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Council hears budget shortfall, weighs filling three vacant positions and employee pay options
Summary
Highland Village staff told council on July 14 they expect FY2026–27 general‑fund revenues to fall short by roughly $267,000; council members discussed a hiring freeze that leaves three positions unfilled and considered options for COLA, market adjustments and absorbing insurance increases.
Highland Village staff presented the city’s preliminary general‑fund budget outlook on July 14 and warned revenues are tracking below the current budget. Finance staff said the city expects to be under budget by about $267,000 overall, attributable mainly to lower property‑tax and sales‑tax receipts and weaker investment income.
“we expect $93,000 under what we originally budgeted,” Finance staff said, adding later that “in total, we expect to see our revenues be under budget by 267,000.” Council members pressed staff on which revenues and assumptions were driving the gap and asked for alternatives to close it without cutting core services.
Staff outlined three tax‑rate scenarios: the current rate, a “no new revenue” rate and a voter‑approved rate. For budgeting purposes staff modeled the budget using the voter‑approved rate, which would increase city property‑tax revenue by an estimated $611,000 but also raise the average taxpayer’s bill in the examples presented.
On the expenditure side, staff told council personnel spending is expected to be under budget by $864,000 this fiscal year mainly because of turnover and a hiring freeze that left three positions vacant. Council members asked whether retaining the freeze permanently would materially improve the five‑year outlook; staff said the projected savings were included in the combined scenarios but warned that removing positions outright—rather than holding them vacant—carries operational tradeoffs.
Human resources director Kim Lopez told council the city’s insurance renewal came in with “no plan changes,” but employee costs rose; she presented a handful of compensation options ranging from a 1% to 2% cost‑of‑living adjustment, targeted market adjustments, a lump sum, or absorbing part or all of the insurance premium increase. “Our ultimate goal is to attract and retain all stars, limit the turnover of those, also be fiscally, sustainable and responsible with our funds,” Lopez said.
Council directed staff to circulate the supplemental (decision‑item) packet and requested a follow‑up workshop to prioritize which decision items to include in the proposed budget. Staff will also provide line‑item costs and job descriptions for the three positions held under the hiring freeze so council can judge operational impacts before taking final budget votes.
