City budget staff told the Columbia City Council on Monday that the general fund budget for fiscal year 2026 is roughly $3.5 million more than projected revenues and that most of the growth in expenditures stems from personnel costs tied to an earlier class-and-comp compensation overhaul.

Council members heard that staffing levels have recovered since the pay adjustments and that the city now has "very little vacancies" in the general fund compared with 2023, but that full staffing produces a cost the city must carry. "We went from worrying about positions that were vacant ... to basically, looking at full staff," Matt Lou, a staff presenter, said during the work session.

Why it matters: the general fund pays for core city services — police, fire, municipal courts and other public safety and administrative operations. Rising personnel costs therefore affect most city functions and limit the budget flexibility available for one-time projects or new programs.

Budget context and reserves
Staff said the city previously carried a substantially larger reserve balance: when one budget director arrived the fund balance was "about $50 million above the required reserve," Lou said. Since then, staff said they have tightened budget projections and used excess reserves for one-time investments, including a $5 million vehicle purchase and other capital items. For FY26, staff said they expect to use some of the amount above the target reserve to balance the proposed budget.

Revenue and expenditure trends
Lou presented a multi-year view showing a roughly 19% increase in general fund revenue from fiscal 2023 to the proposed FY26 and a 29% increase in expenditures over the same period, driven in part by the class-and-comp recognition that added roughly $10 million in general fund personnel expense.

Sales and use tax remain the largest single revenue source for the general fund, representing about 25% of revenue and roughly 30% when use tax is combined with sales tax per staff presentation. Staff described use tax and select other taxes as unpredictable in timing and magnitude, which complicates short-term forecasting.

Council questions and staff responses
Council members pressed staff on the efficacy of the class-and-comp investment, vacancy reduction, and the revenue assumptions used in the FY26 forecast. "It'd be good to kinda know what have been the trade offs ... was the investment working?" a council member asked; Lou replied that vacancy rates have declined and that came earlier than expected, producing an earlier-than-anticipated price tag for personnel.

Staff said the FY25 shortfall in the general fund was "a little under a million dollars" and that the FY26 proposed budget is about $3.5 million over projected revenues. Staff recommended using reserves and, where needed, bringing amendments during the year to match budgets to spending needs.

Next steps
Staff said the presentation is the first of three budget work sessions and that council will see further slides and examples on Saturday, including department-level savings and graphical breakdowns of changes year over year. The staff also said they plan to present a proposed budget document to the council after the Saturday work session and ahead of the official first reading in August.