Alamance County staff warn of $12.9 million structural gap; commissioners debate cuts, reserves and debt
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Summary
Staff told the board Alamance County faces a roughly $12.9 million projected budget gap starting in FY 2026–27 and that unassigned fund balance is below the 20% policy (17.18% in draft figures). Commissioners pressed for spending cuts, options to shore reserves, and cautioned about debt and mandated costs.
Staff presented a fiscal update showing the county is below its board-adopted undesignated fund balance target. "Our unassigned fund balance, we see a $3,700,000 reduction in the category from 23–24," staff said, and reported a draft unassigned fund balance of $37,200,000, or about 17.18% of expenditures, below the 20% target.
The budget office summarized current-year numbers and a five‑year general‑fund model. Staff said the FY 25–26 budget was adopted at $242.1 million and later amended to $248.0 million; through Dec. 31, collections were about $145.6 million and expenditures $106.1 million. Projected year‑end totals for June 30, 2026, showed revenues slightly exceeding expenses (roughly $522,000) in draft projections.
But looking forward, the five‑year model shows a potential structural shortfall of roughly $12.9 million beginning in FY 26–27. "We used a significant amount of appropriated fund balance to balance the FY 25–26 budget," the budget analyst said, and staff warned that changes in federal and state reimbursement policies (including shifts in administrative cost responsibility) increase uncertainty.
Commissioners debated tradeoffs. One commissioner said the board must prioritize emergency services and ‘‘grow a spine and say no to a lot of these programs,’’ while staff and other commissioners stressed the importance of maintaining service levels and the county’s credit rating if one‑time funds are used as recurring revenue. Staff quantified about $6.0 million needed to restore the unassigned fund balance to the 20% policy and noted rating agencies consider unassigned fund balance when evaluating debt costs.
Staff recommended establishing a sustainable plan to restore reserves, continuing conservative debt practices, and presenting a manager’s recommended budget with fewer on‑the‑fly scenarios. To increase public input, staff proposed an electronic community survey with paper collection through libraries and outreach to community meetings.
Next steps: staff will prepare the manager’s recommended budget and bring CIP and operating recommendations to the board in the adopted budget timeline; commissioners signaled they will provide guidance on priorities (service levels, reserve targets, and possible cuts) before final adoption.