Shelton finance staff reports projected draw on reserves; sales-tax receipts showing early decline

Shelton finance staff on April 15 briefed the City Council on the monthly financial report for February, saying current trends would draw the general fund down from reserves this fiscal year unless service levels or revenues change.

The finance presentation noted that sales-tax collections for January and February are below year-ago levels and that the city typically collects between $275,000 and $300,000 per month in the general-fund sales-tax category. Finance staff said they currently estimate the city will use about $916,243 of the unreserved ending fund balance this fiscal year, leaving a projected unreserved balance of roughly $1.2 million at year end.

Why it matters: council members said the figures will frame discussion at the May 5 council retreat on service levels and budget priorities. Staff called attention to wages and benefits representing roughly 50% of general fund expenditures and to the need to manage growing costs across departments.

Details from the report

- Revenues and expenses: staff said revenues are mixed across categories with some up and some down; overall the report showed a small forecasted shortfall compared with the adopted budget and a current estimate that expenses will exceed revenues by the $916,243 figure.

- Expenditure drivers: staff pointed to wages and benefits as the largest single category of general-fund spending and noted a multi‑year rise in citywide expenditures from prior years. Staff also highlighted savings in the Central Mason Fire contract tied to assessed values, which they said reduced that line-item cost this year.

- Fund balances and funds beyond general fund: staff reviewed other funds, including the street fund where planned projects will draw down reserves; they reiterated the goal of keeping estimated fund balances positive.

Context and next steps

Finance staff asked the council to use the May 5 retreat to discuss service levels, priorities and potential budget adjustments for 2026. Staff also reported that hiring activity since February has reduced the number of open positions in some departments, which changes near-term savings projections.

Ending

Council members agreed the figures warrant a full budget discussion at the retreat and will rely on staff to provide program- and service-level analyses to guide choices about reserves and spending.