Clarksville releases FY‑26 budget proposal, officials cite $0.15 tax‑rate increase to close shortfall

Lori Mata, former city chief financial officer, presented the Clarksville City Council with a draft fiscal year 2026 budget at a June 12 work session, outlining a citywide budget of about $950,200,000 across all funds and a proposed 15‑cent increase in the property tax rate to close an estimated shortfall.

Mata said the city’s general fund revenue is projected at $169,300,000 and general‑fund expenditures at $170,100,000, with general‑fund departmental spending at about $145,000,000 and $25,100,000 budgeted for transfers and other entity funding. She described the city’s fund‑balance policy as a target of 20% of general‑fund expenditures (about $34,000,000) and said that, after a set of FY‑25 adjustments, the projected ending fund balance would increase by nearly $4,200,000.

The nut of the presentation, Mata said, was that without a tax‑rate increase projected revenues would total roughly $162,400,000 and leave a nearly $8,000,000 shortfall. “A tax rate increase is always the mayor and my last resort,” Mata said, adding that an 88‑cent rate “is not sustainable for a community our size.” Councilman Smith later described the resulting rate as rising to about $1.03 per $100 of assessed value if the 15‑cent increase is adopted.

Mata reviewed how the budget was prepared: departments submitted requests in April, the five‑year capital improvement plan began in mid‑February and will be considered at the June 17 meeting, and the budget summary was published in the local newspaper on June 5 as required by state law and the city charter. She noted the council must pass a budget by June 30 to maintain normal operations and that the ordinance and capital projects would be on the June 24 reading and vote calendar.

Mata described several FY‑25 amendments and FY‑26 assumptions: an updated beginning fund balance following the external audit (an increase of nearly $2,100,000), revenue reductions in licenses and permits tied to lower building‑permit receipts, and lower investment income. She said general‑fund departments’ budgets decreased about $2,300,000 in FY‑25 largely because of unfilled positions and turnover, and that the city increased transfers to the ACT authority (hotel‑motel tax) after higher collections than projected.

On benefits and pay, Mata said the budget includes a 2.5% general wage increase for all non‑probationary employees who meet expectations, effective June 28, and that the city will increase its contribution for health and pharmacy coverage by 10% starting in July, bringing the city’s per‑employee monthly contribution to $117. The employee share of health insurance will increase 5% effective Jan. 1, 2026, a change Mata said would amount to roughly $2–$12 per month for covered employees depending on plan selection. She also said the city will absorb the full on‑site clinic cost and remove a prior $5 usage fee; the clinic fee will increase $10 a month but not be passed to employees.

Mata said the general fund will use a portion of the fund balance for one‑time expenses (vehicle replacement and other capital items) but that ongoing expenses should not rely on reserves. She summarized debt and capital plans: general government debt is about $158,100,000, enterprise debt totals about $528,800,000, and the FY‑26 budget includes $30,900,000 of new debt for previously authorized but unissued projects. The citywide budget amount presented, she said, includes enterprise and governmental funds and several internal service funds.

Council members asked clarifying questions. Councilman McLaughlin asked whether FY‑25 actuals would be updated before the vote; Mata said the June close would not be finalized until about July 10, after the scheduled vote. Councilman Zacharias asked whether proceeds from the hotel‑motel tax (set at 2.75%) would cover ACT authority obligations; Mata said the 2.75% rate is producing more revenue than originally budgeted but “is not going to bring enough to cover the debt service to build the performing arts center” and that the ACT authority will need fundraising to fill the gap.

Mata emphasized the certified tax‑rate process and assessment appeals reduce the city’s ability to capture growth in property tax receipts and said that, in past cycles, appeals have reduced expected revenue “by over a million dollars” during certified‑rate calculations. She urged the council to consider the balance among reserves, service needs and borrowing costs when deciding on the proposed rate change.

The council did not take formal action during the work session; the budget ordinances and the capital projects ordinance were provided to members and scheduled for the June 24 reading and a final vote before the June 30 deadline.