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Council hears finance pitch to restore reserves to 10%; some members propose trimming the increase to fund employee pay
Summary
Finance staff told councilors the FY26 proposal restores the city’s reserve target to 10% (from 8.5%), increasing the reserve balance by roughly $6.9 million; several councilors proposed a smaller increase to free funds for non‑sworn staff stipends if FEMA reimbursements arrive later.
Finance and mayoral staff told the council the FY26 proposed budget moves the city’s operating reserve from roughly 8.5% of revenues to a target of 10%, increasing the reserve from about $27.5 million to approximately $34.4 million.
Finance staff and councilors described the rationale: preserving one‑time fund balance for disaster response (councilors cited the recent wind/Father’s Day storm, when 46% of reserves were used) and avoiding using limited fund balance for recurring operations. Staff noted an outstanding FEMA reimbursement roughly in the $12 million range for debris and other costs; reimbursements at the federal level must be obligated before the city can treat them as received.
Several councilors said the reserve increase is prudent but urged considering a smaller step (for example 9.5%) so modest pay adjustments or stipends could be offered to non‑sworn city employees to help retention amid local competition for skilled workers. Finance staff provided a rough cost for a 1% across‑the‑board stipend for eligible employees (including enterprise funds) and councilors discussed an option to bank reserves at 9.5% with the plan to replenish to 10% if FEMA money arrives.
Councilors also asked about the appeals and obligation timeline for FEMA reimbursements; finance staff said reimbursement obligations are reviewed by state and federal emergency management and can remain uncertain until formally obligated, though some recent reimbursements have arrived.
Ending: Council members asked staff for options showing the fiscal impact of reserve targets at several levels and the cost of specific employee-stipend scenarios so councilors can weigh reserve prudence against immediate retention needs.
