Normal presents FY25-26 proposed budget, plans limited cuts and reserve use after sales-tax drop

Town of Normal leaders on the town council’s budget review work session presented a proposed fiscal-year 2025–26 budget that totals about $211,000,000 across all funds while forecasting a moderate decline in sales tax revenue and using one-time measures and reserves to balance the gap.

The proposed budget lists $96,000,000 for the general fund and projects total general fund revenue of about $94,700,000 for 2025–26. City Manager Miss Reese summarized the presentation, saying, "I think it's a very good financial picture and presents a very realistic outlook based on what we know today." Finance staff warned most of the revenue shortfall — about $13.9 million across the five-year outlook — stems from weaker sales tax performance, which accounts for roughly $13.6 million of that decline.

Why it matters: the general fund pays for core services (police, fire, public works and parks) and also transfers money to capital and specialized funds. Town staff said they will primarily address the revenue shortfall with one‑time capital reductions, by cutting extra discretionary pension payments, trimming some transfers (notably economic development), and drawing down excess reserves in the near term rather than reducing staffing levels.

Finance Director Mr. Heun told the council the town will draw down about $4,750,000 from reserves in the first year of the five‑year plan and implement approximately $10,000,000 of budget reductions across five years to accommodate the revenue reset. "We’re using some of our reserves to help balance the budget this year," Heun said during the presentation.

Staff showed the council that the general fund typically transfers money to a variety of other funds — roadway, vehicle/equipment reserve, debt service and CIP — and that those transfers total roughly $13,800,000 in the proposed plan. Among explicit reductions, staff removed a previously planned $2,000,000 in extra police and fire pension payments while retaining a $1,000,000 supplemental contribution. Economic development one‑time cash of $2,000,000 planned for the coming year was eliminated.

Capital and debt: the town’s five‑year capital improvement plan (CIP) and roadway programs remain substantial — staff said about $200,000,000 of projects are planned over the five‑year horizon — but some general‑fund transfers that fund CIP projects were pared back. The vehicle and equipment reserve was highlighted as one fund that could be used to smooth near‑term budget adjustments; that fund is projected to return to target by year five. On debt, staff reported nine outstanding bond issues with no planned new bond issuance in the next fiscal year and approximately $5,000,000 in principal paydown planned.

Other funds: staff flagged caution for water and sewer funds in the later years of the five‑year outlook and noted both funds assume a 2% rate increase each year in the current budget model. The town's health/dental fund is projected to be in good condition under the current assumptions.

Council reaction and next steps: council members pressed staff for clarifications on contingency versus reserves, economic development options without the set‑aside cash, the timeline for major capital projects and the expected impact of the town’s credit rating change. Staff said they will return with a final budget for adoption at the council’s first March meeting and that staff expect to make modest downward adjustments to revenue between the proposed and final budgets as more January financial data are incorporated.

The council did not take formal votes on budget adoption at the session; staff asked for additional council direction and said they will bring a final budget for a March vote.