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Staff outlines fund-balancing options: adjust tax rate, use fund balance, defer projects or delay pay adjustments
Summary
Budget staff laid out several options to close the city's budget gap, including adjusting the M&O portion of the tax rate, using fund balance (with caution), excluding market pay or COLA adjustments, or deferring FY2026 certificate of obligation projects.
City budget staff presented options to balance the general fund at the July 30 meeting and cautioned against relying on fund balance year after year. Staff listed choices including adjusting the tax rate (the council can change the M&O portion), using fund balance for one-time needs, excluding market or COLA pay adjustments (the presentation referenced a 3% COLA for most employees and market adjustments for public safety), or deferring FY2026 certificates of obligation (COs).
Staff noted trade-offs for each option: using fund balance addresses a short-term gap but is not a sustainable long-term strategy; excluding pay increases affects employee compensation; and deferring CO projects affects capital delivery. Staff also described changes in other funds, including reductions in water and sewer I&S payments and adjustments to hotel occupancy tax allocations to comply with the 15% cap for the art category.
