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Council trims preliminary 2026 levy request after workshop; debate continues over pace of long-term capital funding
Summary
Finance staff presented a trimmed preliminary 2026 levy package that reduced an earlier request; councilmembers debated whether to accelerate capital funding to close a long-run maintenance gap or phase in increases more slowly.
City finance staff presented a revised preliminary levy and budget framework for 2026, cutting the initial levy request after council feedback and opening a debate about the pace of long-term capital funding.
What staff presented: Finance staff said she had reduced the general fund levy request by $400,000 and recommended taking roughly $270,000 from fund balance for 2026 items, tightened some staffing-grade assumptions (notably a lower step for three proposed fire captain positions) and lowered the projected health-insurance increase. The draft budget estimate presented showed total general fund expenditures near $8.8 million and a preliminary total levy of roughly $11.5 million, down from an earlier figure near $12.2 million.
Key tradeoffs and numbers: Staff explained the capital plan and recommended capital-levy approach. Under the revised scenario, the infrastructure reserve levy was shown at $400,000 and the city proposed to use franchise-fee revenue to support infrastructure, leaving a combined infrastructure levy position of about $650,000 in new cash for 2026. Staff also noted the city’s depreciable asset base exceeds $123 million and suggested a long-term capital levy closer to $3 million annually would be required to fully cover depreciation — a number staff described as illustrative of the magnitude of the funding gap, not an immediate recommendation.
Council discussion: Councilmembers debated pace and fairness. Some members urged a more aggressive funding plan to reduce long-term risk and avoid future large special levies; others advocated a slower, more gradual approach to lessen immediate tax impacts. One councilmember circulated an alternative that would reduce the levy increase to about 10% (roughly 8% city-only local tax rate impact) and urged staff to identify modest further cuts. Several councilmembers asked staff for more information on overhead allocations from enterprise funds, the durability of vehicle and equipment reserves, and whether some capital needs could be deferred or funded via developer contributions.
Direction and next steps: Council did not adopt a final levy. Staff noted the council’s ability to lower the levy between the September preliminary and the December final levy but not to increase it, and council members asked staff to return with additional analyses: enterprise overhead allocation options, retained fund balance projections, and alternative capital-levy phasing scenarios. A number of members signaled conditional support for the currently revised levy level if staff could demonstrate the changes were sustainable and provided clearer long-term projections.
Ending: The council left the revised levy and budget as the working assumption heading into the preliminary levy adoption next week and asked staff for follow-up analyses to inform the November–December adoption process.
