Provo finance staff outline FY2026 calendar, warn sales-tax pressures; debt and transfers reshaped to aid transparency

Provo finance and budget staff presented a preliminary fiscal 2026 budget calendar and revenue outlook at the council’s February work session, warning that lower sales-tax expectations will constrain discretionary spending and outlining a restructuring of some debt-service transfers to improve transparency.

Budget officer Kelsey Zarrbuck walked council members through the FY2026 schedule, flagging March 11 as the start of department budget presentations and May 6 as the tentative budget delivery and council receipt date required under state code; staff noted June 17 as the second and final public hearing and anticipated adoption date. Zarrbuck said the five-year capital-improvement plan will be sent to council by Feb. 27 to meet a March 1 city-code deadline.

John Borgett, director of administrative services, reviewed revenue composition for the general fund: sales tax remains the largest single source (about 39%), followed by franchise fees and user charges. Borgett said staff currently project slightly lower sales-tax revenues for FY2026 than the adopted FY2025 budget, in part reflecting state-level revisions to revenue forecasts. He described offsets in fee categories, including a full year of Epic Sports Park operations contributing to parks and recreation fee growth, and noted roughly $460,000 in projected property-tax increases tied in part to a reclassification of some receipts between the general fund and the debt service fund.

Dan Follett, division director of finance, led a technical review of outstanding city debt. He described the current portfolio, interest rates and final maturities, and said most outstanding interest rates are favorable relative to market. Follett and Borgett described a recommended accounting change: transferring certain property-tax receipts and vehicle-fee allocations previously routed through the city’s debt service fund into the general fund, and moving a fleet transfer so that payments are made directly from the general fund rather than routed through debt service. Borgett said the net accounting change will benefit the general fund by about $280,000 and result in a simpler, more transparent debt-service fund whose activity will largely be property-tax receipts dedicated to bonded obligations.

Staff also reviewed enterprise-fund revenue composition (energy, wastewater, water) and noted the city’s recent wastewater bond issuance that will post on next year’s debt schedule. Borgett said the city is coordinating capital and bond timing with Utah County and other partners to reduce borrowing costs where possible, and that some interim cash-management steps may be required because grant and other revenue timing differs from construction schedules.

Councilors asked for additional breakdowns: a franchise-fee detail, an enterprise-revenue split, and clarifications on vehicle fees and transfers. Staff said they would provide the requested tables and return with department presentations beginning March 11.

No formal action was taken; the presentation set deadlines and reporting expectations for the coming months.