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Loudon council approves budget on first reading, adopts certified tax rate after narrow votes
Summary
After a multi-hour presentation, the Loudon City Council approved the fiscal 2026–27 budget on first reading and voted to set the city’s tax rate at the certified rate provided by the assessor, rejecting a proposed immediate rate increase. Council and staff warned that delaying revenue actions will deepen a projected deficit and erode reserves.
City Manager Kevin Goen laid out draft No. 2 of the 2026–27 budget on May 26, describing scenarios that left the city with recurring deficits unless the council adopts revenue actions or cuts. After extended debate about timing and trade-offs, councilors approved the budget ordinance on first reading and determined the city’s certified tax rate as provided by the assessor.
Goen told the council the budget as presented includes personnel additions and capital funding and that, with those choices, the city faced an approximately $816,000 shortfall if capital costs are funded from recurring revenues. He walked council through scenarios — including removing positions, spreading modest tax increases over several years and a two‑year mild recession — to show how fund balance would decline toward the staff’s $6 million floor.
"We can't cut our way to prosperity," Goen said during the presentation, urging the council to consider a measured revenue plan in addition to efficiencies. He warned that in a recession scenario the city could deplete its fund balance and be forced to defer maintenance or stop purchasing vehicles and equipment.
During debate, some councilors proposed a phased tax-rate increase (discussed as roughly 3.98 cents) to begin addressing the gap. That motion failed on roll call, 2–3. Council then voted to set the tax rate at the certified tax rate provided by the assessor (as described by staff), a motion that passed 3–2.
Councilors also approved the budget ordinance on first reading (roll call recorded in the meeting packet). Staff emphasized the ordinance can be amended between first and second reading; the manager said staff will prepare specific amendment options and run a workshop so councilors can review scenarios in more depth.
Why it matters: staff said delaying revenue action compounds the city’s shortfall and makes it harder to restore positive recurring cash flow. Goen urged the council to adopt a long-term laddered approach — small, planned changes over time — to preserve capital funding and avoid a single larger increase later that would be more disruptive.
Next steps: the council approved the budget on first reading and set required notices and hearings for the tax-rate ordinance as required by state certified-rate procedures. Staff indicated a workshop will be scheduled in the coming month for deeper modeling and to prepare the second reading with any agreed amendments.
