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Budget shifts costs into police internal-service fund; aldermen press for clarity as state retains policing authority
Summary
The FY26 proposal moves $16.4 million of support-service costs into an internal service fund billed to the police department; aldermen asked how the change and state policing arrangements affect city obligations for pay, pensions and operations.
Budget Director Paul Payne told the Budget Committee that the FY26 proposal reclassifies certain support costs for police into a new internal service fund and allocates $16,400,000 to the police budget to reflect those charges.
Payne explained why: services that historically supported police ' facilities management, equipment services (fleet), the personnel portion that served police, and legal support ' were absorbed into city departments after local control and now are being tracked and charged back as an internal service allocation so that the police department's budget shows the full cost of its operations.
"That is the $16,400,000 that's the cost of those services that we moved out, for those 4 departments and incorporated into the police department in a cost allocation line for internal service," Payne said.
Why it matters: committee members pressed for clarity about what the city will still be expected to pay if policing remains under state oversight. During Q&A, aldermen and the director noted that although the state will assume operational control under the recent legislation, the city continues to bear many recurring expenses: salaries, pensions, vehicle and facility maintenance, and certain contractual liabilities. Payne said the city's pension liabilities and judgment exposures remain material budget drivers; he noted policy changes had increased certain pension contributions (police pension figures were discussed separately).
Other relevant budget items discussed: - Police pension budgets: while Payne reported a $3.5 million decline in one police pension line, overall police retirement costs in the general fund rose, driven by other retirement plan contributions. - Pay and staffing assumptions: the police department budget incorporates pay and benefit increases approved earlier in FY25; the director also referenced an assumed officer count of about 1,100 tied to those pay changes. - State assistance: Payne said the state's package includes some assistance items (for example, expanded judgment coverage from $1 million to $2 million under the new statutory arrangement) and that some legal-defense assistance may be provided by state attorneys; he cautioned the committee that many costs remain municipal obligations.
Committee members sought follow-up information: several aldermen asked for a clearer, line-by-line explanation of what the internal service allocation covers, and whether the state would assume any of the support-service costs going forward. Payne said that some items historically charged in other city departments now show up in the police budget and that the internal service fund provides an accounting mechanism; he also said cost-allocation treatment is likely to evolve during the transition.
Ending: aldermen requested more detailed cost-allocation schedules and projections to determine the full city liability for policing and related services during the FY26 review process.
