Athens-Clarke County manager outlines FY26 "Big Rocks": $9M projected revenue uptick but ~$3M shortfall and limited capital funding

County management and staff on March 25 presented a high-level preview of FY26 "Big Rocks"—major revenue and expenditure issues that will shape the mayor's budget proposal—warning of a roughly $3 million gap after accounting for recommended expenditures.

County Manager Brad (presenting the manager's proposal) said the county is estimating roughly $9,000,000 in additional revenues for FY26 compared with the prior year, an increase running at about 4.5 percent. "We had almost $40,000,000 of requests from our departments above their base budget," he said; of those additional operating requests, the manager said his recommendation was to fund a small portion. "My ultimate recommendation ... is to only recommend funding about 9.5% of that $34,000,000 of additional operating," he said.

Manager Brad told commissioners the manager-proposed expenditures and transfers out run about $3,000,000 more than projected revenues. The presentation also showed approximately $4,500,000 in new-initiative requests (the manager recommended funding roughly 10% of those) and about $26,000,000 in capital requests across roughly 104–110 individual project submittals. Staff recommended funding components of roughly 10 of those capital projects and did not fully fund most requests. To partially meet capital needs, management proposed using $2,000,000 of fund balance as part of a $7,000,000 capital funding total taken from fund balance and other sources.

The manager emphasized that some costs are essentially mandatory and narrow the county's choices: pension contribution increases, insurance and jail medical contract costs, streetlight utility costs, and other fixed obligations were listed as non-discretionary. The manager added a recently-identified line item for increased pension fund contributions, noting it reduces the apparent revenue margin: "We have added 1 line in here that was not in the presentation sent to you, and that is the increase in pension fund contributions that we just had not included," he said.

On capital and long-term maintenance, staff reported 104 individual capital requests from multiple departments, but money was recommended for only about 10 projects and not at full requested levels. Examples discussed in the presentation included facilities life-cycle maintenance, pavement and street-signal work, park maintenance, and equipment replacement. Manager Brad said that although annual line-item capital requests (for example, replacement hoses and nozzles for the fire department) are legitimate needs, funding overall is far below requests and many such items were not recommended for FY26 because revenue is limited.

Fund balance and reserves were a central focus. The manager said the county's minimum target reserve is a two-month reserve (16.7 percent). FY25 fund balance stood at about 20.4 percent; adding the manager-proposed $3,000,000 transfer to cover the gap would reduce the reserve to roughly 18.9 percent—still above the 16.7 percent minimum but close to it. The manager warned that using fund balance to close recurring gaps would be "deficit budgeting," and said fund balance is also being allocated to projects and future operating costs tied to capital projects coming on line.

The presentation noted other revenue and policy matters that will affect future budgets, including the Community Energy Fund (a locally adopted policy established in March 2020 that directs new utility-related revenue above policy limits into a designated fund for energy and low-income assistance projects) and projected incremental franchise-fee revenues (the manager estimated roughly $2,500,000 that could flow into the Community Energy Fund for FY26). Staff noted legal complexities for spending those funds on private property energy improvements and said the fund's governing policy constrains uses until the commission chooses otherwise.

Commissioners asked questions about the manager's selection of capital projects to fund, the percentage of department requests historically funded, staffing and overtime trends (the manager said overtime remains high in several public-safety departments but the staffing situation is improving), the potential impact of federal grant reductions, and whether enterprise funds could be used for some capital maintenance. Management committed to provide additional detail at upcoming work sessions, including a multi-year snapshot comparing manager recommendations and adopted budgets and more information on the base amounts behind recommended pay-table adjustments.

Ending: Staff will meet with the mayor for a detailed handoff; the mayor will prepare a budget proposal in April for commission review during May budget meetings, with adoption targeted no later than the June voting meeting.