County staff preview FY2026 budget: personnel, overtime, property taxes and a $2 million surplus projection

Kalamazoo County officials on Aug. 20 presented a combined finance and budget update as the administration prepares an administrator27s recommended fiscal 2026 budget. Finance and treasury staff outlined the July financials, investment results, revenue assumptions and structural budget considerations that will shape next year27s proposal.

Chief Deputy Treasurer Tyler White told commissioners the county27s investment portfolio had a par value of $141,818,879.10 and a market value of $141,025,401.67 as of July 31, leaving a mark-to-market variance of $793,477.43. "For the month of July, our portfolio earned $534,441.15 on an average daily balance of $143,010,279.92 for an effective rate of return of 4.4%." White noted that, for the year, the portfolio earned about $4.29 million on an average daily balance and that the portfolio27s effective rate of return exceeded recent inflation (2.7%), giving a net gain in purchasing power for July.

On the operating side, finance staff said 2025 salaries total approximately $52.7 million and that 2026 salaries are projected at $55.1 million, reflecting a 3% wage-scale increase and eligible adjustments. Administration identified personnel-related costs as the largest driver of general-fund expenditures and said overtime budgeting—especially in the sheriff27s office—has historically produced actual costs above budgeted amounts.

Revenue assumptions included a 4.5% increase in property-tax receipts (about $56.4 million for 2026), a flat marijuana-tax forecast of $2.1 million pending state data, and an increased investment-income estimate (bumped to $3.5 million in the proposed forecast, with up to $1.5 million earmarked for capital improvements). Staff flagged state revenue-sharing as uncertain because the House, Senate and governor had differing proposals.

On fund balance, staff projected roughly $2.0 million in general-fund surplus available for new ongoing funding requests and about $721,600 available in the law-enforcement fund. Administration reiterated a proposed 22golden ratio22 for allocating unanticipated revenues (portions to capital, board priorities and fleet/large capital) and recommended keeping a conservative reserve within the county27s 202525% fund-balance policy.

Longer-term liabilities were highlighted as a risk. Staff said other-post employment benefits (OPEB) and retiree health obligations are a material, rising cost. The presentation noted a demographic "rule of 80" and that a notable share of current employees are eligible for retiree health under legacy provisions; staff said continued vigilance on benefits management and potential fringe-rate adjustments will be necessary.

What happens next: Administration said it will present the administrator27s recommended budget by Sept. 16 (or earlier if possible) and that the $2.0 million surplus projection already incorporates a $400,000 community-grants allocation. Commissioners asked staff for additional breakdowns and modeling; staff agreed to provide further detail and scenario projections during the budget process.

Why it matters: Personnel costs, overtime and unpredictable revenues remain the primary drivers of the county27s budget outlook. The board must weigh requests against reserve policy and long-term liabilities such as OPEB as it finalizes 2026 appropriations.