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Smithville board directs cuts and holds in FY26 budget after state audit notice
Summary
After receiving official notice of a state audit, Smithville board members directed staff to remove or delay several FY26 funded items to cover a potential $125K–$150K audit cost and asked staff to present a revised recommended budget for first reading on Oct. 7.
Member 1, a board member, opened the meeting by saying Smithville had received official notice that “we will be having a state audit,” and urged colleagues to reconsider roughly $450,000 in recommended FY26 funded items so the city can absorb an estimated $125,000–$150,000 audit cost without unduly depleting reserves.
The audit estimate was discussed as a high-end $150,000 assumption; Member 2 clarified the figure had been shown as if absorbed entirely in the general fund, while Member 1 noted the city customarily cost-shares external audit expenses (proposing a 70/30 split between the general fund and utilities as an option). Member 2 said staff had “plugged in a 150” to reflect the high-end estimate.
The board examined trade-offs between maintaining service levels and preserving reserves. Member 2 disclosed a separate, already-planned 4% staff salary increase that would add roughly $98,000 to personnel costs and warned of recruitment and retention consequences if that item were cut. Members discussed deferring or removing several funded highlights to reduce near-term pressure on the general fund and to preserve a targeted operating reserve.
Specific holds and removals the board directed during the discussion included removing outside agency financial assistance (the board referenced removing “the whole 40”), placing a hold on the mini excavator and the golf cart purchases, and cutting or reducing event-related spending. The board also debated a requested $5,000 contribution toward a regional event website; staff noted partner counties were proceeding without Smithville and the board signaled it would notify partners it could not provide the $5,000 contribution at this time.
Member 2 recapped the changes and said the net impact of the identified holds and removals freed approximately $205,000; members agreed to revisit deferred items after second-quarter revenue results and after the external audit process clarified final costs. Member 2 directed staff to use the board’s guidance to prepare a recommended FY26 budget for first reading on October 7; a second reading date was referenced in the discussion but was not clearly specified in the transcript.
The board closed the item by voice approval; Member 4 called for the motion and members answered “Aye.” The direction taken was to prepare a revised recommended budget reflecting the holds and cost-share options, return with updated numbers after the second quarter, and proceed with the October first reading.
