Jackson Council opens FY26 budget review; Gregory Lane, staff pay, insurance and IT costs flagged

The Jackson Town Council began a multi-step review of the proposed FY26 town budget during a special meeting April 14, as town staff laid out fund balances, major capital projects and recommended changes to compensation and operating assumptions.

Town Manager Charles St. Clair and Kelly Thompson, the town’s finance director, presented the budget framework and answered council questions. Thompson told the council, “This is the first budget meeting. We do not need to have all the answers today,” and emphasized the presentation was the start of an iterative process that will include an aspirational budget for council consideration.

The presentation listed a beginning general fund balance in the current year of roughly $17.5 million and a proposed ending general fund balance of about $15.0 million—roughly 40 percent of annual general-fund expenditures as presented. Staff identified a target or policy reserve of 25 percent of the general fund, which they quantified at $9.6 million, leaving roughly $5.6 million described in the materials as the discretionary portion of the fund balance under the current proposal.

The largest single capital project discussed was Gregory Lane. Staff said the town currently has $18,500,000 fully budgeted for Gregory Lane this year but warned that projects of that size can produce cost changes and that contingency and reserve planning is important. Thompson said several funds will contribute to big capital draws, including general capital, water and sewer funds and grants.

Key spending and revenue issues

- Compensation: The recommended compensation package in the manager’s proposed FY26 budget combines a 4.7 percent cost-of-living adjustment and a 2.5 percent annual increase, yielding about a 7.2 percent total increase in wages. Staff estimated the combined effect would add roughly $1 million in recurring personnel costs year over year. The presentation framed wages and benefits as the town’s largest recurring expenditure.

- Health insurance: Staff warned of steep increases in employee medical costs. The presentation cited an overall health-insurance cost increase of about 18 percent for the town this year, with a roughly $657,000 budgetary impact and a noted jump in stop-loss premiums of about 30 percent. Thompson said staff was not recommending passing those increases through to employees at this time.

- IT and software: Finance staff highlighted rapid growth in annual contract and software maintenance costs. Slides showed recurring contract maintenance and software costs rising from roughly $379,000 in earlier years to about $1.4 million in the most recent figures. Staff said they planned to track departmental software subscriptions more closely and to present that breakdown in coming meetings.

- Capital funding approach: Staff described the town’s longstanding practice of transferring one-half of the town’s “fifth-cent” (half of one cent of sales tax) into the capital project fund and using state direct-distribution (“over the cap”) money (estimated at about $362,000 this year) to support capital. Staff cautioned that the current practice should be monitored against depreciation and ongoing maintenance needs, and they said they had doubled street-maintenance contributions in recent years and were recommending another increase this year.

- Enterprise funds and large projects: Water and sewer enterprise funds were presented as generally healthy; staff said planned water spending is about $3.6 million and sewer spending about $3.0 million in FY26, much of which will go toward Gregory Lane and Vine Street work. Staff noted the town completed a comprehensive water/sewer rate and capacity study in 2021 and updates since then, but said very large projects (for example a wastewater treatment-plant expansion) were not currently fully funded by the rate structure.

Other items highlighted

- Park exactions: Staff showed the park-exactions balance would be drawn down by a proposed $600,000 expenditure this year for Karnes Meadow Park, reducing that fund’s balance from about $646,000 to roughly $97,000 after the proposed withdrawal.

- Affordable housing fund: Staff said the town’s housing fund was about $4.8 million when combining assigned and restricted components (approximately $3.6 million assigned and $1.4 million restricted, as presented). Staff noted assigned amounts can be reallocated by council action, while truly restricted dollars must be used for their stated purpose.

- Joint departments with the county: Council and staff reviewed a phased-in change to the town/county funding split for joint departments tied to the recently completed justice-center financing. Staff said the town’s share shifted modestly in the town’s favor this year (a change that staff estimated would reduce the town’s share of joint-department operations and capital by roughly $780,000 in total for the year) and noted the funding formula will be revisited after the 2030 census as required by the intergovernmental arrangements.

Budget process, timing and next steps

Thompson and St. Clair reminded the council the budget book and a change log will track amendments as the council refines priorities. The manager said staff will prepare an “aspirational” budget packet showing additional items the council might choose to add, and staff asked councilmembers to submit questions to guide follow-up work. The council scheduled additional budget work, including a departmental deep dive at a follow-up meeting; staff said directors would be available to answer department-specific questions.

Ending and formal action

At the end of the meeting Councilman Schechter moved to adjourn; Councilwoman Beeman seconded and the council recessed by voice vote.

The council’s work on the FY26 budget continues in subsequent budget workshops; staff said the process will remain iterative and that they will return with updated revenue estimates, department-level detail and an aspirational budget for council consideration before formal adoption in mid-June.