Highlands City Council reviews FY25–26 revenue funds, debt service and capital priorities

Highlands City Council on July 22 received a staff presentation updating the city—s special revenue and utility funds and discussing capital priorities and requested supplementals for the FY2526FY26 budget cycle.

The presentation identified an unplanned increase in principal payments for 2025 (staff said about $30,000 was not included in the adopted budget estimate) and noted staff—s plan to issue 2025 certificates of obligation to fund road reconstruction projects including Holly Shores Boulevard and Holland Village Road reconstruction. Staff also presented fund-by-fund materials on court technology and building-security fees, park-impact (development) fees expected from the Magnolia Village project, peg/cable fees, and the utility/drainage funds.

Why it matters: the items on the table affect the city—s projected revenues, reserve level and the near-term tax-rate/tax-note decisions that will be part of the formal budget adoption process this fall.

Staff highlights and council questions

- Debt service: staff said the 2025 budget did not capture roughly $30,000 in principal payments that arose while a tax note issuance was in process. Staff also presented an estimate for first-year payments tied to a planned certificates of obligation issuance in 2025 to fund local street reconstruction; the final debt schedule will depend on pricing and the actual issuance.

- Court and administrative fees: staff noted municipal-court technology and building-security fees are collected on citations and restricted for those uses (for example, a small technology fee per citation funds court video-magnification and related equipment; a separate per-citation fee supports building security purchases).

- Development/park impact fees: staff said Magnolia Village (roughly 25 residential units) could generate neighborhood and community park impact fees for area 4; timing of collections was described as dependent on when permits/plans are finalized.

- PEG/cable fees: staff reported declining cable-related revenue (peg fees) and said the city plans to prioritize longer-lived capital purchases because the revenue stream is shrinking.

- Utility and drainage funds: staff reviewed recent utility-rate actions (a 40-cent increase last year) and said the drainage fund balance is declining; they noted a possible discussion next year about another rate increase (staff mentioned a potential 30-cent increment as a planning example). Staff described drainage maintenance needs (dredging, vegetation control, mosquito control) and equipment purchases scheduled in the replacement plan.

- Streets and parks capital: staff presented combined spending plans drawn from the 2021 bond and potential 2025 COs, citing a plan to spend roughly $6.0 million between those two sources on street projects in 2026 and an estimated $4.8 million for parks-related projects in the coming year.

Supplementals and fiscal impact

Council reviewed a set of supplemental requests (public-safety technology and equipment, fire and police radios and gear, park maintenance and small capital items, recreation program items and accessibility work). Staff reported preliminary council votes on those supplementals and said the subset receiving majority support would cost roughly $286,000 (staff presented the figure as an approximate recommended package). Staff said incorporating the recommended supplementals into the general fund would increase the projected operating gap and reduce the ending fund balance; staff reported the illustrative impact as an increased projected shortfall of about $2.2 million and a projected ending general-fund balance of about $8.7 million (roughly a 34% reserve) under the scenario shown to council.

Council action and next steps

- Consent items: Council approved the consent agenda items (minutes and three resolutions, listed by the city clerk in the meeting packet) by voice vote, 69 (motion by Councilman Feaster; second recorded by council). No items were pulled for separate discussion.

- Calendar: staff reminded council of the budget calendar: utility-fund review and tax-rate consideration are scheduled for an August meeting, followed by additional general-fund discussions in late August and public hearings/adoption in September.

Councilmembers asked for additional detail on specific items (for example, a clearer breakout of costs and multi-year work-order history for drainage and utility repairs) and asked staff to return with refined estimates. Staff said some numbers presented were preliminary and that final debt sizing and interest cost will depend on actual market pricing when certificates are issued.

Ending

Council members asked that staff schedule two formal budget review meetings before final adoption and requested additional data on multi-year maintenance costs and the rationale for certain proposed capital expenditures. Staff said it would return with refined engineering and cost estimates and with scheduled dates for the next budget workshops.