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Birmingham reviews five-year financial forecast as commissioners debate using reserves for roads
Summary
City officials presented a five-year financial forecast projecting nearly $97 million in infrastructure spending and modest taxable-value growth; commissioners pressed staff on the fund-balance policy, the Headley rollback, and whether some reserves should be spent to accelerate road repairs.
City officials on Saturday walked the Birmingham City Commission through a five-year financial forecast that officials said is a planning tool — not a final budget — but one intended to shape the coming fiscal-year requests.
Miss Chavez, the city's finance director, and Tim St. Andrew of Plan Moran presented revenue assumptions, noting that property taxes remain the general fund's largest source. St. Andrew said state equalized value (SEV) is expected to grow faster than taxable value in the near term, widening a cushion that protects the city if market values decline. He cited 2026 taxable-value growth of about 6.4% and SEV growth of about 7.8%.
The forecast shows the city budgeting to use fund balance in 2026 largely to match the timing of planned capital projects and projects roughly $97 million in infrastructure spending over five years, with streets making up the largest share. Commissioners focused on the city's fund-balance policy, which sets a target band of roughly 17% to 40% of operating expenditures. City staff said the plotted figures in the packet are projections and that audited year-end balances often reconcile below the forecasted top line. Finance staff also said transfers to other enterprise funds (for example, streets or water projects) are excluded when computing the unassigned operating-reserve percentage, explaining how a large transfer could change the numerator and denominator differently.
Several commissioners asked whether the city could divert part of an apparent reserve overage to accelerate roadwork. One commissioner suggested taking $10 million from reserves to quicken street projects, arguing the forecast still leaves room in later years; others warned that many planned projects require underground work (water and sewer replacements) and grants that affect timing. St. Andrew said the forecast is sensitive to construction cost volatility and to grant awards and that the plan should be viewed as a roadmap rather than a fixed spending schedule.
Commissioners also asked about the Headley rollback, a statutory limit that reduces the city's maximum levy as property values rise; staff said Birmingham currently has about a 0.3-mill gap to the Headley maximum, which was estimated to yield roughly $1 million annually if fully used. Several commissioners asked staff to provide audited reconciliations for prior years and to show how changing assumptions or moving project timing would affect reserves and operating metrics.
The commission did not take any formal action on the forecast at the workshop; staff said the forecast will guide the April budget development and that more detailed budget proposals will return for formal consideration.
