Englewood Budget Advisory Committee finalizes annual report; flags reserve drawdown and CIP prioritization issues

The Englewood City Budget Advisory Committee met and advanced a draft annual report for submission to City Council, discussed the city's reserve policy and 2026 budget outlook, and elected Jay Knight as vice chair.

The committee told staff it needs a finalized report this week for an appearance before City Council on Aug. 4. "All those in favor of Jay being Vice Chair, say aye," Peter Eckle said as the committee confirmed Knight as vice chair by voice vote. Peter Eckle also set a Friday upload deadline for the committee's report, saying, "I would need to upload it, by Friday end of day."

Why it matters: the committee warned that Englewood faces an operating shortfall that could draw the city's unrestricted reserves down toward the lower bound of the adopted range and asked staff for more data and explicit guidance on when it is reasonable to use reserves versus cutting operating costs. The committee also raised concerns about the capital improvement project (CIP) prioritization form, saying its scoring tends to favor safety projects and may underweight other community priorities.

Key actions and near-term tasks

- The committee approved the June meeting minutes by motion and voice vote. The motion to approve was made during the meeting and seconded; the minutes were accepted without a recorded roll-call tally. - The committee confirmed Jay Knight as vice chair by voice vote after nominations. - Committee members asked staff to finalize the annual report for City Council by Friday ahead of the Aug. 4 presentation and to provide additional financial detail (five-year reserve balances, unassigned fund balance and the numeric implications of a projected shortfall).

Discussion highlights: reserves and budget outlook

Committee members reviewed the city's reserve and investment policy, which the memo characterized as having an "unrestricted reserve range of 12% to 21.4%" and a default midpoint target of about 16.7%. Staff reported a projected operating shortfall for the 2026 budget in the range of about $1.5 million to $2.0 million. That shortfall, if addressed by the budget as originally presented, would reduce the city's unrestricted reserve level from roughly 16.7% down toward the low end of the adopted range; staff said an unmitigated version of the preliminary budget would produce a roughly 13% unrestricted reserve outcome.

City staff described two basic choices to close the gap: reduce ongoing operating expenses or draw on fund balance/reserves. Committee members pressed for clearer guidance on when drawing below the policy target is appropriate versus when to prioritize cuts to operating budgets. Staff and council representatives told the committee they are pursuing line-item reductions, rightsizing of revenue estimates and other cuts to avoid significant reserve draws while trying to preserve staffing levels.

Budget drivers and examples discussed

- Sales and use taxes are the single largest revenue source for the general fund; staff said trends in that revenue category are the primary driver of the revenue weakness. - Staff gave an example of cost pressures: health insurance costs increased by about $212,000 this year (a roughly 7.5% increase), and the city is budgeting a 1% across-the-board salary increase, producing an overall cost pressure near 3.1% in the current cycle. - Staff noted prior decisions to increase capital spending in recent years and discussed a potential certificates-of-participation financing for building energy and HVAC upgrades in the neighborhood of $6,000,000 (described as a financing mechanism rather than a cash-out refinance).

CIP prioritization and process recommendations

Committee members revisited the capital improvement project prioritization tool and surface-level concerns from past cycles: members said the current scoring format tends to favor safety-related projects, which can cause smaller but strategic or visibility-focused projects (for example, wayfinding, public art or communications-focused capital requests) to score lower and receive less funding. The BAC proposed:

- adding a clear section in the annual report describing the CIP process and the committee's observed limitations in the current scoring tool; - flagging projects that have been on the unfunded list for multiple years and indicating partial completions or staged work; and - developing a plan to review the prioritization tool comprehensively before the 2026 CIP cycle and offer suggested changes or alternatives to Council.

Sales and use tax reviews and other items

The draft report will continue the committee's formal review language for the two voter-approved sales and use tax areas the BAC reviews per Council direction (identified in discussion as the public safety/policing and road and bridge expenditures approved by voters in 2022). The committee clarified that its role is advisory and review-focused; members asked staff to ensure annual reporting and departmental presentations use consistent formatting and clear labeling for metrics such as full-time-equivalent staff percentages.

Next steps and deadlines

Committee members asked staff (finance) to provide a five-year table of general fund balances, the reserve-dollar amounts corresponding to the 12% and 21.4% policy bounds and the current unassigned fund balance. The committee asked staff to finalize and upload the annual report by Friday so committee members can finalize who will attend the Aug. 4 City Council meeting.

Votes at a glance

- Approval of June meeting minutes: Motion made and seconded; approved by voice vote (no roll-call tally recorded). - Election of officers: Jay Knight confirmed as vice chair by voice vote; chair position remained with the committee chair pending further confirmation (no formal roll-call tally for a separate chair election was recorded in the transcript).

Ending

The committee closed the meeting after confirming the Friday deadline for the report and reminding members to avoid "reply all" email threads that could run afoul of open-meeting rules while drafting the report. The committee plans additional follow-up with staff to obtain the requested financial schedules and to develop any recommended changes to the CIP prioritization tool ahead of the 2026 cycle.