City administration presented a draft 2026 budget in a work session where staff warned of falling dedicated revenues and set priorities for capital projects and operating lines.

Finance staff reported that Act 13 revenues are projected down about 39%, roughly $107,000 below recent expectations, and that the city used a five‑year average to estimate receipts. "Act 13 is down, 39%," a finance presenter said, adding the administration reduced some capital allocations to preserve grant matches for pump‑track and riverwalk connector projects. Liquid fuels allocations were estimated at about $817,000 for 2026 and are down 6.73%, Public Works leadership said, prompting concern about sustaining regular paving schedules and equipment purchases.

Finance staff also flagged a final full balloon payment under a Federal Transit Administration obligation that they said is due in March; the emergency fund is the currently identified source. When council asked whether a bond had been pursued to spread that cost, staff replied it had not been.

On the expense side, department presentations identified a mix of modest increases and targeted cuts. The Department of Community and Economic Development requested a 7.47% increase ($35,909), described as largely salary-driven. Public Works said it cut several resurfacing line items this year—reducing some street resurfacing and brick‑street work to zero—creating near‑term savings while preserving about $1 million in paving capacity through other allocations. Parks and recreation lines showed small increases overall but raised questions about capital needs and operations.

Councilors asked staff to tighten revenue projections and to identify where small reserves could preserve critical services or match grants. Finance staff said some reductions were one‑time and that the city will continue to seek grant matches for prioritized projects.

The session concluded with a procedural motion to adjourn that was moved, seconded and carried.