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Springfield adopts 2026 tax budget after finance staff warns of income-tax shortfall
Summary
City commissioners adopted the 2026 tax budget after a staff presentation that said income tax—the general fundbackbone—has flattened, one-time federal relief is exhausted, and projected 2026 expenditures were reduced to avoid an estimated $4.7 million deficit.
Springfield City Commission voted to adopt the city's 2026 tax budget after a staff presentation that warned the general fund faces a near-term revenue shortfall and that "income tax revenue, which is the backbone of our general fund, has flattened." The ordinance adopting the tax budget passed unanimously on a roll call vote.
Staff told commissioners the city relied on about $5,000,000 in American Rescue Plan Act dollars to balance the 2025 general fund and that those one-time federal relief dollars are now exhausted. "For 2025, we relied on more than $5,000,000 in American Rescue Plan Act funds to balance the general fund budget," the staff presentation said.
The presentation said income-tax growth slowed sharply after a post-pandemic rebound: the city saw a combined gain of about $9.2 million from 2021 to 2022, and only about $3.0 million in growth from 2023 through mid-2025. Staff recommended a cautious 2.5% income-tax projection for 2026 and said the city is transitioning collection to the Regional Income Tax Agency (RETA) to improve compliance.
City staff described steps already taken and additional reductions under consideration. They said more than $3,000,000 in cuts have been made to the 2025 budget and that, without the reductions, 2026 expenditures would have left a projected $4,700,000 deficit. The tax budget reduces projected general fund expenditures from about $63,400,000 to $58,900,000 and lists a general fund projection of $58,683,783 for 2026.
Commissioner Rob Estrop praised the early warning: "we've got to increase revenue or we gotta decrease expenditures or we gotta do a little of both," and thanked staff for bringing the issue forward sooner rather than later so the commission could act in time.
The ordinance adopting the tax budget was presented as an emergency measure and approved by unanimous roll call. Staff said the commission will receive the city manager's preliminary expenditure budget by the November 1 charter deadline and return in November and December for public meetings and the appropriation ordinance that sets final spending.
The budget presentation and the commission's vote did not adopt an expenditure appropriation; the tax budget is a revenue document that sets the ceiling for next year's appropriations. Staff emphasized the plan to preserve core services while continuing to identify efficiencies.
Funding details and fiscal context cited in the presentation included: the special police levy (3 mills) generating roughly $3,000,000; police and fire pension at 0.6 mills; conservancy district at 0.4 mills; and income tax constituting about 80.83% of general fund revenue in the 2026 projection. Staff also noted timing effects from the RETA transition that will affect how December receipts are recorded in cash-basis accounting.
