At the Mobile City Council meeting on Tuesday, July 29, city finance staff reported that the general fund ended the month with a higher balance than at the start of the fiscal year and that revenue performance was close to budget projections. Staff also told council members the city expects to finish fiscal 2026 having fully funded the police and fire pension unfunded liability.

Finance staff (identified in meeting as Scott) presented month-end figures for the period ending June 30. The city's reserve fund balance was reported at roughly $58,000,000. The general fund operating balance on July 1 was $113,160,009.77, and the month ended with a $117,944,182 balance. Year-to-date comparisons showed total revenues slightly above budget: a year-to-date budget of $281,125,007.38 versus actual receipts of $283,766,594.

On specific revenue categories, the finance presentation showed sales-tax receipts near budgeted expectations (year-to-date budget $149,097,008.24; actual $147,422,005.72) and business-license receipts slightly above target during the year reported.

On expenditures, finance staff reported net income for the month of $4,783,205 and noted year-to-date actual expenditures were under budget in part because some capital spending that occurred in a prior fiscal year did not recur.

Council members asked about the target for the reserve balance. Finance staff said the council had set a policy reserve target of 16.66% of the general fund (about two months), while the statutory minimum requirement is substantially lower. The staff presentation said the city maintains a larger reserve to remain fiscally healthy.

Council members also asked about the police and fire pension unfunded liability. Finance staff said the draft fiscal-year-2026 budget includes a contribution of $17,000,000 to finish funding the liability and that the actuarial study is expected within roughly 45 days; the final contribution is likely to fall between $16 million and $18 million. Staff said that once that contribution is made, the pension unfunded liability will be retired and the city would no longer be required to make that legacy distribution in fiscal 2027.

Council discussion noted the city's projected revenues are expected to remain essentially flat for fiscal 2026 and that while there may be grant opportunities, recurring general-fund revenue growth is limited. Staff and council members said the expected end of legacy debt service in fiscal 2029 or 2030 should free capacity in coming years but that fiscal 2027 will present cash-flow pressure as the pension contributions conclude and other debt service overlaps.

Why this matters: The finance report frames near-term fiscal decisions for the council and administration, including decisions about one-time versus recurring spending, capital projects and potential new operating commitments. The projected payoff of the police and fire pension unfunded liability in fiscal 2026 is a significant event likely to influence budget capacity in subsequent years.