Council debates budget goals as administration warns of 2026 shortfall; discussion covers reserves, COP payments and potential cuts

Council members spent an extended portion of the April 21 meeting reviewing budget goals and the city’s financial outlook for 2026. The discussion focused on how to balance competing priorities — maintaining core city services, addressing capital-asset debt service and managing a projected operating shortfall — and on what council direction to give the administration ahead of formal budget markup.

Council framing and fiscal context Council President Mark Ayla opened the item, saying council should provide early guidance to the administration on high-level expectations for the 2026 budget. Several councilors and the mayor commented that revenues have been volatile; one speaker said year-to-date sales-tax receipts had moved from a small increase in January to an 11% decline in February, noting March figures were not yet available. Multiple councilors warned that if revenues remain flat the city could face an $8 million to $10 million operating “deficiency” in 2026, and they discussed the need for cuts or alternative revenue sources.

Capital obligations and specific items discussed Councilors reviewed recent and potential capital commitments. Councilors said the city paid for the Dittmer/Wells Fargo purchase out of earlier set-asides and noted the city’s payment obligations for recent capital acquisitions including the PBR building. The mayor told council the initial COP payment for the PBR building would be about $575,000 and could rise to about $800,000 near the 15-year mark (figures as stated in the meeting). Another councilor described the city’s recent boathouse match of $1 million on a $16 million project. The mayor said that, in terms of replacement cost, the PBR building’s square footage would cost substantially more to build today and that the city’s purchase price represents a favorable comparison to new construction costs.

Options for balancing the budget Administration representatives said operating-budget reductions of 10–15% across departments are feasible and that part-time staffing represents a major near-term lever: the parks department alone hires roughly 380 part-time workers for seasonal operations. The administration noted that cuts to part-time workers would alter service levels (pool hours, event staffing, mowing, rentals) and could reduce related revenue. The administration also said union contract wage increases for 2026 would add to operating pressures and that any proposed revenue measures should be accompanied by demonstrated internal cost reductions.

Councilors discussed alternatives including prioritizing capital maintenance and infrastructure, pursuing additional federal and state grants, accelerating expenditures reductions before seeking voter approval for new revenue and examining the city’s contract and non-departmental funding processes for multiyear clarity. One councilor suggested the city might expand grant-writing capacity to pursue federal funding opportunities; another said the city must show fiscal restraint and prioritize core departmental funding over non-departmental grants or donations if further cuts are required.

Why this matters: council must set priorities now to shape the administration’s 2026 budget proposal. The conversation covered trade-offs between protecting current services, meeting debt-service commitments and presenting a responsible proposal to voters if revenue measures are later considered.

Next steps and requested follow-ups The administration said it will prepare detailed presentations on (a) part-time staffing costs and the service impacts of reductions, (b) operating-budget line-item reductions across departments and (c) the fiscal schedule for COP payments and other long-term obligations. Council requested those briefings so it can decide whether to accept a projected deficit or insist on deeper reductions before the formal 2026 budget is published.