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City officials warn of $12M–$17M multi-year general-fund gap after state property-tax cap
Summary
City finance staff told the council an anticipated 2% annual cap on property-tax growth, elimination of multiple state backfills and volatile revenue streams create an early FY28 shortfall estimate of about $12 million and a two-year gap near $17 million; officials outlined an accelerated public engagement process to identify savings and revenue options.
City Manager Scott and Finance Director Nick Schaal presented an early estimate of the city's multi-year budget gap after the state legislature enacted a 2% cap on year-to-year property-tax growth.
Schaal sketched revenue-side impacts: the new cap limits general-fund property-tax growth, and the state removed prior backfills (commercial-industrial rollback and the business property-tax credit), shrinking expected revenue by roughly $1.5 million to $2 million. He also noted key revenue volatility in franchise fees, building permits (currently bolstered by large airport construction) and hotel-motel receipts. Interest income has declined from a COVID-era peak and remains uncertain.
On expenditures, Schaal said personnel costs (wages and benefits) continue to be the largest driver and that the general-fund status-quo projection produces a conservative FY28 shortfall of about $12 million. He and Scott said an additional layer of pressure raises the two‑year planning gap to roughly $17 million.
Scott urged the council to start the process early and outlined a public-engagement plan that will include a "solve the budget" online exercise and public meetings to solicit priorities for cuts and revenues. He said departments will submit options for savings and that the administration will present a laundry list of potential measures in June, with September–October targeted for council direction and November for final recommendations.
Councilors discussed survey design (avoiding pitting departments directly against one another), the possibility of proportional vs. targeted reductions across departments, and regional shared-service opportunities (dispatch, joint library services) as longer-term options. Scott and Schaal said some cuts may be staged, vacancies held or phased, but emphasized that the magnitude of the gap makes difficult choices unavoidable.
No formal actions or votes occurred; councilors requested more detailed analyses and public materials before fall budget deadlines.
