budgeted to rise by about $1.815 million from last year’s minimum; staff noted the Board of Education had not yet submitted a full request and the county had included only the required minimum for now.
Staff also told commissioners that the FY25 ending fund balance is projected to be just under $23 million, above the county’s 7.5% target (about $4.7 million). Using that beginning balance, the FY26 draft budget would require roughly $5.7 million of fund balance, leaving a balance well above the 7.5% target. Finance staff emphasized that the county’s strong fund balance is intended primarily for one-time projects (examples cited: a planned middle school project, regional jail, and emergency dispatch/9-1-1-related costs) and said it should not be used to fund recurring operating costs.
Commissioners and staff flagged next steps: department presentations would continue in the workshop, and staff said they will work to reduce the $5.7 million gap. The finance presenter asked commissioners for questions and noted some line-item uncertainties — for example, lease proceeds with Enterprise had not been finalized and would offset similar lease expenses when settled.
Ending
Staff characterized the budget as a starting point and asked commissioners to focus on balancing one-time and recurring uses of fund balance as they review departmental requests. They also flagged several large upcoming one-time needs that could appropriately use reserves.
