Signal Mountain council agrees on $140,000 cap for cost-of-living pay increases as budget shows a small shortfall

Signal Mountain Town Council members reached consensus on Tuesday to cap cost-of-living adjustments for the fiscal 2025–26 budget at a maximum of $140,000 — about a 2.75% increase on the budgeted salary base — and to include the town manager in that adjustment.

Town Manager Matt Justice presented the proposed fiscal 2025–26 budget, saying “general fund revenues for the 25–26 budget year are projected to be $9,873,266” and that total budget appropriations are $10,012,620, producing a projected general-fund shortfall of $139,154. Justice also told the council the proposed budget includes an estimated $287,015 expense to transfer operation of the Mountain Arts Community Center to the town.

The council’s action to set a $140,000 cap was reached by verbal consensus rather than a formal roll-call vote. Mayor Elizabeth Baker confirmed the decision during the meeting, stating, “So that is consensus, on that.” Council members discussed COLA percentages, with several expressing comfort in a figure between 2% and 3% before settling on the $140,000 ceiling as a practical cap tied to a target percent.

Why it matters: The COLA cap determines how much the town will increase payroll costs next year; those costs feed directly into the general-fund deficit the council reviewed. The transfer of the Mountain Arts Community Center (MAC) into town operation was also budgeted in the proposed appropriation, creating a near-term cost the council must monitor as the town assumes program responsibilities.

Details from the budget presentation

- Revenues and shortfall: Justice reported projected general fund revenues of $9,873,266 and total appropriations of $10,012,620, yielding a projected deficit of $139,154 for fiscal 2025–26. He noted enterprise funds (water/sewer, stormwater, etc.) “look very strong” and that the town’s cash-to-expense ratios are healthy.

- Mountain Arts Community Center: The proposed budget includes an estimated $287,015 to transfer operations of the MAC to the town. Justice said that estimate was compiled from the MAC’s historic expenses (going back to about 2020) and their financial statements. Council discussion flagged the MAC operating budget as an area with many unknowns; council members said the town will monitor revenues and consider a phased or prorated approach for personnel costs during the first year.

- Library fund: The budget keeps the town’s transfer to the library at $220,000. Justice reported library operational revenue of about $22,400 and total appropriations for the fund of $260,664, leaving an ending fund balance the presentation estimated at $10,114. Council members discussed whether the town should increase the library transfer to cover COLA costs for library employees; the council agreed that any increase needed to cover COLA for library staff would be added to the town transfer in an amount equal to the COLA portion affecting the library.

- Vehicle replacement and other funds: The vehicle replacement fund shows budgeted cash receipts of $677,720 and appropriations of $334,724; Justice said the fund balance would increase from $2,362,806 to $2,705,802 under the proposed budget. State Street Aid revenues were described as budgeted at $384,500; Justice said current cash in that fund should avoid a negative balance and that an anticipated small deficit would be eliminated by the second quarter of the fiscal year. The stormwater fund user-fee revenue was estimated at $536,216 with appropriations of $273,443, resulting in a projected fund balance growth.

- Wages, merit raises and COLA: Justice said the council-recommended merit increases total roughly $47,007.56 across the general fund. The group discussed a 2% COLA and staff estimates about how much that would cost. During the presentation, Justice and council members noted some inconsistency in spreadsheet outputs used for the meeting; council members asked staff to confirm whether current-year actuals and budgeted totals were being pulled correctly from the town’s financial software (Edmonds) and to fix hard-coded Excel values that had produced confusing totals during the meeting.

- Data reliability and software: Council members and staff spent substantial time reviewing where numbers were coming from. Justice said he pulls reported figures from the town’s budget software (Edmonds) and then populates multiple spreadsheet tabs; several council members pointed out the spreadsheet formulas and hard-coded cells had led to inconsistent displays of salaries and benefits. Justice agreed to run direct Edmonds reports and provide clarified year-to-date salary and benefits numbers.

Council direction and next steps

- COLA cap and inclusion: The council agreed by consensus to cap COLA spending at $140,000 for fiscal 2025–26 and to include the town manager in the adjustment. Councilmembers said the cap is a practical ceiling; the final percentage will be determined during subsequent budget adoption steps once staff confirms exact payroll and vacancy savings figures.

- MAC transition: Staff will proceed with transition planning for the Mountain Arts Community Center and return with more detailed operations budgets and staffing cost estimates; councilmembers said they expect to adjust the MAC budget after seeing actuals and a morecomplete operating plan.

- Data follow-up: Justice and town staff agreed to produce corrected reports pulled directly from the town’s finance system (Edmonds) showing year-to-date salaries and benefits and to fix the spreadsheet inconsistencies used in the presentation.

Votes at a glance

- Motion to suspend the agenda: moved and seconded; all council members present voted “Aye.” (Motion approved.) - Motion to adjourn: moved and seconded; all council members present voted “Aye.” (Motion approved.)

What’s next: Staff will run direct reports from the town’s financial software to reconcile year-to-date salary and benefits numbers, return with a finalized COLA percentage within the $140,000 cap if numbers warrant, and present a more detailed operating budget for the Mountain Arts Community Center after additional review of revenue and staffing assumptions.

Ending: The council ended the special-called meeting after suspending the published agenda and adjourning following the budget discussion.