Mobile City Council reviews proposed FY2026 budget with new stormwater department and fleet changes

Mobile City Council heard a presentation on the proposed fiscal year 2026 budget that consolidates convention-center revenues into the general fund, creates a new stormwater department, and changes how the city budgets for vehicles and fleet operations.

Scott Collins, finance director, told the council the FY2026 budget combines the general fund, capital improvements and the enterprise funds supported by the general fund, and folds what had been a stand-alone convention-center budget back into the general fund because the center’s operations are now contracted to OVG. “Everything that was convention center sales tax has made its way back to the general fund,” Collins said.

Collins presented line-by-line projections and cash-position figures: a projected October 1 general fund operating balance of about $102,000,000, a planned transfer-in from operating of $29,000,009.91 (which Collins said he expects to be spent at a lower actual rate — closer to $23,000,000 — by year-end) and a projected September 30, 2026 general fund operating balance of roughly $72,008,691. The presentation also shows an ordinance-required reserve of about $64,455,195 and a roughly $9,000,000 employee health-insurance reserve.

Why it matters: the budget packages several structural changes that affect how revenue and expenses will be tracked and spent. Council members pressed staff on whether the accounting changes preserve long-term replacement funding for vehicles and ensure capital projects do not lapse unnoticed.

Major elements of the proposal

- Stormwater: The budget creates a new stormwater department with $5,000,000 of new operating resources. Collins said “roughly about a million dollars of that is allocated or considered allocated toward a drainage system study,” and the remaining funds (about $4,000,000) are intended for ditch maintenance, clearing, staff work or contracts to perform those tasks. Staff said the new department will include Vactor trucks and some sidewalk responsibilities previously assigned elsewhere and that the city is recruiting a stormwater manager and a deputy.

- Public safety staffing and equipment: The budget includes funding for 24 new police officer positions and nine certified firefighter positions. Collins explained the police positions are budgeted as if they will be grant-funded under a COPS grant application; if the grant is not awarded, the budget includes fallback funding in public-safety administration so the positions can be maintained. The public-safety administration budget also includes $1,400,000 for cameras and a video-management system — Collins estimated about $1,000,000 of that will be for cameras and roughly $400,000 for recurring management costs — plus an $825,000 contingency in public-safety administration tied to the COPS grant outcome.

- Fleet and vehicle purchasing: The motor-pool enterprise fund has been dissolved and consolidated into a citywide fleet/budget structure. Collins and staff described a shift away from an unclear accrual-based motor-pool approach to a structure that places vehicle budgets in departmental or fleet lines and allows the city to identify funding earlier in the fiscal year to place large state-bid orders when vendor order windows open. Councilmembers raised concerns about maintaining disciplined, long-term sinking funds for rolling stock replacements (for example, police cruisers and fire trucks). Collins said the city will preserve sinking-fund behavior for major equipment and will transfer unspent capital dollars into capital holding accounts when appropriate, while using business-license timing and other revenue flows to identify funding when ordering vehicles is time-sensitive.

- Capital improvements, CIP process and the “zombie” rule: Collins described an updated five-year capital plan and a formalized capital-projects review committee (staff members, including the finance director, city engineer, capital purchasing and others) to meet monthly beginning January 2026. The committee will help track project lifespans and surface projects approaching the 36-month inactivity rule referenced in the meeting as the “zombie act,” which requires action or reversion of funds if projects see no activity. Collins said the committee’s work will lead to annual council resolutions identifying capital projects and funding across multiple years when appropriate.

- Revenue and transfers: The budget shows total FY2026 revenues and expenses both at about $416,000,000, reflecting the consolidation of convention-center items and other reclassifications. Collins noted the debt-service line increases substantially (from roughly $21,000,001.85 in FY25 to about $32,000,006.19 in FY26), primarily because of arena-related debt service. The city’s contract with arena operator OVG also provides for up to $3,000,000 in startup support between now and January 1, 2027; Collins said staff expects actual transfer needs closer to $2,400,000.

- Dedicated fuel/gas taxes and pothole/road repairs: Under Alabama law and the lodging-tax ordinance cited in the presentation, the 5¢ gasoline tax and the 7¢ roadway-fuel tax are budgeted to capital for road maintenance and spot repairs rather than general operations. Collins said those sources fund roughly $1,000,001.75 for spot road repair and pothole maintenance during FY2026, to be used by public works for pothole patrols and spot repairs (rather than full resurfacing projects).

Other items and clarifications

- ADA transition plan: The capital budget includes $150,000 for an ADA transition plan, which Collins said is required to maintain eligibility for certain federal transportation grants.

- IT and capital accounting: The city is moving IT-related software costs from capital to operating so those costs are tracked centrally in MIT (information technology) or assigned to departments as operating expenses. The city will use Munis for financials and e-Builder for capital-project management.

- Cruise terminal and enterprise funds: Collins said the cruise terminal is projecting a positive contribution for the year; other enterprise activities (EMS, Azalea Golf Course, tennis center) were shown in the materials and will be updated for formula or accounting items called out by council members.

Public process and next steps

Collins said the mayor approved the budget earlier and the council will hold a public hearing on the budget at its meeting next week, with final council action to follow. Several councilmembers asked for additional detail and continued monthly updates from the newly formed capital projects review committee so the council can identify projects approaching their statutory timelines.

Quotes from meeting participants

“Everything that was convention center sales tax has made its way back to the general fund,” Scott Collins, finance director, said about the consolidation of convention-center accounting.

“Roughly about a million dollars of that is allocated or considered allocated toward a drainage system study,” Collins said about the stormwater funding.

“We are providing $3,000,000” under the arena contract, Collins said about the startup funding to OVG, while adding the expectation that actual transfers will be closer to $2.4 million.

Ending

Councilmembers requested additional detail on vehicle-sinking funds and capital-project timelines, and staff committed to monthly capital reporting and a formal review committee. The council will take public comment at the upcoming hearing and is expected to consider final action on the budget at the subsequent meeting.