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Highlands introduces 2026 budget as health-benefit costs and payroll increases push appropriations higher
Summary
Finance staff introduced the 2026 municipal budget showing a projected 1.7-cent tax decrease (subject to appeals), an 8.7% valuation increase, and a $855,000 increase in appropriations driven largely by a 36.5% rise in health-benefit costs; capital funding and potential cuts were also discussed.
Borough finance staff presented the 2026 municipal budget during the April 15 Highlands Mayor and Council meeting, citing rapid increases in employee health-insurance costs and contractual payroll changes as the primary drivers of higher appropriations.
Mike, the finance officer, told council members the borough is projecting a 1.7-cent tax decrease based on current assessed values but emphasized that outcome could change if tax appeals are upheld. He reported assessed-value growth of about 8.7% year over year and said the borough has about $171,140 available for capital improvements — enough, at a required 5% down payment, to underwrite roughly $3.4 million in bonding for projects.
The largest budget pressure is employee health benefits: appropriations increased by $855,000 overall, of which about $540,000 is attributable to health-benefit cost increases. Mike said benefits rose 36.5% this year and staff project roughly another 20% increase next year; he explained the borough is too small to obtain lower rates from some insurers without joining a larger pool. Contractual payroll increases added about $232,500 to appropriations.
Mike said the current capital request list totals roughly $3.8 million and the borough will need to "shave about $400,000" from that list; he circulated a draft capital budget to council members and scheduled the public hearing on the budget for May 20, 2026.
Council members asked where cuts would be made and discussed joining a larger, multi-town insurance pool or the county plan to obtain better rates, but they noted administrative and political hurdles to doing so.
Next steps: the council adopted the budget introduction (Resolution R26097) to advance the statutory hearing process; public hearings and further budget work were set for May 2026.
