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Finance Committee reviews FY26 operating budget; staff flag $800,000 operating deficit and follow-up workshop scheduled
Summary
Committee members received an overview of the proposed FY26 operating budget, discussed revenue and expenditure drivers — including health insurance, ECC dispatch costs and paving priorities — and scheduled a second budget workshop to refine options to close a roughly $800,000 operating shortfall.
The Hendersonville Finance Committee on April 22 reviewed the mayor’s proposed FY26 operating budget and discussed revenue updates, spending priorities and areas for further work to produce a balanced operating budget.
Budget staff presented the operating revenue and expenditure overview used by the mayor to construct the recommended budget. Key updates since the initial workshop included a $25,000 projected increase in Parks and Recreation fee revenue offset by a $25,000 decrease in beer and liquor tax revenue, and adjustments that made state revenue line items for police and fire supplemental pay match their corresponding expenditures.
Staff told the committee that operating revenues in the proposed general fund are up about 2.25% from the current fiscal year, while recommended operating expenditures increase by roughly 3.75%, producing an initial operating deficit of just over $800,000. Committee members were told that public safety (police and fire) and public works are the largest expenditure categories and that salary and benefits account for the largest portion of the budget, with police and fire salaries comprising the majority of those costs.
Committee members discussed several major nondiscretionary cost drivers. Staff said contributions to the emergency communications center (ECC) increased about 12% (roughly $200,000), property and liability insurance was estimated to rise around $100,000, and health benefits were projected to increase by about $600,000 with an ongoing evaluation underway. The city’s TCRS (Tennessee Consolidated Retirement System) employer rate also rose, adding roughly $80,000 to costs.
Members reviewed special revenue funds and capital priorities, including a proposed $3.7 million allocation from PIP (the infrastructure projects fund) and $1 million from state street aid for paving. The proposed capital and PIP planning also included a replacement fire engine, replacement hose and equipment for the fire department, and a proposed 13 police vehicles (10 funded in PIP and three from the drug fund). Committee members asked for more detail on mileage/usage tracking for police vehicles and for clearer multi-year encumbrance schedules for large purchases such as a fire engine.
Staff described staffing recommendations embedded in the proposal: a 2% cost-of-living adjustment for all employees, a transfer of one codes position into parks maintenance, and other organizational adjustments. The mayor’s priorities identified in the presentation were: low property taxes (no change proposed to the rate), a structurally balanced operating budget, debt reduction and continued investment in paving and public safety apparatus.
Given the operating gap, staff and the mayor plan continued work with departments on discretionary reductions and health-benefit options. Budget workshop number two was scheduled for May 5 at City Hall to review new and continuing projects and to present updated health-benefit analyses and revised revenue/expenditure options. Staff said some savings opportunities tied to health-plan changes could require a six-month transition because of deductible timing.
Committee members asked for more detailed numbers on paving mileage covered by the proposed funds and an itemized list of PIP carryovers and encumbrances. Staff committed to circulate updated sales-tax figures and other supporting documents by email in the coming days and to include organizational charts and authorized positions with the formal budget ordinance when it moves forward.
