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Royal Oak city manager previews fiscal 2026 budget, urges millage capacity change and targeted capital investments
Summary
City Manager Joe Gautra presented the draft fiscal 2026 budget, highlighting capital priorities, proposed transfers of ARPA funds to downtown projects, a recommended $25 million water bond, and a recommendation to seek a charter amendment to increase public safety millage capacity to 6 mills.
City Manager Joe Gautra presented the Royal Oak draft fiscal 2026 budget on May 19, 2025, laying out revenue trends, capital priorities and department requests while flagging pressures in public safety spending and lead-line replacement mandates.
Gautra said the general fund has faced constrained revenue trends while public safety costs have risen substantially; he illustrated a jump in police costs from roughly $20 million to an estimated $27 million in the coming year. To address infrastructure needs, Gautra proposed issuing approximately $25 million in water bonds to coordinate water-line replacements with the city’s road program so the city does not have to dig up recently repaved streets in short order.
On ARPA and downtown investments, the city manager said staff are proposing to divert roughly $1,000,000 in ARPA funds to support a Salter Center roof replacement and a downtown parking-system reinvestment and placemaking project; with matches from the Royal Oak DDA, Gautra said the combined investment would total about $2,000,000.
Gautra also highlighted several other proposals in the draft budget and related work plans: using internal service fund balances for IT and cybersecurity upgrades (including a move toward mobile workforce tools), a lifecycle replacement schedule for SCBA breathing units for the fire department, continued annual costs for the police department’s Axon technology contract, and a proposed $75,000 downtown/solid-waste-funded pilot composting program. He noted an expected $520,000 deficit in the auto parking fund and cautioned staff would take a conservative approach to revenue assumptions.
On public safety finance, Gautra presented a millage-cap analysis under Royal Oak’s charter and recommended the city consider a November ballot charter amendment to increase the maximum mills available for public safety from 3.975 to 6 mills to provide future flexibility (he stressed the amendment increases capacity rather than immediately raising rates). Gautra described this as an enabling measure for the city to better respond to market-driven cost increases in public safety services.
Commissioners asked for details about vehicle replacement policy, timing for a proposed policy to guide motor pool purchases and whether some items (for example, a Zamboni replacement) would be deferred. Gautra said staff expect to return with a formal policy and that some capital requests were cut or deferred as part of the draft budget. He also warned that grant funding (for example, DOE or CDBG) remains subject to federal decisions and that staff would be conservative about relying on uncertain grant awards.
Next steps: Gautra and staff said a public hearing on the fiscal 2026 budget could be scheduled for June 9, 2025, and staff will return with detailed budget documents and any amendments after public input.
Key quotes: “So the bottom line up front,” Gautra said when opening the presentation, stressing a focus on capital prioritization, government modernization and maximizing available funding sources.
