City finance staff presented the city manager’s proposed fiscal year 2026 budget in a brief overview at the Aug. 4 council meeting. Matthew Liu, Director of Finance, said the proposed budget shows approximately $558 million in total revenue, $539 million in operating expenses, and $59 million allocated to capital projects for total proposed expenditures near $598 million.

Nut graf: The introduction defined priorities and pressures — utilities drive much of the fee revenue, personnel and services are the largest cost drivers, and the General Fund shows a planned $3.5 million deficit that council will need to address during the public hearing and budget adoption process beginning later in August.

Key points presented included: fees and service charges make up a large share of revenue, with utilities accounting for 82% of that category; personnel costs are forecast to increase about 5.9% (roughly $10 million) including new positions and pay adjustments and a 10% (~$1.6M) rise in employee medical benefits; capital increased about 18% in the proposed budget; and the General Fund projects roughly $133.0 million in revenue against $136.5 million in expenses for a budgeted deficit of about $3.5 million, which staff warned is not sustainable without addressing ongoing spending.

Staff also noted Water & Light and transportation funds are separate enterprise funds that account for a large share of city expenditures. Water and Light intends to propose utility rate adjustments for both water and electric to address operating and capital needs. Liu walked the council through sales and use tax history, transfers, and the department breakdown with police and fire combining for 48% of General Fund spending. He flagged fleet replacement costs driving higher transfers and pointed to the proposed investments for public safety, including equipment contracts and positions.

Councilmembers were told the budget introduction is the start of the formal public hearing process. Finance staff said the first public hearings start at the council’s second meeting in August, and the city will host town halls on Aug. 11 (lunch and evening sessions) with registration on BeHeard.como.gov and the finance page. Staff also provided the requested decision item detail and distributed slide materials to council.

Ending: The introduction frames a budget cycle with clear trade‑offs between maintaining service levels and managing General Fund pressures; council will review details and hold public hearings and town halls in August as part of the formal adoption process.