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Rock Island staff previews 2026 budget, flags rising pension and personnel costs
Summary
Finance staff told the Rock Island City Council that rising pension contributions, personnel costs and declining state replacement taxes will tighten the 2026 budget and outlined a schedule for public hearings and adoption this fall.
City finance staff presented a preview of the proposed 2026 budget to the Rock Island City Council, warning that rising pension obligations, personnel costs and declines in state replacement tax receipts will squeeze the city's fiscal flexibility.
Jessica from the finance department opened the presentation and said staff's primary goal is a balanced budget, noting that some one-time uses of positive fund balances may be proposed if council approves. The presentation introduced new budget and purchasing coordinator Stephanie Lacham, who has been with the city about three months and brings nonprofit grant experience.
The presentation laid out key assumptions: a 10% increase in health-insurance costs (staff said 2025 rates rose 6% and 2024 12%), an anticipated IMRF rate of about 5.98 for 2026, a 2% average merit increase and a 3% straight GWI for contracted positions. Staff reported an actuarial recommendation by Lauterbach & Amen for 100% funding of police and fire pensions; the presenter said the police pension difference was $383,362 and the fire pension difference $417,046 — roughly an $800,000 increase from the prior year.
Jessica said the city faces revenue pressures as Personal Property Replacement Tax (PPRT) distributions continue to decline and use-tax receipts were reduced by the Level Playing Field Act, which shifted some collections into sales tax allocations. Personnel remains the largest expense (39% citywide, 66% of the general fund). Staff also noted that about 78% of budgeted revenues for calendar-year 2025 were restricted by grant or statutory purpose, limiting the general fund's flexibility.
On the revenue and balance sheet, staff said the 2025 general-fund surplus was about $6.7 million, some excess was used to balance budgets and the remaining general fund surplus balance was $3,980,000 available for council direction. Staff also warned the city will pay more than $10,000,000 in combined principal and interest on general obligation and IEPA bonds and loans in 2026.
Staff outlined next steps and dates: a study session to present the proposed budget on Oct. 27, a CIP presentation on Nov. 10, public hearings and first reading of the property-tax-levy ordinance (with a truth-in-taxation hearing if necessary), second readings and adoption on Dec. 8, and transmittal to the county on Dec. 9.
Council members asked follow-up questions about an $80,000 property-tax line item (staff said it is recorded in the debt-service fund to pay banking fees), whether departmental presentations would be added to the Oct. 27 session (staff said departments can present if council prefers), and distribution timing for budget books (staff will provide them before the presentations).
The finance preview presented assumptions and constraints that will shape council discussion this fall; no budget ordinance was adopted at the meeting.
