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Finance presents FY 2026 budget preview as general fund drops by $9.4 million vs. prior year
Summary
Finance and administration outlined a conservative FY2026 budget plan showing a projected $5.7 million shortfall that staff addressed through cuts, equipment delays and attrition targets; the citywide budget proposed is roughly $311 million with capital projects reduced to $77.2 million.
Scott Rathbone, the city’s finance director, and City Manager Jeff Jurgens presented a first look at the proposed fiscal year 2026 budget to the Bloomington City Council on Feb. 17, detailing a combination of revenue shortfalls and expense increases that produced a preliminary $5.7 million deficit before departmental adjustments.
"We said we need to be extremely conservative," Rathbone said, summarizing the multi-month budget work. After department reviews and proposed adjustments, the presentation showed a citywide proposed budget of about $311 million — down roughly $21 million from the prior year — and a general fund proposal about $9.4 million lower than the previous year.
Rathbone identified several drivers of the gap: reduced state-distributed replacement tax (PPRT) receipts that fell from $6.4 million in 2023 to a proposed $2.6 million, an estimated $750,000 impact from the grocery-tax elimination, lower-than-expected investment income and higher pension and contract costs. Rathbone said staff initially projected a $3.75 million…
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