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Provo budget office outlines FY26 calendar and early revenue outlook; sales tax growth lags
Summary
Budget staff told the council the FY26 calendar is on track but warned sales tax projections are lower than last year, showing pressure on general fund revenues; staff outlined changes to transfers, proposed debt service fund accounting shifts and enterprise fund revenue composition.
Kelsey Zarrbuck, Provo Budget Officer, presented the Fiscal Year 2026 budget calendar to the City Council and said key deliverables are on schedule, including delivery of the five‑year Capital Improvement Plan by the March 1 city‑code deadline and department budget presentations beginning March 11.
John Borgett, Director of Administrative Services, gave preliminary revenue projections and said the city’s general fund remains heavily dependent on sales tax (about 39%). He told the council that early estimates show sales tax revenue budgeted slightly lower for FY26 than FY25, reflecting softer statewide sales tax collections and uncertainty around state economic projections.
Borgett highlighted two revenue offsets under discussion: higher fee revenue driven by full‑year operation of the Epic Sports Park and an expected $460,000 increase in property tax line items that largely reflects accounting shifts tied to the debt service fund reclassification. He explained the administration’s recommendation to simplify accounting by shifting certain property tax and vehicle fee transfers from the debt service fund into the general fund; the change aims to make the debt service fund’s purpose narrowly about servicing debt on bonds and to improve transparency. The recommended accounting changes, Borgett said, would net roughly $280,000 in additional general fund revenue compared with prior practice.
City finance staff said enterprise funds account for the largest share of citywide revenues (about 55%), with Energy comprising roughly 53% of enterprise receipts. Staff advised the council that enterprise revenues are up in the FY26 draft and that capital timing will affect the capital improvement fund line.
Dan Follett, Division Director of Finance, reviewed outstanding city debt, including principal balances, annual debt service and call dates. He noted some historically favorable interest rates on existing issues and said the city had issued $29 million of wastewater bonds since June 30, 2024. Follett told the council there is no current plan to refund any outstanding debt because existing rates on many issues remain attractive relative to market rates.
Zarrbuck highlighted important calendar dates: the tentative FY26 budget will be presented to the council on May 6 for distribution and tentative adoption that night; public hearings and final adoption are scheduled for June, with the final hearing and budget adoption on June 17 unless truth‑in‑taxation procedures apply.
Ending: Councilors asked for additional breakdowns — staff agreed to provide a franchise‑fee composition and a line‑by‑line enterprise revenue breakdown. Finance staff recommended the council treat these early projections as preliminary and said recommended accounting changes and transfer revisions will return for formal action as needed.
