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Budget officer warns of growing revenue pressure; 2027 shortfall and additional downside risks could exceed $20 million
Summary
Budget officer Greg Hayes told council that 2027 baseline projections show a $6.3 million shortfall and that downside risks (weaker Leeds forecast, rising utility/contract costs) could push total pressures toward or above $20 million, prompting staff to plan both top-down and department-driven cuts.
Budget Officer Greg Hayes briefed the council on the city's fiscal outlook, reporting a mixed 2025 result but a weakening revenue picture for 2026 and 2027. He said operating revenues through March are running below budget and flagged sales and use tax weakness as a major concern.
Hayes summarized the Leeds School of Business forecasts and said the city's pro forma is now showing a 2027 starting shortfall of $6,300,000 under baseline assumptions. He added that new downside risks and cost increases—ranging from higher worker-benefit and utility costs to potential IT and telecom inflation—could produce a broader pressure in the range of $10 million to $25 million, with staff conservatively estimating the aggregate issues could exceed $20 million without mitigation.
"We were out of balance in '27 by $6,300,000," Hayes said, and later: "Total of all the issues looks like it's going to be in excess of $20,000,000." He outlined a two-track response: immediate efforts to reduce discretionary expenditures (top-down directives such as travel and training cuts) and a bottom-up departmental exercise to identify structural savings. Hayes also flagged continued reliance on one-time revenue sources—such as audit receipts—makes the budget sensitive to economic fluctuations.
Council members asked whether audit revenue could continue at current levels and suggested consideration of increased compliance resources if needed. Hayes noted that capital revenues are weak due to reduced construction activity and that staff will continue to refine projections and present options to close gaps ahead of the 2027 budget cycle.
