Council work session reveals roughly $649,000 general-fund gap as staff narrows priorities

Administrator Wart told the City Council the city faces a roughly $650,000 shortfall in its general fund and asked council members to prioritize a short list of projects and hires to close the gap.

"So right now our deficit of revenue and expenditures is about $650,000," Administrator Wart said as he reviewed the proposed fiscal 2026 budget and handouts. Finance Director Jessica Pile presented revenue detail: "Net sales and use tax is higher fiscal year to date over $538,000 or about 3% increase this fiscal year," while "The franchise tax is lower fiscal year to date by $550,000," she said, attributing most of the drop to declines in electric-related receipts.

Why it matters: staff said the general fund pays most city personnel and core services, so shortfalls could affect service levels unless the council approves offsets through cuts, one-time transfers or drawing on reserves. Administrator Wart said staff reworked department requests and trimmed roughly $4.5 million of initial overages down to the remaining $649,000 and asked council to provide final prioritization ahead of a March 2 follow-up meeting and an adoption target later in March.

Details and debate: staff described multiple revenue and expenditure dynamics. Administrator Wart highlighted that some taxes are earmarked (for example, transportation tax and capital improvements tax) while the general fund is flexible and covers items such as employee health insurance and backstops for enterprise funds. He noted that the franchise tax is subject to an ordinance cap that reduced receipts this year and recommended conservative revenue assumptions going forward.

On enterprise funds, Administrator Wart reiterated that the sanitation fund has improved but still "owe[s] money to the general fund" after borrowing to buy garbage trucks. He said the city previously "loaned three and a half or $3.3 million to the sanitation fund to buy garbage trucks," and council debated whether sanitation should prioritize paying down that balance or preserve funds for capital purchases.

Capital projects and grants drew extended discussion. Staff said many grant-funded projects have been delayed by supply-chain and engineering issues, producing year-to-year carryovers for projects such as a Liberty Park Boulevard stormwater pipe and sidewalks; Administrator Wart urged caution programming grant matches until awards and schedules are firm.

Priorities on the table include a police/public-safety software move to the cloud (moved into the capital improvements fund), a fire-station alerting upgrade already in progress, police forensic equipment and vehicle- and camera-related items tied to grant revenue. Councilmembers also discussed personnel proposals: adding an animal control officer (and a vehicle that could be moved to CIP) and various transportation staff and equipment requests. Supporters said additional staff could reduce overtime; opponents urged caution given the remaining deficit.

Compensation and benefits were a recurring theme. Staff said merit raises were included in the draft but noted the budget strain makes sustaining raises difficult; staff also said health insurance costs are substantial and currently about $2.6 million, a cost that factored into prioritization choices this year.

Next steps: staff will update the budget based on council guidance and return for review at the March 2 meeting with the goal of passing the budget in March. The work session ended with a motion to adjourn.

The meeting did not include a formal roll-call vote on any ordinance or appropriation; the only recorded formal action was a motion to adjourn, which passed.