Hot Springs council opens budget hearings with $125,000 general-fund shortfall

Hot Springs — City finance staff opened the first of two budget hearings on July 5 with a point estimate for the 2026 general fund showing a shortfall.

"In comparing our revenue to our expenses for estimates for 2026, in our general fund, we're projecting a loss of a $125,275," Misty, the finance presenter, told council members as she walked through revenue worksheets and historical collections.

The staff presentation identified major revenue sources and assumptions: general property tax collections of $1,418,450 based on a historical collection rate of 96–98 percent; municipal sales and use tax projected at about $1.6 million; and other locally controlled receipts such as liquor licenses, fees and pilot payments from housing authorities. Misty said she used conservative growth assumptions — roughly 2–3 percent annually for sales tax — and factored in statutory levy limits and the most recent CPI growth allowance.

Council members reviewed enterprise funds separately from governmental funds. Staff emphasized that water, wastewater, solid waste, the Southern Hills golf course and Evans Plunge operate as self-balancing enterprise funds and that savings in one fund do not automatically cover deficits in another. Misty noted a $1.125 million estimate for metered and flat-rate water revenue and flagged long-term debt obligations that will affect net positions in utility funds.

Several smaller revenue lines and one-time items were discussed, including airport fuel sales, library allotments and a new cell-tower lease that began producing revenue in 2023. City staff also noted statutory constraints on cemetery perpetual-care funds and the use of a portion of occupancy taxes for the city’s business improvement district and chamber activities.

Mayor and councilors pressed staff for conservative assumptions and asked that budget authority be set carefully for proposed personnel steps. Staff said the council will either reach a structurally balanced budget over the next two hearings or consider using savings to close remaining gaps, but recommended prioritizing structural fixes over ongoing reliance on reserves.

The council approved the agenda and waived council pay for the special meeting by voice votes earlier in the session. Follow-up sessions are scheduled to address remaining expense items and specific department requests.

The council recessed for additional expenditure hearings and will return to unresolved items, including major department requests, at the next scheduled meeting.