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City budget hearing opens; officials warn of 2026 shortfall tied to extra payroll
Summary
At an Executive and Finance Committee hearing Feb. 23, city leaders outlined a 2026 operating budget showing roughly a $2.7 million gap, driven in part by an extra biweekly pay period that added about $1.6 million in personnel costs. Officials said the budget remains amendable and listed options for moving projects into capital funds.
The Executive and Finance Committee opened its first of three 2026 budget hearings on Feb. 23, with city leaders outlining a draft operating budget that shows an estimated $2.7 million shortfall and described how an extra biweekly payroll is driving much of the one-year gap.
Mayor Gail said the document before council is a working plan and reminded members that adjustments are possible: “The budget is a framework. It's a plan based on what we know today,” she said, adding that the administration can amend the budget during the year.
Finance Director Katie Iaconis told council the draft includes a roughly $1.6 million cost tied to an occasional “20th/27th pay” — an extra pay period that occurs roughly every 10–11 years — and that personnel costs overall include a negotiated 3% across-the-board increase. Iaconis said the draft general-fund shortfall presented in the materials is about $2.7 million but that the $1.6 million portion is the result of the additional payroll timing; she described other adjustments and revenue timing as also affecting the gap.
The administration is seeking council input over the next two hearings before introducing legislation for first reading; staff said they expect to present legislation for a first reading in the coming weeks so the council can consider adoption before county deadlines. Iaconis distributed position worksheets and demonstrated the city’s VIP analytics budget module to show how underlying entries roll up into the line items in the council book.
Councilors pressed staff on details of revenue and expenditures. Questions focused on how prior ARPA revenue replacement had affected line items, the placement of capital expenses between funds and the accuracy of line-item reporting. On one line, staff confirmed that refunds and reimbursements (BWC payroll true-ups and other reconciliations) were included in the revenues. Iaconis said internal controls require council legislation for individual contracts or expenses over $75,000 and order control approval for expenditures over $5,000.
Looking ahead, staff noted the budget can be amended after adoption and that the next committee meeting will cover police, planning and development, recreation and finance. The committee adjourned after scheduling the next session.
