Town manager outlines 2028 sales-tax strategy as council backs balanced-budget goal for FY29

Town Manager Tyler Sinclair told the Tunnel Town Council workshop that recurring expenses have outpaced recurring revenues and warned the town’s general fund reserve could fall below the 25% floor within two to four years unless the council acts. "This is our opportunity to reenvision how we will address that going forward," Sinclair said, asking the council to consider short-term steps to balance revenues and expenses and longer-term measures to align recurring revenue and expense growth.

Sinclair framed three possible FY29 goals — (A) status quo, (B) balance the annual budget, and (C) an aggressive plan to balance both the annual budget and growth — and recommended Goal B as the most practical near-term objective. After a nonbinding straw poll, Sinclair reported that "everyone's number 1 vote was B," indicating council support for pursuing a balanced-budget path that would leave the town with an estimated 32%–42% fund balance by FY29 while still requiring further work to close a growth gap.

Why it matters: Council members said they want staff to return with concrete options that could close the gap without unduly disrupting services. Sinclair and finance staff presented magnitudes for possible tools — including a lodging tax, property tax increments, reduced FTE growth, and changes to capital transfers — so the council can weigh fiscal trade-offs against political and service impacts.

Revenue strategy and county coordination: Sinclair told the council the town should plan to pursue a countywide 1¢ "general penny" sales tax on the November 2028 ballot but emphasized that the effort is contingent on county buy-in. "We need to coordinate with the county to develop a general penny detail or strategy — we cannot do this on our own," Sinclair said. Staff estimated a full general penny would generate material new general revenue but flagged implementation questions about incremental sizing, joint powers agreements (JPA) with the county, and timing tied to existing expiring pennies.

Tools discussed: Staff noted that a 2% lodging tax could raise roughly $1.9 million in general revenue (with a portion legally constrained to specific uses), while a 0.5 mill property tax increment could raise substantially more in some scenarios. Councilors debated whether to prioritize expense cuts (freeze FTE growth and reduce transfers or community grants) or to accept new revenue tools, and many urged staff to prepare a mix of scenarios showing combinations of tools and their service impacts.

Next steps: Staff will draft a budget philosophy and return with a more detailed plan, including (1) the FY27 actions needed to position the town for FY29, (2) clearer magnitudes for each tool, (3) a community engagement plan, and (4) proposed outreach to the county on JPAs and the proposed general penny. Council set a near-term follow-up meeting in March to review the draft philosophy and begin public engagement work.

Meeting outcome: The straw poll produced consensus for Goal B (balanced-budget approach); council did not take a binding vote on taxes at the workshop. A formal adjournment motion — made by Councillor Schechter and seconded by Councillor Regan — passed unanimously to close the session.