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McAlester manager presents balanced but tight FY2026–27 operating budget; reserves remain low
Summary
City staff presented a preliminary FY2026–27 operating budget that staff say is balanced after addressing a $1.7 million shortfall but warned reserves remain below best‑practice levels and health‑insurance costs are rising by roughly $200,000.
City Manager (speaker 3) told the council the preliminary FY2026–27 operating budget is currently balanced after staff closed a roughly $1.7 million gap, but cautioned the city’s reserves are thinner than recommended and several cost pressures remain.
"We started out $1,700,000 in a hole for next year. ... I think I can change slide number 2 to say we, at this point, have a balanced budget going into next year," the manager said, emphasizing ongoing efforts to move money across departments and identify savings. Staff highlighted personnel costs, insurance increases, and infrastructure needs as major budget risks.
Finance staff said health‑benefit costs rose significantly. "Health benefits is budgeted at $22,500,000 for health insurance ... Close to 200,000," the finance representative said when asked for an approximate dollar amount for the insurance increase.
Presenters identified several revenue and expenditure drivers: sales tax is projected to grow modestly (about $96,000), personnel benefits and retirement contributions are significant expense lines, and a $32 million Oklahoma Water Resource Board waterline loan requires annual payments funded in part by a dedicated sales tax. Staff also noted the city will reach the final year of a seven‑year refuse contract next year and plans to reopen contract talks with Republic.
Councilors pressed staff about reserve levels and transparency; the manager said the monthly financial report shows fund balances and that the general fund was about $1.2 million at the end of April. The manager and finance staff urged caution in hiring or one‑time spending given the narrow cushion and pending contract negotiations.
The presentation closed with staff saying they will continue working on revenue ideas and operational efficiencies and will present a capital improvement list and additional materials during the budget adoption process.
The council did not take final action on the FY2026–27 budget during the meeting; the presentation was informational and part of the ongoing budget process.
