Highland releases FY2026–27 budget showing modest deficit, plans $2M in TIF projects

City Manager Chris Conrad presented the City of Highland’s proposed FY2026–27 operating and capital budget on March 16, saying the packet shows an anticipated budget deficit of about $191,346 and a total proposed budget of $64,477,943.

Conrad said the increase from the prior year—about 12%—reflects planned capital work, including roughly $2 million earmarked for proposed tax increment financing (TIF) projects, and a conservative revenue assumption that includes an estimated 13% increase driven primarily by changes shifting Use Tax collections to Local Sales Tax and proceeds from a planned bond issuance. “We submit to you, for your consideration, the proposed operating and capital budget for the City of Highland’s fiscal year of 2026/2027,” Conrad told the council.

Conrad emphasized the city will use reserve balances to fund capital and equipment needs rather than ongoing operations, noting prior administrative decisions and reserve growth gave the city flexibility to accelerate deferred projects. He said, “To be clear, we are not pulling any reserves for operational expenses, just for necessary and deferred capital and equipment expenses.”

The presentation included department-level highlights: Public Safety will add one officer and invest in vehicles and Starcom radios; Parks & Recreation plans major capital work including a Korte Recreation Center roof replacement and pool lighting; Public Works will continue water‑main replacements, CIPP sewer repairs and MFT-funded resurfacing of 12th and 13th Streets; Electric staff plan pole inspections, substation and transformer maintenance and will pursue a grid‑resilience grant. Director Reanna Ohren said the new budget packet format—enabled by recent software—makes year‑to‑year comparisons easier.

Conrad also warned that federal changes to Medicare and Medicaid could affect EMS revenues because more than 80% of the city’s EMS calls are for patients covered by those programs; however, he said a contract with the hospital for transport services is structured to provide a base cost and should not be immediately affected. Council members pressed staff on predictability of tax revenues and noted pension funding levels—Conrad said Police Pension is about 70% funded.

The council did not vote to adopt the budget at the March 16 meeting; Conrad said the city will return with proposed amendments in April and the budget must be approved and submitted before May 1.

The next step: council review and amendments are scheduled for the second meeting in April, after which a final adoption vote is expected ahead of the May 1 filing deadline.