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Council hears that pay-study raises and ARPA use contributed to budget strain; finance director says warnings began in 2024
Summary
Finance Director Joey Fuqua told council members the recent pay study and attrition-driven raises, combined with ARPA fund use, contributed to fund balance depletion and that he warned the Council in 2024 that new revenue would be needed.
Finance Director Joey Fuqua told the Council that Henderson’s most recent pay study began around March 2024 and that implementing recommended salary adjustments required substantial use of fund balance after ARPA funds were depleted. He stated that COVID significantly reduced revenues and that the City used approximately $4 million in ARPA funds to help close gaps.
Fuqua said he "began warning the Council in 2024 that fund balance depletion was becoming unsustainable and that the City needed new revenue." Councilmember Tami Walker asked why raises were implemented if the City could not sustain an approximately 20% increase and pressed staff on whether anyone had raised concerns at the time of approval. Mayor Elliott and City Manager Paylor Spruill clarified that personnel decisions are managed by the City Manager and that the budget conversation today concerns FY27 recommendations.
