Diamondhead council reviews proposed FY 2026 budget, plans $70,000 draw for dog park

Diamondhead City staff presented the proposed FY 2026 budget at a recess workshop and outlined revenue expectations, key capital requests and a recommended draw from fund balance to complete the dog park.

John McCraw, the staff presenter, said the packet shows three columns—current FY 2024–25 amended figures, the FY 2024–25 standing numbers and the proposed FY 2025–26 budget—and that he had deliberately budgeted a $70,000 reduction to fund balance to finish the dog park. “This year, I went ahead and budgeted a $70,000 deficit to our overall budget,” McCraw said, noting roughly $30,000 of that total represents donations collected in prior years and the additional $40,000 would complete the project as designed by engineers.

McCraw described the city’s overall fund balance as healthy and said one large apparent deficit in the packet stems from an anticipated Gulf Coast Restoration grant that the city did not receive this year. Excluding that $400,000 grant, he said the effective shortfall would be roughly $14,000 and the year is likely to end with a small positive change to fund balance.

On personnel costs, the proposed budget includes a 3% pay raise for all employees; McCraw estimated that increase would raise salary-related lines from about $1,180,000 to roughly $1,220,000 and add about $40,000 in associated benefit costs.

Revenue lines in the proposal reflect next year’s property reappraisal and other projections. McCraw said property-valuation increases could add nearly $200,000 to revenue and that motor-vehicle-related receipts may rise by about $50,000; he noted the year is a reappraisal year and figures could change once the tax assessor finalizes values.

The staff presentation also called out concern about sales tax. “We budgeted for $1,000,000 in sales tax; if we get $850,000 we’ll be lucky,” McCraw said, citing the timing of construction and slow retail receipts even with new developments. Council members asked about specific revenue sources: whether local medical-marijuana stores generate taxable sales (McCraw said he would verify the taxability and report back) and whether farmer’s-market vendors are collecting sales tax (staff said vendors must collect sales tax on non‑farm-fresh or non‑cottage items and that the market uses an accounting firm for tax handling).

On capital needs, the proposal includes $175,000 for streets and drainage and $250,000 for paving next year. McCraw also listed several equipment and system requests: funding for an electronic sign (a starting budget figure of $40,000), the purchase of a license‑reader system (staff proposed buying rather than continuing monthly lease payments), and an increase of about $56,000 in the police interlocal agreement line to anticipate pay adjustments and other charges. Public‑works requests included additional non‑certified positions and possible UTVs or a boat to serve new or hard‑to‑access areas.

Council members and staff discussed potential future responsibilities if the POA transfers operations or facilities to the city. McCraw said the three additional public‑works positions and related equipment included in the draft would cover assumed needs, but that staffing and role differentiation (for example, creating a full‑time recreation supervisor if recreation responsibilities expand) would need attention.

Other items raised by council members included a request to consider pickleball facilities if suitable property can be found, a suggestion to fund a small feral‑cat spay/neuter program, and a proposal to budget a part‑time Saturday compliance officer at an estimated $5,000 annually to handle weekend disturbances. A separate request proposed a regular ditch‑maintenance plan similar to the roads program to reduce repeated homeowner complaints.

Staff said it will prepare revised budget figures reflecting the council’s requested changes and return the packet for discussion at the next council meeting on Aug. 5. The recess meeting was adjourned after a motion by Councilmember Shepherd, seconded by Councilmember Harwood, with a vote in favor to adjourn.

The presentation packet will be updated to show adjustments discussed during the workshop (revenue refinements, alternate staffing scenarios and potential shifts in capital priorities) and returned to the council for a follow‑up workshop and formal consideration at future meetings.