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Hot Springs budget workshop: staff projects $125,275 general-fund shortfall for 2026
Summary
City finance staff told the Hot Springs City Council that current 2026 revenue and expenditure projections leave a $125,275 gap in the general fund. Council reviewed major funds and revenue lines, discussed expenditure pressures such as insurance and personnel costs, and deferred some contested allocations to the next meeting.
Misty, the city’s budget presenter, told the Hot Springs City Council the city is projecting a $125,275 shortfall in the general fund for 2026 and urged council to pursue a “structurally balanced budget” so the city doesn’t rely on savings. "In the general fund, we're projecting a loss of a $125,275," Misty said as she walked council through revenue worksheets and Banyan printouts.
The revenue review covered the city's largest sources — property taxes and municipal sales and use taxes — and a variety of smaller lines, from licensing and building permits to airport fuel sales. Misty estimated current-year general property taxes at $1,418,450 (historical collection rate 96–98%) and projected moderate annual sales-tax growth of roughly 2–3% adjusted for long-term trends. She noted statutory and policy constraints: local tax growth limits affect revenue planning and the City’s cemetery perpetual care fund is statutorily restricted (the perpetual-care fund must maintain at least $50,000 and only amounts over that can be used for care).
The city’s fund structure was reviewed in detail: governmental funds include General (101), the liquor/BBB fund (211), the additional sales-tax fund (212), the BID fund (213), capital improvements (501) and the Cemetery Perpetual Care Fund (701). Enterprise funds include water (602), wastewater (604), solid waste (612), the golf course (620) and Evans Plunge (621). Misty emphasized enterprise funds are treated as business-like and are expected to self-balance.
On the expense side, staff recommended budgeting an estimated $0.75/hour cost-of-living adjustment for wages for 2026, and used conservative assumptions for insurance (a 10% mid-year increase on health premiums for half the year and 10% for other insurance premiums). Contingency authority was set at $75,000. Staff also proposed reallocating $12,000 previously paid to the Chamber to create budgeting authority for an in-house deputy finance/media role; actual pay adjustments would be decided later by council.
Several department-specific issues were flagged: Evans Plunge shows a projectioned deficit versus listed expenditures, the Fire Department requested $290,975.97 but the budgeted projection shown was $90,000 (the council invited fire personnel to speak at the next meeting), and the city’s audit and building repairs remain significant items in the general-government budget. Council members and staff agreed to continue several in-depth conversations, particularly about police and fire budgets, at a follow-up meeting.
Tomorrow’s agenda will revisit deferred items and focus on options to close the remaining gap, including further expense cuts, reallocation of one-time funds, or limited use of reserves. The council did not adopt final appropriations during this workshop; staff was directed to bring back clarifying numbers and to meet with department heads and stakeholders in advance of final decisions.
