Alexander City staff outlines FY‑26 budget gaps and circulates draft finance policy

Alexander City staff reported on the draft fiscal 2026 budget and circulated an 80‑page draft financial policy, telling the City Council the general fund currently shows a deficit while most utility funds remain on track.

Kristen (staff member) told the council that “as of August 17 total revenue we’re seeing is 23,700,000,” and that figure represents roughly three‑quarters of projected general fund receipts so far this year. She said utility funds such as water, sewer, gas, airport and golf vary in how closely they track projections: “water revenue $6,000,070,” “sewer $7,000,000,” and the golf fund was “95% of revenue,” while the nutrition program’s own revenue was “88%” (Kristen said that figure excludes the general fund subsidy and includes an insurance payment).

Kristen said the general fund faces a $500,000‑plus deficit before corrective steps. She attributed the shortfall primarily to sales tax receipts running below projections and to an abatement agreement with Gateway that requires an estimated payout of about $1 million against the FY‑26 budget. To reduce the gap, she said department operating budgets funded by the general fund were cut by 10 percent, which produced a net improvement of roughly $32,000 in the draft figures.

The staff presentation listed assumptions to inform FY‑26 projections: a rolling average of revenues back to 2016; grant revenue estimates; anticipated new industry revenues, including an expected about $3,000,000 contribution to the gas fund from a project identified as 2 Rivers; and an upcoming water system acquisition (Hackneyville Water). Expense assumptions included a 2 percent across‑the‑board pay increase, a projected 10 percent health‑insurance cost increase and retirement (RFA) changes of roughly 13.46 percent for tier‑1 employees and 11 percent for tier‑2 employees.

Kristen said the draft finance policy is intended to serve as an employee manual covering procurement, purchase orders, travel, segregation of duties, asset policy and internal controls. She highlighted a reserve policy target in the draft that “has to be at least 30% of annual expenses,” and said the draft requires that any proposed debt financing include a financial analysis showing effects at one, five and 10 years. She asked council members to review the appropriations in the packet, noting some requests include nonfinancial asks (one request sought land) and that a special budget work session would be scheduled after salary‑setting is complete.

Council members asked clarifying questions about timing and the Gateway abatement payout. One councillor confirmed the Gateway abatement runs on the city’s calendar year and staff said the total with interest is “about 9” (years). Council members also discussed the packet content the staff provided and were told the summary sheets were included now, with the full supporting detail to follow as variables are resolved.

Kristen said the finance policy draft is “about 90% complete,” that shaded sections remain under revision, and that the document had been reviewed by the finance team, human resources, the city clerk and other internal reviewers. She requested written questions by email ahead of the council’s planned budget work session.

The meeting then proceeded to other agenda items.