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Opelika budgeters warn CIP funding will shrink after FY26 as surplus is spent
Summary
City staff told commissioners the city has used much of its accumulated fund balance to pay for capital projects and ARPA-funded work; unless the commission changes the operating‑vs‑CIP mix or finds new revenue the CIP will shrink sharply in FY27.
City of Opelika finance staff told commissioners at a July 15 FY26 budget workshop that the city has relied on accumulated surplus fund balance for capital projects and is running low on that one‑time resource, meaning the capital improvement program (CIP) will likely shrink unless the commission changes priorities or increases revenue. Bob, the staff presenter, said the city faces a roughly $21 million investment program across FY25–FY26 and has used surplus fund balance to cover CIP without raising operating revenues. “Because we’ve had the luxury of having a lot of excess fund balance … we’ve pretty well used up the surplus, fund balance,” Bob said. That, he cautioned, means “in FY27 your CIP is gonna go down to maybe $1 or $2,000,000 because we’ve used up all the surplus fund balance.”
Why it matters: commissioners were asked to consider the trade‑off between funding ongoing operating costs and maintaining the city’s multi‑year CIP. Bob described three levers for preserving CIP: growing revenue, reducing operating expense, or choosing not to do some CIP projects. City staff pointed out that maintaining a two‑to‑three months operating reserve is a best practice; the manager and Bob said the city is at roughly that two‑to‑three month level and should avoid going below it except in major emergencies. The presentation also itemized FY26 CIP funding sources including ARPA and federal/state grants; staff noted some ARPA projects must be spent by December 2026.
Key projects and constraints: Adelina Gross, CIP division manager, summarized major FY26 projects expected to be completed or advanced with ARPA and grant funding: Burlington Canal (phase 3), multiple pump station rehabilitations (including Pump Station 4 and Pump Station 9), Norwest/130th sewer work, downtown sewer mainlining (approximate $300,000 estimate), sidewalks prioritized from a citywide study, a $500,000 USDA Urban and Community Forestry grant (three‑year planting/maintenance), railroad crossing work (city share about $254,000 on a $3 million project), and a proposed $250,000 street‑safety study tied to a possible $2.5 million federal grant application. Gross said Burlington Canal phase 3 is one of the most expensive items and pump station work will proceed once RFPs and easement issues are resolved. Several projects rely on outside grants and federal/state match funding.
Discussion and next steps: Commissioners pressed staff on prioritization and asked the manager to direct the newly procured lobbyist and the grant writer to pursue state and federal funding for key IT and infrastructure projects. Bob agreed staff will pursue competitive grant and lobbying opportunities and said staff will bring to the commission an explicit recommendation on the mix of operating vs. CIP spending for FY27. No formal action or appropriation occurred at the workshop; staff said the CIP funding picture will be revisited in the next budget cycle and during upcoming commission briefings.
Ending: Staff advised the commission to decide whether to reduce operating growth, increase revenues, or accept smaller future CIP allocations; commissioners asked for follow‑up briefings showing prioritized projects and potential outside funding sources.
