City finance staff report lower sales and gambling revenue, offset by higher utility taxes; council told to expect tightened 2026 spending

Finance staff presented the city’s fourth‑quarter 2025 fund‑by‑fund financial report at the March 26 study session, highlighting variances and planned budget adjustments.

Key revenue variances: Sales tax receipts for 2025 came in below the adopted budget; utility taxes were slightly above budget, and gambling taxes declined due to ongoing bankruptcy proceedings involving the local casino. Development‑related permit and CD fees were lower than forecasted, reflecting stalled or delayed private projects.

Expenditure and reserves: The city reported roughly $2.2 million in savings through cost containment measures. Overall, cash balances decreased during 2025 but by less than budgeted — finance staff reported the general fund cash decline was approximately $845,000 versus a budgeted $3.1 million decline. Staff said they will seek to reduce general fund expenditures for 2026 and noted that the city is monitoring trends closely; the first quarter 2026 financials will be presented in May.

Program‑level notes: Finance discussed several funds with council members — the housing needs fund and 1406 revenue, the solid waste discount program (where demand and payouts exceeded prior estimates and staff will tighten eligibility requirements), pool and recreation revenue impacts from maintenance‑related pool closures, and capital projects funded from real estate excise taxes and grants.

What happens next: Staff will bring first‑quarter financials in May, continue refining the 2026 budget and seek to present more granular line‑item reporting as supplemental material to aid council oversight.