Bettina, a city finance presenter, told the Finance and Investment Committee that the city’s fiscal-year 2025 financial picture is tightening as insurance costs rise and many revenue lines are flat or declining.

The report, delivered in a special-call meeting, previewed assumptions being built into the FY26 recommended budget, including a 4% midyear salary increase (subject to council approval), no built-in employee health‑care premium increases and planned use of reserves to cover higher self‑insurance costs.

Why it matters: higher insurance premiums, uncertainty from pending state legislation and an unsettled court ruling could sharply increase the city’s liability costs; at the same time many revenue sources that fund operations and capital — property tax assessments, hotel/motel and auto‑rental excise taxes, business licenses and permit revenues — show only modest or uneven growth, constraining options for FY26.

Bettina said the FY26 draft includes a built‑in 4% midyear salary increase for all funds, noting that midyear increases are reviewed and approved by council. She also said the draft does not include employee health‑insurance cost increases for employees, though employer-side self‑insurance and other health costs remain a significant budget pressure.

On self‑insurance, city staff have budgeted about $2,000,000 of reserve from the self‑insurance fund to smooth health‑care costs this year and reported the fund holds roughly $6,000,000 in total reserves for insurance needs. Bettina described a long COVID-era spike in claims that pushed city payouts near $15,000,000 annually at the peak and said claims, rebates and refunds have since helped normalize that figure toward roughly $12,000,000 per year.

Property and casualty insurance premiums rose sharply after the city changed insurers in 2024 and revalued assets; Bettina said premiums moved from about $1,000,000 to roughly $1.8 million. She warned the city is monitoring current and proposed state legislation that would raise liability limits (described in the meeting as proposals moving limits from $1,000,000/ $3,000,000 toward $3,000,000/ $5,000,000 in some versions) and said the city is also watching a high‑profile lawsuit described in the presentation as the “Milton” case, where a court judgment of more than $30,000,000 could reshape insurer pricing and municipal liability exposures if subsequent appeals do not reverse it.

The city expects to rely on reserves in the near term but said the premium outlook is uncertain because insurers have little actuarial experience pricing at the higher per‑occurrence limits that have been discussed in the legislature. Bettina noted Zurich exited the municipal insurance market, reducing the pool of insurers willing to underwrite government risks and limiting market options.

On utilities and the Board of Light and Water (BLW), the draft budget incorporates wholesale cost pass‑throughs agreed with Cobb County (2.5% wholesale water and 3% wholesale wastewater increases) and a 2.5% electric retail increase enacted last August — the first electric retail rate increase in 11 years, the presentation said. The BLW also has a proposed 7% pay increase for line workers to address retention and recruitment at intermediate skill levels; staff described that as a targeted adjustment to keep employees beyond apprenticeship stages from being poached by private and public competitors.

Salary savings that previously helped fund capital projects have narrowed: staff reported salary savings assumptions fell from about $2,800,000 in the prior year to 1.75% for FY26 due to improved hiring. To preserve year‑end capital funding staff have instituted a managed hiring slowdown (new hires are being delayed by a four‑week processing period), and the presentation said the slowdown has begun to boost the year‑end salary‑savings projection.

Capital items discussed included the final fire‑truck payment (about $750,000, being split across two years) and vehicle purchases for police that typically consume a large portion of year‑end capital. Staff said capital allocations were trimmed given personnel and insurance pressures.

On taxes and assessments, Bettina said the city millage rate remains at 2.788 mills. The county digest is expected to increase about 2%, and staff estimated the city’s digest may rise roughly 3% because of local assessment patterns; the actual bill amounts will be available from the county in August, she said. The presentation also noted new required bill language under HB 92 that must appear on property tax bills to identify entities that chose not to adopt homestead exemptions.

Other revenue notes: hotel/motel excise tax receipts showed a slight dip and auto‑rental excise tax collections declined in FY25 after a large FY24 over‑reporting and subsequent refund; business license receipts showed processing and renewal timing changes that temporarily reduced collections; and permit revenue was lower than the FY23 spike that included a one‑time construction project.

Next steps: Bettina said the budget team expects to finalize the recommended FY26 budget book next week and to release it the following Wednesday. The finance team is completing a five‑year revenue and expenditure forecast and will provide that forecast to council to inform policy and capital decisions.

Closing: the presentation ended with staff reiterating ongoing monitoring of insurance markets, wholesale cost pass‑throughs from Cobb County and the progress of negotiations and litigation that could affect future budgets.

Ending: Staff will publish the recommended budget book next week and deliver a five‑year forecast to council when it is complete; formal council action on any FY26 salary increases or budget changes remains required before those items take effect.