City Manager outlines conservative FY2026-27 budget as health-care costs push expenses higher

City Manager Tim Gibbons presented Garden City's proposed fiscal year 2026-27 budget at the April 13 council budget meeting, outlining revenue projections, the city's fund-balance policy and the primary cost pressures shaping the proposal.

Gibbons said the city is proposing total revenues of $31,064,970 and will use $468,953 of the general fund balance to match $31,064,970 in budgeted expenditures. He told council the budget is intentionally conservative: "A budget is a guess. It is our worst case scenario of what we'll need on revenue or worst case scenario what we're getting on revenues, best case scenario of what we can do expenditure," he said.

The city manager identified personnel costs and a large health-insurance increase as the main drivers of the gap. "Blue Cross Blue Shield dropped a 30% premium rating increase on us," he said, and, together with contractually obligated 3% raises, those labor and benefit changes are expected to add "about a $1.3 million increase in expenditures." Gibbons said the city has reduced other spending and secured grants (including a roughly $100,000 award) to help stabilize finances.

Gibbons also described constraints from Michigan's Headlee and Prop A provisions, which limit the share of assessed-value growth the city may capture. He said assessed value rose about 4.62% while the allowable inflation multiplier for taxable value this year was 2.7%, reducing new property-tax revenue relative to market growth.

On fund balance, Gibbons noted the city's policy requires an unrestricted balance of 25% or greater, with a 35% goal. He said the general fund sat near 20% at the end of FY2025 because the general fund had loaned money to the water fund; the water fund is repaying that loan under a five-year plan, and Gibbons expects balances to recover within that timeframe.

Council members asked detailed questions about lines in the proposed budget. In response to a query about the water fund, Gibbons confirmed the city is proposing a 5% water-rate increase to smooth fees and to account for anticipated wholesale-rate changes from the regional supplier. "Our goal is to smooth water rates out so that even when they're increasing up to a certain point," he said, "we're only requesting the 5%." He said the city's model anticipates wholesale increases when possible.

Council pressed for specifics on the health-insurance spike and alternatives. Gibbons said the 30% jump hit the city hard in a single year but that the two-year average increase is closer to 19%; staff and the city's broker (Gallagher) are evaluating alternatives, including pooling arrangements with other municipalities to lower premiums.

Police staffing and overtime were discussed extensively. Council noted roughly $575,000 in projected police overtime and asked whether hiring additional officers would reduce that cost. Police leadership and Gibbons said hiring does not produce one-for-one overtime savings because of hiring costs and the unpredictable nature of overtime demand. The police chief said the department is budgeted for 33 officers, with three in the academy and 30 actively sworn at the time of the meeting.

Gibbons highlighted program- and grant-driven improvements in other areas: the Radcliffe Center has reduced its projected deficit (from about $600,000 previously to an anticipated $350,000 use of revenues this year), and the city has secured funding for water-main projects and Radcliffe rehabilitation. He said staff will continue seeking low-cost loans and grants to address aging facilities such as the Maplewood building.

Gibbons closed by reiterating the city's long-term fiscal goal: build and maintain a robust fund balance while prioritizing services that provide strong value to residents.

The council did not adopt the budget at this meeting; Gibbons reminded members the city charter requires budget adoption by May 20 and invited further questions and detailed departmental follow-up.