City staff explain FY2026 budget trade‑offs after tax‑rate publication issue; council weighs raising rate to regain $215,000

City finance staff reviewed the proposed fiscal year 2026 general fund budget, the recently published tax notice and the impact of a corrected certified roll at a council workshop Aug. 21.

Staff explained the council previously adopted a cap and published a notice based on one calculation; after receiving the certified appraisal roll staff discovered a calculation/publication inconsistency. To avoid exceeding the published levy, staff initially adjusted the proposed rate down to 0.6975 per $100 valuation; doing so requires removing roughly $215,000 from the draft general‑fund spending plan. Finance staff said the council’s prior vote from Aug. 7 capped the rate at about 0.6999, and an attorney’s interpretation may allow the council to rely on the adopted rate rather than the published dollar amount; staff took the conservative path and prepared a budget that reflects the lower 0.6975 rate.

City budget staff (Tracy and Jennifer) walked council through the changes made to balance the draft budget under the lower rate: removal of a proposed public‑safety assessment fee and park fee, reductions to proposed new positions and operating adjustments, delaying some capital and consultant projects into FY2027, and trimming discretionary event and maintenance allocations. Staff also reported a reduction or reallocation of proposed positions from the filed budget (from 67 proposed positions down to a net 37 plus two), changes to contingency and a decision to smooth certain compensation/insurance changes across two years.

Finance staff said there is an estimated $405,000 of general‑fund savings tied to the city’s newly selected health‑insurance vendor (staff called this a one‑time available resource to allocate). Staff proposed programming those funds toward a real‑estate/program manager position to inventory and manage surplus city lots (places & spaces/real estate), and toward contract mowing/temporary mowing services while the city evaluates long‑term disposition of surplus properties. Council asked for details and timing of the health‑plan savings and asked that staff provide written confirmation of any vendor payment schedules before making allocations.

On capital, staff presented three six‑year scenarios: (1) the original CIP proposal (about $340 million total tax‑supported projects across six years), (2) a reduced middle ground, and (3) a constrained scenario that avoids any future tax‑rate impact (roughly $206 million of projects over six years). Staff cautioned that staying at or below a 70¢ tax rate this year would sharply constrain 2026 bond issuance capacity; under the constrained scenario only about $13.6 million of new tax‑supported capital could be issued in the coming bond cycle without producing a tax‑rate impact next year, compared with the $51 million the city had planned to issue.

Council discussed options: adopt the 0.6975 rate and accept the $215,000 reduction in available funds, or adopt the previously published 0.6999 rate at the final reading to restore about $215,000 for the general fund. Staff noted that if council re‑adopts the 0.6999 rate the additional revenue could be used to restore contingency or fund specific items such as AirFest, contract mowing, separation pay reserves or other priorities.

No final vote was recorded in the workshop. Staff said the formal first reading was on the regular agenda; council indicated preference to review written allocations and reconfirm the health‑plan savings before the final tax‑rate adoption. Staff will bring back written detail on the $405,000 health‑plan savings and on how the $215,000 could be allocated if council chooses the higher published rate at final reading.