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Meridian presents FY26 proposed budget, plans to use fund balance to cover shortfall
Summary
City staff presented a proposed fiscal year 2026 budget that closes a modest operating gap largely with one‑time funds and new construction revenue, while flagging a need for a recurring replacement funding source and possible future policy choices on foregone property tax and a public safety levy.
Meridian City Council on Wednesday reviewed the proposed fiscal year 2026 budget, which city staff said relies on new construction and one‑time fund balance to close a modest shortfall while asking council to consider long‑term replacement funding.
The proposed general‑fund base revenues were presented as about $77.5 million and base expenditures as roughly $79 million, leaving a discretionary gap of about $1.5 million before taking the city's 3% allowable increase and other assumptions into account. Ricardo (budget presenter) said the 3% allowable would cover most of the city's cost‑of‑doing‑business items such as market adjustments and health care, but the budget still relies on new construction and annexation dollars to balance base operations.
"By taking the 3%, you're covering the cost of doing business," Ricardo said in the presentation, noting that even after assumptions the city would show a modest surplus before planned replacements.
Why it matters: staff emphasized that the city is still in a healthy financial position overall but highlighted two structural issues: (1) growing replacement needs for vehicles, technology and other capital items that staff estimate at roughly $1.5 million per year to sustain, and (2) reliance in this budget on one‑time or growth‑related revenue rather than new ongoing revenue to pay base costs.
Details: the presentation showed the total city budgeted revenues falling about 9% from the prior year because several large FY25 capital projects and grants (including ARPA and CDBG items) do not carry forward. On the expenditure side, staff noted decreases because large FY25 projects (tertiary filter expansion, lift station construction, aeration basins, land acquisition) are not repeated in the FY26 proposal.
Staff recommendations and council direction: the proposed package includes $10.2 million in one‑time general fund requests and $2.8 million of enterprise fund requests that would use fund balance; staff asked council to consider an $8.1 million general‑fund use of fund balance for FY26 if council approves the package as presented. Finance director Todd explained that the city remains debt free and that using one‑time funds for one‑time projects is consistent with the finance team's approach, but that staff will continue to recommend identifying recurring revenue sources for replacements and long‑term needs.
Council reaction: Several council members praised staff for a restrained budget approach and for removing several vacant positions from the base. Council members asked for follow‑up information on replacement schedules and scenarios (for example, how property‑tax growth or a public safety levy would affect recurring funding needs) and signaled a preference to defer nonessential one‑time amenities if the council ultimately wants to prioritize building a recurring replacement fund.
Next steps: staff said it will return with any follow‑ups requested by council as part of the formal FY26 budget hearings. The council did not adopt the FY26 budget during the workshop; this was a workshop discussion and the budget process will continue through the public hearings and formal adoption schedule later this year.
