Peoria council reviews largely flat FY2027 budget while flagging water, fee and contingency risks
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Summary
City staff told the council the FY2027 budget is balanced and largely flat year over year but flagged revenue risks from a proposed state fee moratorium and federal/state tax-conformity uncertainty, and highlighted a large capital plan that includes a potential $90M water acquisition.
Peoria’s City Manager Mike Faust and finance staff presented a proposed FY2027 budget on Tuesday that officials described as balanced and largely flat year over year, while warning of revenue risks that could force later adjustments.
Faust told the council the administration worked to keep spending steady and called the proposal “fiscally sound” and aligned with council priorities such as public safety, water security and economic development. He said the city’s operating budget is projected to rise about 3 percent while capital spending is up about 1 percent.
The nut of the presentation was how staff achieved those numbers: the budget reflects a $40 million sweep of unspent capital carryover into general fund one-time dollars, a return of contingency from an inflated FY26 level ($88 million) to about $55 million, and a possible $90 million water acquisition inside the capital plan. “If you take out that $90,000,000, essentially we would have been down $50,000,000 year over year,” Faust said.
Finance staff also identified several revenue risks. Faust and the CFO warned that a proposed state-level moratorium on local fee increases — described in the presentation as a house resolution that could freeze FY26 fees through 2030 — could reduce the city’s ability to manage user fees for utilities and development. He also noted a dispute over federal-to-state tax conformity that, depending on the outcome, could reduce Peoria revenues by roughly $1 million to $2.5 million.
“You should be mindful because it could have an implication,” Faust said of the pending state and federal actions. CFO Sean said the proposed budget contains no tax-rate increases; a previously approved 5.1 percent utility rate increase remains scheduled to take effect July 1, 2026.
Council members pressed staff on the capital numbers and the composition of the carryover; staff said carryover is down about $40 million from last year but base-year new capital requests rose, and that several one-time, high-dollar opportunities—such as the water acquisition—drive headline totals.
The council directed staff to return during the budget process with more detail and to prepare the tentative budget for a May 5 presentation; the schedule calls for a final adoption in late May and the property-tax levy in early June.
The session closes with staff reaffirming reserves and debt-management policies that staff say allow the city to weather short-term impacts while keeping priorities on track.
