Franklin mayor, finance staff flag tight 2026 budget and narrow levy limits; preliminary numbers show roughly $480,000 in new levy capacity

The mayor and city finance staff told the Franklin City Finance Committee that preliminary property-value corrections and net new construction will raise the city's allowable levy only modestly for the 2026 budget, leaving about $480,000 in additional tax revenue to divide among departments, the library and capital projects.

Danielle (finance staff) said the assessor initially reported about $94 million–$95 million in net new construction, equal to roughly a 1.46% increase in the levy limit and about a $300,000 increase in levy capacity, but Department of Revenue corrections raised the figure. "With the adjustment from the Department of Revenue it'll be a 1 time adjustment for 2025's levy limit worksheet," Danielle said, describing a corrected net new construction rate that raised the city's net-new-construction percentage to about 2.07 percent and the city's maximum levy to about $24.2 million. Danielle cautioned the numbers are preliminary and could change after equalized values and board of review adjustments are final.

The nut graf: the modest increase in levy capacity comes as the city faces rising personnel and benefit costs and limited other revenue increases, forcing council members and staff to prioritize spending or consider fee changes, shared services, or a referendum for additional operational revenue.

Committee discussion detailed how levy limits work and why the increase is limited. "The levy limit is the amount of tax revenue that we can now collect from residents," Danielle said. She explained the statutory calculation starts from the prior year's levy, adds net new construction, and allows additional debt-service levy up to anticipated principal and interest. Using the packet worksheet, staff showed an adjusted starting levy near $23.3 million, with net new construction and debt-service adjustments producing the preliminary $24.2 million maximum in one scenario. Danielle added that with the Department of Revenue correction, the working estimate for additional levy capacity is about $480,000.

Committee members asked how that additional levy would be allocated. The mayor said the goal is to "provide excellent fire, DPW, police" and to "make sure we are not losing anybody because of that," but acknowledged the group has not decided how to allocate the new revenue. "How we're gonna solve them? No idea," the mayor said, summarizing the urgency of starting the budget conversation early.

Staff identified likely pressures: health-insurance cost increases, contract negotiations with the police department, committed increases for fire, and possible pay adjustments for nonrepresented employees. Danielle provided an example: a hypothetical 4% increase for police and 3% for fire would significantly increase the 2026 budget obligations; she said labor is a large and growing portion of the city's cost base.

Revenue-side options discussed included revising the fee schedule (building permits, rental permits, impact fees), increasing certain user fees where lawful, and pursuing grant opportunities. Committee members asked about water and stormwater billing changes; staff said the Board of Water Commissioners and the state Public Service Commission set and approve water rates, so those revenues are controlled outside the council's direct levy authority.

Committee direction: members asked staff to return monthly budget updates. Danielle agreed to provide regular updates and more finalized numbers when equalized values and board-of-review results are available in coming weeks.

Ending: staff emphasized the preliminary nature of the numbers and that the Finance Committee will continue monthly review as the 2026 budget is developed. Final levy capacity and specific budget decisions will need to wait for the Department of Revenue's finalized equalized values and the council's subsequent budget choices.