Franklin staff present FY2026 budget forecast: $229.1 million projected, ARPA nonrecurrence cited for decline

City of Franklin staff on Thursday opened the Fiscal Year 2026 budget process and presented a preliminary revenue forecast totaling $229,100,000, a decrease of about 2.5% from the FY2025 budget, city management said.

"The total for 2026 is $229,100,000, which is a decrease of 2 and a half percent from what we budgeted in fiscal year 2025," Dylan Gaster, the city's management fellow, told the Budget & Finance Committee. Gaster said the decline is “largely due to the American Rescue Plan Act or ARPA, which those funds were received and expensed in the budget for fiscal year 25.”

Staff provided fund-level forecasts and noted the general fund remains the largest single fund at about 49.1% of the total. Key preliminary forecasts include: - Local sales tax: $66.7 million budgeted for FY2026 (a 2.74% increase compared with staff’s FY2025 estimate after four months of actuals). Staff said that projection is intentionally conservative relative to state board ranges. - General fund total: modest decrease from FY2025 budgeted levels (staff cited a 0.3% projected decrease to $112.5 million). - Property tax (gross): projected at $25.1 million for FY2026; staff noted net general-fund property-tax receipts shown in the model reflect transfers to debt service and capital and that net figures vary depending on those transfers. - Water and sewer fund: forecast at $50.8 million for FY2026, incorporating currently approved customer-service and impact-fee rates. - Sanitation fund: forecast at $13.1 million and reflects the rate increase that took effect Jan. 1.

Staff emphasized several caveats and next steps: the FY2026 forecast does not assume any additional revenue from an updated census count (the city is still collecting data and has not assumed the potential increase); property reappraisal numbers and any change to the property-tax rate will arrive later in the process; and American Rescue Plan (ARPA) funds largely boosted FY2025 totals and are not expected to recur.

The committee was given a schedule for departmental budget presentations: public safety and administration departments in February; planning, finance and governance later in February; community and economic development in March; public works and conference center on March 20; appropriation requests to outside agencies to follow. Staff said they will present a recommended budget on May 1, followed by budget hearings and the three required readings and adoption later in May–June, with the new budget effective July 1.

On revenue assumptions, Gaster said the sales-tax forecast (2.74% growth) was intentionally set below the state funding board’s low-end projection and reflects only four months of FY2025 actual collections at the time of the forecast. He noted the city historically uses conservative assumptions early in the process and will refine estimates as more months of actuals arrive.

Officials also reviewed several special and capital-related funds during the session: hotel-motel tax (projected $6.69 million for FY2026, down from FY2025 because ARPA and one-time items inflated the prior year), development-related funds such as the city facilities tax and road impact fund (staff used conservative projections equal to roughly 75–85% of five-year historical averages), and the debt service fund (staff reviewed existing outstanding G.O. and water/sewer debt and how new debt from the proposed G.O. issuance would affect future debt service schedules).

Staff signaled that revenue projections will be updated as part of the full budget submission in May and that departmental reviews will be public. The committee did not take formal action at the meeting because it lacked a quorum.