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Takoma Park projects $2.5M FY27 general fund deficit in early forecast; staff outlines options
Summary
City staff presented an early FY27 general‑fund forecast projecting about a $2.5 million deficit (expenditures ≈$35.4M vs. revenue ≈$32.9M), cited drivers (salary/fringe increases, ARPA transitions, capital timing) and outlined options including use/retention of assigned reserves, spending adjustments, or revenue changes.
City Manager and finance staff presented an early‑stage FY27 general‑fund forecast to guide council priorities ahead of formal budget development. Staff cautioned the presentation was not a proposed budget and that numbers will evolve as staff collects more information.
The forecast projected general fund revenue of approximately $32.9 million (about a 2.9% increase over FY26) and expenditures around $35.4 million (about a 3.6% increase), yielding a preliminary deficit near $2.5 million. Key assumptions included a 4.5% increase in property tax revenue (about $771,000), a conservative 3% income‑tax estimate reflecting potential federal layoffs, a 1% intergovernmental increase, and modest increases in other revenues.
On the expenditure side staff projected a $1.1 million increase for salaries/wages and benefits (including an estimated $77,000 for parental leave), a $608,000 reduction in capital spending, a preliminary $600,000 placeholder for a personnel classification/compensation study, a 4% salary projection, and a 5% fringe increase assumption.
Staff emphasized ARPA timing: two‑and‑a‑half FTE currently funded by ARPA are assumed to roll into the general fund midyear, which affects FY27 cost estimates. The forecast also assumes an equipment replacement reserve contribution of $1.1 million, and under linear projections the available unassigned reserve balance would be about $2.95 million (roughly 9% of revenue) versus the council—s 17% policy target (~$5.6M). Staff outlined options to reach 17% including release of assigned reserves, spending cuts, or revenue enhancements.
Council members pressed staff on assumptions (execution rate for personnel, vacancy management, ARPA transitions and whether positions are permanent, and the timing/cost of a continuing mental‑health counselors contract). Staff said they will continue to scrutinize vacancies, revisit execution rates, and work with the county on mental‑health counselor contract coverage; they will return with more refined figures during the budget season.
Ending: Staff will bring updated forecasts and department presentations in December and propose a FY27 budget in March; council work sessions and community input opportunities were scheduled in the months ahead.
