Council sets FY26 budget guidance: sales/lodging projections, 25% reserve and town mill retained at 0.5

The Jackson Town Council on March 17 held its official kickoff for the fiscal year 2026 budget, giving staff guidance on revenue assumptions, reserve policy and other revenue options the town should explore as it prepares the draft budget.

Key actions and votes - Sales tax projection: Council approved staff’s recommendation to use a 2% increase in sales‑tax collections as the working projection for the FY26 draft budget. Vote: unanimous. - Lodging tax projection: Council approved a 3% lodging‑tax projection for the draft budget. Vote: unanimous. - General fund reserve policy: Council confirmed a target reserve of 25% of net operating expenditures. Vote: unanimous. - Town property tax (mill levy): Council set the town’s property‑tax assessment at 0.5 mills for the FY26 draft budget. The motion passed 4–1; Councilwoman Beeman voted no, citing concerns about housing affordability and the burden on residents. - Additional revenue exploration: Council directed staff to evaluate a set of alternative revenue sources for the draft budget, including fee adjustments, town‑only lodging or sales taxes (or town/county joint options), an economic development sales tax, a town‑only special purpose excise tax (SPET), use of any funds above the 25% reserve (“delta”), and property tax options.

Why this matters Town staff told council that sales tax is the dominant revenue source for the general fund and that the town is highly dependent on it to operate core services. The town’s current general fund balance and reserve figures staff cited were: - Total general fund (FY25 amended): $21,130,000. - Target general fund reserve (25%): about $9,097,000.

Staff also provided simple conversion figures for council planning: a 1 percentage‑point change in sales tax yields roughly $240,000 in revenue in the town’s model. Staff estimated that every 0.5 mills of town property tax generates roughly $450,000 in revenue.

Presentation highlights Mitra Thompson, town manager, and Kelly Thompson, finance director, led the presentation. Kelly Thompson walked the council through historical sales tax patterns and the town’s reliance on a few large categories (retail, lodging, restaurants, building materials, motor vehicle sales and online/mail order), which together comprise about 77% of local sales‑tax collections.

The staff presentation emphasized that revenue projections are not final and that council will receive quarterly updates. Staff recommended careful monitoring and quarterly check‑ins so that the council can adapt spending later in the year if actual revenues diverge from projections.

Council debate Council discussion focused on several themes: - Equity and affordability: Councilwoman Beeman said she would vote against an increase in the town’s property tax levy because of housing affordability concerns and the burdens on residents who are already struggling. - Timing and scale: Several councilors noted that sales and lodging taxes collected are seasonal and that the timing of voter ballots for new sales taxes or lodging tax changes could limit their effect in FY26; sales‑tax ballot measures would appear to affect later fiscal years. - Use of revenue: Councilors asked staff to pair revenue options with proposed uses — for example, preservation and conservation programs, affordable housing, core services, or capital reserves — rather than examining revenues in isolation.

Directives for staff Council asked staff to: (1) use the 2% sales and 3% lodging projections for the draft FY26 budget; (2) maintain a 25% reserve policy for planning purposes; (3) use 0.5 mills in town property tax for the draft budget; and (4) explore a menu of alternative revenues — including fee schedule adjustments, town‑only or joint town/county lodging and sales taxes, economic development sales tax, town SPET options, use of funds above a 25% reserve, and property mill options — and report back with estimated revenue, administrative implications, and potential uses.

Votes at a glance - Sales tax projection (+2% for FY26 draft): unanimous approval. - Lodging tax projection (+3% for FY26 draft): unanimous approval. - General fund reserve target (25%): unanimous approval. - Town property tax assessment (0.5 mills): approved 4–1 (Councilwoman Beeman opposed). Estimated revenue: approximately $450,000 per 0.5 mills. - Direct staff to explore alternative revenue sources (fees, town/county tax options, SPET, economic development tax, use of reserve delta): unanimous approval.

Next steps and timing Staff will prepare the draft FY26 budget using the council’s revenue assumptions. The town manager said the staff will present quarterly revenue/expenditure updates during the budget year and will return with specific proposals and estimates for any revenue options council wants to pursue further. Any new tax measures that require voter approval will be subject to statutory ballot deadlines.

Ending Council provided clear initial guidance on revenue assumptions and a list of candidate revenue options to study. The council also signaled that it expects staff to pair revenue proposals with proposed uses so councilors and the public can evaluate tradeoffs before any ballot measures or formal budget decisions are made.