Norwalk reviews FY2026 budget as property-tax reform trims projected new revenue

Norwalk City Council convened a dedicated work session on Jan. 16 to review the proposed Fiscal Year 2026 budget and the five-year capital improvement plan, with staff warning that state property-tax changes under House File 718 will sharply reduce the new revenue the city can capture.

City finance and department staff framed the issue as a revenue-side constraint that reduces options for wage increases, capital projects and service expansions. Staff recommended maintaining the current levy and proposed a 3% base wage adjustment as the planning assumption while describing a range of staffing requests and capital needs.

Why this matters: House File 718 reduces the portion of new assessed value the city may capture. Staff said the law lowers Norwalk's ability to capture new general-fund revenue this year from an estimated $597,000 (under the older calculation) to roughly $203,000, about a 1.85% increase against an $11 million general fund. That drop narrows the city's flexibility to pay larger wage increases, accelerate capital projects or avoid hiring freezes.

Key figures and staff recommendations - New-capture estimate: Staff reported that under the new rules the city can capture about 3.24% of assessed growth, producing roughly $203,000 in additional general-fund dollars for FY2026. Under the prior structure staff estimated closer to $597,000. - General fund size: roughly $11 million. Staff described $203,000 as about a 1.85% increase for that fund. - Reserve levels: audited FY2024 reserves were 36%; estimated FY2025 reserves 35%; projected FY2026 reserves about 32% under the recommendation. - Base wage adjustment: staff recommended a 3% base…