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Finance director warns of $5M possible shortfall; council asked to approve hiring freeze
Summary
City finance presentation detailed fund‑balance definitions, projected reliance on reserves, and a possible $5 million shortfall in 2026; the presenter proposed a three‑stage recovery plan and asked the council to approve a hiring freeze through the end of 2026 with exemptions for essential services.
City finance officials told the Saratoga Springs City Council that the city faces a structural budget problem and could see a worst‑case $5 million shortfall in 2026 if corrective steps are not taken.
The finance presenter explained fund‑balance categories — restricted, assigned and unassigned — and said the city’s reliance on unassigned fund balance rose after a $4 million federal COVID aid infusion in 2022. The presenter said adjusted projections show unassigned fund balance falling from a projected $11 million at the end of 2025 to about $8 million by the end of 2026.
Pointing to rising personnel costs, the presenter said the city has added employees (notably in the fire department), and that health insurance and retirement costs have increased. “We are projecting a possible $5,000,000 shortfall in 2026,” the presenter said, calling it a "worst case scenario" and stressing that the numbers will move as revenues and expenses change.
To address the gap, the presenter laid out a three‑stage Fiscal Recovery Plan — bridge, reform and transform — and asked the council to approve a hiring freeze through the end of 2026 on positions where no offer has been made, with an exemption process for essential public‑safety and regulatory roles.
Council members acknowledged that public safety and infrastructure are priorities and noted that the police and fire departments will absorb much of the necessary backfilling because they have proportionately more full‑time positions and immediate needs (for example, two dispatcher vacancies affecting 911 response). One commissioner warned the hiring freeze may require emergency meetings to authorize essential hires outside the regular two‑week cycle.
The finance presenter also recommended creating a cross‑functional recovery leadership team to meet weekly, update projections monthly, and review purchasing, contracts and reserve use. The council did not take a final vote on the hiring‑freeze resolution at the meeting; the presenter said a resolution would be brought forward the following day for council consideration.
