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Peoria presents midyear financial review showing modest ongoing capacity and reliance on one‑time reserves
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Summary
City finance staff told the council that slower sales‑tax growth and higher health care costs leave the general fund with about $3.3 million in ongoing capacity over five years, while one‑time reserves near $60 million provide flexibility. Staff urged caution on new ongoing spending as revenue growth moderates.
Peoria officials presented a midyear financial review on Nov. 18, telling the City Council the local economy continues to grow but at a slower pace and that the city should expect modest revenue growth heading into the Fiscal Year 2027 budget cycle.
"This year has proven very hard to really evaluate our current economic condition," Kevin Burke, Deputy City Manager, said as he introduced the review and the finance team. CFO Sean Bridal said national GDP remains positive but slower than recent years and that inflation remains slightly above the Federal Reserve's 2% target. "We just expect it to continue kind of on pace above the levels that we're looking for," Bridal said of inflation.
Peter, Deputy Finance Director, translated that outlook into local revenue projections. He said the general fund is driven primarily by local sales tax, state shared sales tax and state shared income tax. While historic local sales‑tax growth was “unprecedented” in 2021–22, recent months show slowing retail and restaurant collections; Peter flagged a 10% year‑over‑year drop in August collections and another 7% decline in September as signs that the 2.5% forecast may require revision if the trend persists.
The city also absorbed a $10 million decline in urban revenue sharing tied to the state’s flat tax implementation; staff treated that as a one‑time adjustment moved into a one‑time reserve. Using baseline assumptions that include a $40 million urban revenue sharing base, 2.5% local sales‑tax growth and a 10% increase in health‑care costs, staff project about $3.3 million in ongoing financial capacity over the next five years (roughly $600,000 per year) but retain about $60 million in one‑time fund balance above reserves.
Peter emphasized tradeoffs: the half‑cent sales tax fund was drawn down for the Peoria Innovation Corps economic development investment and staff recommended letting that fund rebuild for two to three years before authorizing major new projects from it. Peter also warned that utility rate adjustments already adopted for water, wastewater and solid waste will need continued discipline to avoid future rate increases.
Council members thanked staff for the presentation and urged continued diversification of the sales‑tax base. One council member summarized the case for economic development investments, saying they help capture spending residents now take outside Peoria. Staff stressed that half‑cent funds used for economic development do not affect enterprise utility funds because of fund accounting.
The city will continue department budget review in January and expects to return a recommended budget to council in March ahead of scheduled budget study sessions.
