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Highland releases tentative FY26 budget; general fund reserves projected to fall below prior target
Summary
City Finance Director David Mortensen presented the Highland City tentative fiscal 2026 budget, showing planned uses of fund balance across multiple funds and an estimated general fund reserve of about 26.4% of revenues at year-end if the budget holds.
Highland City Finance Director David Mortensen presented the city’s tentative fiscal 2026 budget and an all-funds summary to the City Council, telling members hard copies of the tentative budget were available at the meeting.
“The far left column in the darker gray color is where we expect to start,” Mortensen said, describing the budget packet’s all-fund summary that shows beginning fund balances, budgeted revenues and expenditures, net revenue, proposed use of prior-year fund balance and estimated ending balances.
The budget rewords a previously labeled “depreciation expense” line. Mortensen said the change—from “depreciation expense” to “saving for capital asset replacement”—is intended to clarify that the city is setting money aside for future capital replacements rather than budgeting a noncash depreciation charge. “We’re not budgeting for depreciation. We’re budgeting to save money for future use,” he said.
Mortensen told council members the proposal would use roughly $80,000 of general fund balance this year to cover the second-year portion of an Alpine Highway fence reimbursement approved earlier. Using that amount, the tentative budget estimates general fund reserves at about $3.5 million, or 26.4% of total revenues at fiscal-year end—below the city’s 35% informal target.
Council members discussed why reserves changed from the prior year. Mortensen said revenue shifts and transfers into capital funds in prior years affected reserve calculations. He noted the calculation is based on current-year revenues and can swing year to year when grants or one-time transfers occur.
The tentative budget also lists specific uses of fund balance in several restricted funds, including parks capital, building capital and multiple utility funds. For example, the building capital improvement fund shows a proposed $331,000 drawdown to pay a portion of building bond debt service because a prior-year transfer reduced the need to transfer funds this year.
The council will consider the tentative budget, meet one-on-one with staff for detailed review and continue hearing updates through May and June before final adoption. The budget calendar shown at the meeting identifies June 17 as the date for final adoption.
What happens next: staff will meet individually with council members to walk through details and incorporate council direction before formal hearings and final adoption in June.
