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Greenwood finance director outlines uncertain 2026 budget, warns of state tax law impacts
Summary
Finance staff presented a 2026 budget overview noting large uncertainty from recent state property tax changes and projected revenue losses; officials are preparing contingency measures and targeted spending controls.
Fred Wright, Greenwood finance director, presented the city’s preliminary budget outlook for 2026 and told the council the dominant theme is uncertainty driven by recent state tax changes and volatile local income-tax forecasts.
Wright said the state had provided an estimated loss of $3,232,200 to the city’s tax base from circuit-breaker and homestead-credit changes referenced in the meeting as SEA 1, an increase of 47% from 2025. He said roughly $960,000 of the projected loss stemmed from a new $300-per-property credit described in the state estimate. Wright cautioned that the state estimate has been low in prior years and that actual losses will not be known until tax bills are finalized in April 2026.
Wright also said the property tax growth factor was limited by state action to 2–4 percent for 2026, producing $755,396 in additional property-tax revenue—less than estimated losses—leaving the city an estimated shortfall of about $278,000 before department budgets are considered.
The presentation noted a projected slowdown in local income-tax growth (an estimate of 5.5% for 2026), and Wright warned that the local income-tax changes slated to take effect in 2028 will replace the existing system and introduce further uncertainty because state data systems do not yet provide municipal-level collections for the proposed approach.
Wright highlighted other budget drivers: a 10.5% increase in the city’s net assessed value this year; TIF incremental value that rose 11.13% and surpassed $1 billion; anticipated bond roll-offs that could create capacity for future GO debt; capital projects such as Main Street phases 3 and 4 and a multi-phase Smith Valley Road widening; and the likely future need to replace Fire Station 92.
On cost pressures, Wright said the city is seeing inflation in health insurance (self-funded plan with stop-loss above $190,000; anticipated growth in claims of 80%, which the city will budget for but not yet finalize premiums), software and hardware costs (3–5% contractual increases), parts and labor for maintenance, property-liability insurance increases (premiums up 15.3% at last renewal), and utilities. He also said the city must build in higher automobile deductibles required by insurers.
On cost-control measures, Wright proposed flatlining many line items, freezing salaries for full-time non-public-safety employees at 2025 levels while implementing a $1,000 premium paid quarterly to eligible employees, and a 1% permanent salary increase for merit public-safety employees to affect pensionable wages. Elected officials will receive no pay increase in 2026, Wright said.
Wright outlined next steps: a formal ordinance introduction at the next meeting, public hearings in October, and DLGF certification due by Jan. 15; he said the city will post department-level budget pages online and continue monitoring state guidance and work with advocacy groups on potential legislative changes.
Why it matters: Wright said the city must balance promises against reduced revenue estimates and that 2026 and 2027 will be years of constrained choices for municipal services and staffing.
