Gardner staff outlines 2027 budget priorities, warns fund balance will decline under current assumptions

City finance staff presented the 2027 draft budget highlights, projecting a gradual decline in the general fund balance and identifying rising cost drivers including health insurance, technology licensing and vehicle/equipment replacements.

"The fund balance at the end of 2025 was 43%" and is projected to fall to "35% by the end of 2027 and 18% by 2031," the presenter told council. The staff presentation outlined a recommended 3.5% merit pool for civilian employees, a 4% step increase for sworn officers, a request for one new street-maintenance worker, and equipment requests tied to an expanded in-house street maintenance program (including milling equipment funded from the infrastructure special sales tax fund).

Staff said they had already applied multiple rounds of budget cuts to meet target fund-balance levels and urged caution about relying on one-time development revenues for recurring expenses. Health-insurance costs were assumed to rise in modeling (staff cited an assumed 10% increase in one slide and listed a $330,000 estimated health-insurance impact for 2027); wholesale electric costs and added cyber-security and ERP licensing also contributed to projected pressures.

Staff identified several next steps and dates for the council: a focused mill-levy discussion on June 15, a resolution to exceed the revenue-neutral rate on July 6 (if council chooses), and final budget and revenue-neutral-rate hearings on Sept. 8.

Council acknowledged the presentation and asked staff to return with more detailed proposals at the stated milestones.