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Fayette County presents unaudited FY26 snapshot showing multi‑million dollar deficit; tax estimates to shift FY27 outlook
Summary
Interim finance staff told the board the unaudited FY26 balance sheet shows assets ~$46.6M, liabilities ~$57.4M and a fund-balance deficit near $10.7M; staff expect additional occupational and utility tax receipts to narrow the gap but said newly certified property‑tax data reduced FY27 revenue projections by about $12M.
Interim executive director of financial services Amy Smith presented an unaudited annual financial report snapshot for fiscal year 2026 and explained why the reported fund balance looked worse on the balance sheet samples used for the AFR submission.
"We ended the June 30 date with liabilities of $57,400,000," Smith said. She noted assets shown at the time were about $46,600,000, producing a deficit fund balance that required explanation: much of the apparent shortfall reflects encumbrances and inventory that cannot be spent again. Smith said encumbrances included roughly $3 million tied to school‑bus purchases that will be delivered in the fall and therefore cannot be reclassified into unreserved fund balance.
Smith told the board the district continues daily tax collections and expected additional receipts — she cited hopes for about $7,000,000 in occupational tax and ~$2,000,000 in utility tax receipts — which would materially improve the snapshot before final reconciliations. Still, she cautioned that tax‑rate certifications received late in July showed property‑tax projections were overestimated in the tentative FY27 budget by about $12,000,000, potentially enlarging any shortfall if additional actions are not taken.
"When your liabilities exceed your assets by $10,000,000, that results in a deficit fund balance," Smith said, adding staff will continue the closing reconciliation and provide updated snapshots to the board in mid-August and early September prior to adoption of the FY27 working budget.
Board members asked staff to explain how the AFR snapshot reconciles to the working budget assumptions and where differences — especially property tax changes — will alter the FY27 starting position.
