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O'Fallon council discusses conditional midyear pay increases; staff says midyear amendment would be possible if revenues permit
Summary
Council members debated adding language to the FY2026 budget to allow conditional midyear salary increases tied to revenue performance. Staff said a midyear amendment would be the appropriate mechanism, and estimated a citywide cost of about $1 million for broader increases.
Council members opened discussion on the fiscal year 2026 budget during the Oct. 23 workshop, focusing on whether the city should plan for conditional midyear salary increases should revenues, especially sales tax, rebound.
Councilwoman Lisa Thompson said she wanted language added that would allow the council to consider additional pay adjustments midyear depending on revenue performance and legislative outcomes. "I just wanted to start the discussion of considering, perhaps putting some language into the budget that would allow for us to give midyear salary increases conditionally based on some economic... the sales tax rebounding," Thompson said.
Finance staff cautioned that the form of any change would be a midyear budget amendment rather than inserting unfunded commitments into the existing ordinance. "If we wanted to evaluate this at midyear, I am more than happy to do that," the finance staff member said, adding that the council cannot adopt language creating pay obligations without designated funding.
Staff presented cost and policy context: the budget as proposed includes a baseline 2.5 percent increase for employees who receive a successful evaluation. Staff estimated the cost of broader increases at roughly $1 million citywide and about $620,000 to the general fund; the figure provided includes salary and additional benefits costs such as FICA and insurance. Staff said the average employee increase across the organization was approximately 4.3 percent in the current adjustments and that the city previously used a range adjustment approach rather than raising all incumbents to a new midpoint.
Other data points discussed included full-time turnover of about 22 percent for 2025 (14.2 percent excluding retirements) and that staff will analyze midyear funding sources — not solely sales tax — and return with a recommendation if revenues permit. The council set a public hearing for Nov. 20 on the budget and scheduled final reading and passage in December.
What they did not decide: council did not add binding budget language on midyear increases at this meeting; members agreed to "make note of it and look at it in July" and asked staff to return with midyear analyses if conditions warrant.
