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City presents FY27 budget projection, proposes raising reserves to 25%
Summary
City staff presented a FY27 budget projection focused on economic development, neighborhood revitalization and infrastructure, proposed raising undesignated reserves to 25% of appropriations, and flagged potential future bonds for a new police headquarters and Fire Station No. 4.
City staff presented the fiscal 2027 budget projection and a budget amendment at the May 12 Paducah City Commission meeting, outlining priorities, revenue expectations and possible capital‑finance needs.
Audra, the finance director, told the commission the FY27 investment fund projection includes $7,900,000 in appropriations intended to support economic development, neighborhood revitalization, street rehabilitation and quality‑of‑life initiatives. "I'm happy tonight to present the fiscal 27 investment fund projection with a total of 7,900,000 in appropriations," Audra said.
Staff described major revenue streams — payroll tax, insurance premium tax, real property tax and business license — projecting modest growth and noting a multi‑year phase‑in of a business license threshold adjustment expected to yield about $300,000. Audra told commissioners the city is projecting a 3% increase in payroll tax revenue.
Expenditures, particularly personnel costs and rising health insurance, were identified as pressure points. To improve reserves, staff recommended raising the undesignated cash balance target from 10% to 25% of budgeted appropriations (about three months of operating expenses). "We are recommending that this year we raise that reserve to 25%, which is equal to 3 months of operating expenses," Audra said, describing a study of peer cities and best practices.
Staff also flagged large unfunded facility needs and said a future public safety bond in the range of approximately $25,000,000 may be required to complete both a new police headquarters and Fire Station No. 4. The commission scheduled the budget amendment for formal action at the first reading in two weeks.
Commissioners asked for clarity on whether the reserve target requires a separate vote (staff said it would be adopted as part of the budget ordinance) and sought staff work on operational efficiencies, including online filing and potential use of AI tools to streamline processes. City staff said they will return to finalize details before the first reading.
