District projects $4.68M 2025–26 deficit under current assumptions; board discusses occupation tax and possible referendum

District business staff provided a year‑to‑date financial update through February and a sensitive projection for fiscal 2025–26. Anthony Rapp summarized the numbers: the district currently shows a year‑to‑date surplus but, under projection assumptions, the year‑end deficit would be approximately $4,677,000.

Rapp explained that revenues through the early part of the fiscal year tend to show a surplus because local collections arrive early, but that salaries and benefits — especially contract increases and special‑education services — are the major cost pressures that could widen deficits later in the year. He said the district budgeted a larger deficit in anticipation of contract-driven costs but the current projection is about $1.7 million better than the adopted budget.

Board members asked about the occupation tax, which Rapp said generates roughly $4 million a year for the district, and discussed a referendum option to convert occupation tax revenue into an increase in the earned‑income tax. Rapp described mechanics for a referendum and noted distribution rules; board members said they would research whether neighboring districts have pursued and passed similar referenda.

Why it matters: the projection and the ongoing budget process affect fund-balance planning, capital transfers and bond ratings. Rapp emphasized that an actual deficit would be drawn from the district’s fund balance; he urged conservative budgeting and noted that final numbers will change as receipts and accruals are finalized.

Next steps: staff will continue to refine projections with March data and bring further budget analyses to upcoming meetings; no formal board decisions were recorded at this committee meeting.