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Crossville staff previews FY 2025–26 budget, flags interest‑income and depreciation risks
Summary
Finance staff gave a first look at the proposed FY 2025–26 budget, showing modest general‑fund and utility surpluses but warning that falling interest income and rising depreciation for planned capital projects could erode those projections.
City finance staff presented a first draft of the fiscal year 2025–26 budget at the April 1 work session, saying the city currently projects modest surpluses in the general fund and utilities but cautioned that lower interest income and increased depreciation tied to forthcoming capital projects could reduce those margins.
The presentation said the general fund was showing about $245,000 in surplus on the first pass. The water/sewer and utility budgets were both forecasted to be in surplus as well, though the water/sewer fund’s margin is smaller. Staff emphasized that interest income — which had been unusually high in recent years — has fallen and further declines would reduce net revenue. The presenter said interest income for one utility line fell from $229,000 last year to an estimated $200,000 drop this year, and staff reduced budgeted interest income conservatively in the draft.
Staff also noted increased depreciation tied to capital projects. The budget includes a new SCADA system and other infrastructure that will increase depreciation expense; staff estimated roughly $500,000 of additional depreciation next year across projects and called out about $100,000 a year in depreciation tied to a SCADA installation. Large capital projects listed in the draft included a speculative building and drive project (roughly $4.5 million), a fire‑station remodel (approximately $750,000), a new building in the Catoosa area (roughly $2 million plus grading), and several water and sewer projects pushing the capital ledger into the millions; staff said total projects across funds were “noted in the packet” and remain under refinement.
The draft keeps outside‑agency contributions at current levels pending council review; staff listed outside requests totaling about $2.5 million, led by a new item identified as a Sports Authority payment tied to the authority’s bond obligations. The draft budget also assumes a 5% cost‑of‑living adjustment (COLA) and a 2% step/merit component (described in the meeting as “STAMP”) built into department budgets.
Staff cautioned that grant receipts are treated separately and cannot be counted to cover operating expenses; the draft therefore does not count grant income to make operating balances appear healthier. The presenter urged council members to review department tabs (the budget was reorganized to provide a tab per department) and said staff will circulate complete packets for detailed review ahead of future meetings.
Ending: Staff said most funds currently show surpluses on a preliminary basis but asked council to consider capital priorities and the exposure from falling interest income. Council did not take action on the draft and asked for detailed line‑item packets and further review before final adoption.
