Springfield officials warn $24 million shortfall and federal funding uncertainty could reshape FY26 budget

Mayor (unnamed) opened a series of budget hearings by telling department heads and council members the city is aiming to balance an FY26 budget without drawing on reserves and highlighted a $24,000,000 gap that city staff are working to close. "At this point right now, we have a $24,000,000 gap in our budget," CFO Kathy Bunnell said during the hearing.

Why it matters: The mayor and finance staff told the hearing that Springfield has maintained balanced city budgets for 10 consecutive years and built cumulative reserves but warned that changes in federal funding could threaten local revenue streams that support direct services to residents and schools.

City finance officials described the budget as a near $1,000,000,000 enterprise split among city operations and schools. The mayor said the city has built a roughly $71,000,000 reserve on the municipal side and expects the city operating budget to be "a little bit south of $400,000,000" for the municipal portion. Bunnell told the hearing the FY26 proposal is a "level of service" budget with conservative revenue estimates and that departments have been asked to model a 3% reduction in non-personnel spending so leaders can evaluate the effect on services before deciding where to cut.

Officials repeatedly flagged federal and state funding risks. The mayor said Springfield receives about $55,000,000 in federal funds for direct city services and that the school system receives about $75,000,000, with Title I accounting for roughly $26,000,000 of that. "If we were to lose that funding," the mayor said, "CDBG is a lifeline to urban mayors, HUD, housing, you know, you have the youth development, business development, housing development, homelessness, health and human services, elder affairs." The mayor added that state receipts are linked to federal funding and urged caution in forecasting.

CFO Bunnell said city staff have not yet implemented the 3% department-level cuts and are taking department responses to those reductions into account as they refine the $24,000,000 gap figure. Finance chair Councilor Tim Allen encouraged councilors to attend hearings and follow up so the council can do its due diligence before voting on a final budget, which the chair said the council expects to take up in June.

Officials emphasized process and next steps: once the administration finalizes the proposal, the city will publish what the budget buys and turn it over to the City Council for hearings and review. The mayor said the administration’s goal remains to present a balanced FY26 budget "without the use of reserves."