Finance staff: Boise has balanced outlook for FY2026 but ‘very little budget flexibility’ as personnel, PERSI and insurance costs rise

City finance staff presented a general-fund budget outlook that projects a balanced position entering fiscal year 2026 but warns the city faces constrained flexibility for new investments because personnel costs, retirement (PERSI) contribution-rate increases, software-maintenance growth and rising workers’ compensation/insurance costs are growing faster than general-revenue categories.

Alicia McAndrews, finance presenter, told the council: “The main theme that I hope you take away... is we don't have a deficit, but we have very little budget flexibility.” Eric (finance staff) and McAndrews laid out the forecast assumptions: property-tax forecasting assumes the statutory 3% base levy option but staff built in full new-construction growth and the effects of 2022 state growth-cap legislation (90% for new construction and 80% for expiring urban-renewal districts). They said sales-tax growth is uncertain and modeled at 1% for FY2026, and liquor-tax receipts had shown recent declines.

Staff quantified several specific drivers. Finance said that council decisions to take less than the full 3% property-tax base increases in recent years produced a cumulative base impact of about $5.7 million and cumulative relief on the order of roughly $30 million over multiple years; the 2022 growth-cap changes have a current base impact of about $1.9 million and a cumulative impact of about $4 million. Staff also said typical year-end carry-forward amounts that have been used for one-time initiatives will likely be significantly lower for FY2026 than in recent years.

Personnel is the largest general-fund expenditure category (staff projected about 71% of general-fund operating expenses in FY2026) and staff showed personnel-cost growth has outpaced property-tax growth: a 6.5% compound annual growth rate for personnel versus 3.6% for property taxes over the period shown. Eric said the city has added staff in the current year via interim budget changes — “I believe that it is 3, however. 2 permanent positions within the IT department... and actually, as I'm speaking, I'm gonna add a fourth one” — and that staff would supply an exact count for general-fund positions added off-cycle.

Staff highlighted projected retirement-plan (PERSI) contribution-rate increases. Based on PERSI's messages, the employer contribution-rate could rise to about 13.53% and then to 15.87% in later years; staff estimated that level of increases could add approximately $2.9 million in base cost impact by 2028 on general employees and represent roughly $58 million cumulative over a 10-year horizon if those assumptions held.

Other rising costs noted include software-maintenance and subscription conversions (from on-premises to SaaS) and escalating risk and workers’-compensation claims. Finance said recent experience has required one-time fund transfers to maintain solvency in the city’s risk funds in five of the last eight years and that claims experience, national insurance market shifts, added assets and more employees are contributing to higher projections.

Council members asked for follow-up materials; staff agreed to provide a vacancy report by department that shows unfilled positions with corresponding budgeted salaries and to produce the exact number of general-fund positions added through interim budget changes. Staff also outlined the FY2026 calendar: a May budget workshop (department presentations), release of the budget book in June, a second budget workshop and public hearing on July 15, and adoption in August.

Why it matters: the presentation shows the city is not forecasting a deficit but will have limited room for new, ongoing investments. Rising nondiscretionary costs and past policy choices to provide property-tax relief are constraining options; staff emphasized the need for careful prioritization and said they will continue refining assumptions as the budget process proceeds.