Finance committee reviews FY 2026 operating budget; staff identify roughly $800,000 structural shortfall

The Hendersonville Finance Committee on April 22 heard an overview of the proposed FY 2026 operating budget and discussed a roughly $800,000 operating shortfall that staff and the mayor are working to close before the next workshop.

Finance staff (presenter Jen) told the committee the proposed operating budget shows operating revenues increasing about 2.25% year over year while recommended operating expenditures increase by about 3.75%, leaving a structural imbalance. “Currently, as we sit, with this draft, we do have a deficit in our operating budget about just over $800,000,” the presenter said.

Key drivers the committee and staff identified were nondiscretionary increases: a roughly 12% increase in the emergency communications center (dispatch) estimate (~$200,000), an estimated $100,000 rise in property and liability insurance, a projected 15% increase in health-benefit costs (staff estimated approximately $600,000), and a TCRS (state retirement) rate increase estimated at about $80,000. Those factors, staff said, account for the bulk of the operating shortfall.

The mayor’s priorities for the proposed budget, as presented by staff, are: maintain a low property-tax rate (the draft keeps the city rate at 0.5883%), present a balanced operating budget, and maintain investment in capital priorities such as paving and public-safety apparatus. Debt service is projected to drop by roughly $2.1 million compared with the current fiscal year’s budget, a change staff described as debt reduction progress.

Paving and infrastructure remain major capital priorities. The draft budget assigns $2.7 million from the general fund for paving, $1 million from state street aid, and $3.7 million from the PIP fund for a total of approximately $7.5 million budgeted for paving projects. Staff said the exact mileage to be resurfaced will be finalized and presented at the next workshop.

Public-safety equipment and vehicles also featured in discussion. The proposed budget includes funds for the replacement of one fire engine and replacement of hose and hose racks. Police vehicle replacements are proposed at 13 total vehicles: 10 funded from the PIP fund and 3 from the drug fund. Staff noted initial requests were larger and that the police chief reduced vehicle requests in light of staffing constraints.

Staffing and compensation items: the proposed budget contains a 2% cost-of-living adjustment across all city employees (executive and rank-and-file); the proposal excludes the Beaumont payroll (collective bargaining/other pay schedules referenced separately). Departments will receive updated organizational charts and the number of authorized positions when the ordinance is prepared.

Staff said they are pursuing several balancing options and will present updated numbers at Budget Workshop No. 2 on May 5, including updated health-benefit projections and recent sales-tax data. “Hopefully, by the time budget workshop number 2 comes around, you all will see a better picture than this,” the presenter said.

Committee members asked staff for follow-up details, including vehicle-usage and mileage statistics for police cars, more precise paving mileage, and updated sales-tax and investment reports. Staff committed to circulate updated reports via email ahead of the next workshop.

No committee vote was taken on the budget at this meeting; staff will return with revised figures and proposals at the May 5 workshop and with the formal budget ordinance at a subsequent special call.