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Item 7.
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| City Council Regular | |
| Date: | 06/23/2025 |
| Title: | FY2026 Preliminary Budget Resolution |
| Presented by: | Andy Zoeller, Finance Director |
| Department: | Finance |
| Presentation: | Yes |
| Legal Review: | No |
| Project Number: | N/A |
RECOMMENDATION
Staff recommends City Council hold a public hearing and adopt the preliminary budget resolution for fiscal year 2026.
The attached budget resolution is consistent with the originally proposed budget that was provided to Council and the public on May 19th, with few adjustments explained below.
The attached budget resolution is consistent with the originally proposed budget that was provided to Council and the public on May 19th, with few adjustments explained below.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
City Council and staff have held four work sessions regarding the City's FY2026 budget. Additional meetings were held by the City Council Budget and Finance Committee through April and May.
The attached budget resolution will establish the preliminary budget authority for the City's fiscal year 2026, which begins on July 1, 2025. Amendments to the preliminary budget may be made by City Council. On August 25, 2025, staff will bring to the City Council an opportunity to amend this preliminary budget, and adopt the final FY26 budget.
Approval of this preliminary budget before July 1 is advisable, as the City will incur expenses during the months of July and August. With a preliminary budget resolution approved, projects will continue on schedule. Beginning July 1, negotiated cost-of-living increases for the Fire Union (3%) and the Teamster Union (4%) will go into effect. Additionally, the proposed budget includes a cost-of-living adjustment for non-bargaining employees (4%), which will also go into effect. The Police contract is currently being negotiated, as such, a cost-of-living adjustment will not occur until that contract is ratified and approved by City Council.
Staff has made the following adjustments to the originally proposed budget, which were discussed at the 6/11/25 City Council Budget and Finance Committee and included in the attached resolution:
1.) Remove $20,000,000 from the South TIF. This will be moved to the FY25 budget, as this project is beginning sooner that originally anticipated.
2.) Remove $1,500 from Mayor & Council. This was requested by the Mayor, as all other non-contracted car allowances had been removed from the proposed budget, consistent with Council direction.
3.) Remove $170,000 from Police Programs. It was determined that a DUI grant (both revenue and expense) was duplicated in the original budget.
4.) Add $101,800 to Building. The Building division is requesting an additional FTE for Project Coordinator. This position was discussed during the Building Division presentation to City Council.
With the addition of these adjustments the total FY2026 Budget, as presented is $417,842,407
Further, the attached Council proposed amendments were considered and recommended by the Budget and Finance Committee:
Rupsis 1 - 4 yes, 1 no. This amendment would dedicate $10,000 towards understanding how best a housing program could be designed. This amendment would be funded by ending the City's membership in the National League of Cities & Towns, which is slightly more than $10,000.
Rupsis 2 - 4 yes, 1 no. This amendment would allocate up to $5,000 from Council Contingency to provide funds for City Boards and Commissions to be used to engage with the community. This amendment would not result in an overall change to the City budget, but would allocate, specifically, some Council Contingency funds.
Kennedy 1 - 4 yes, 1 no. This amendment would eliminate the vacancy savings that were budgeted for Police Salaries ($500,000) and would be offset by an equal reduction in Police Overtime.
Kennedy 2 - 3 yes, 1 no. This amendment is to remove car allowances from the FY26 budget, and utilize the IRS mileage reimbursement for employees. The proposed FY26 budget does not currently include any car allowances, nor were they lumped into other areas. At the March 26 Budget and Finance Committee meeting, the committee voted to recommend that car allowances not be included in the FY26 budget. As a result of that recommendation, the proposed budget does not include funding for any car allowances other than the City Administrator, as required by contract.
These amendments are not currently included in the resolution attached for consideration, and will need to be introduced and voted upon by the whole Council.
The attached budget resolution will establish the preliminary budget authority for the City's fiscal year 2026, which begins on July 1, 2025. Amendments to the preliminary budget may be made by City Council. On August 25, 2025, staff will bring to the City Council an opportunity to amend this preliminary budget, and adopt the final FY26 budget.
Approval of this preliminary budget before July 1 is advisable, as the City will incur expenses during the months of July and August. With a preliminary budget resolution approved, projects will continue on schedule. Beginning July 1, negotiated cost-of-living increases for the Fire Union (3%) and the Teamster Union (4%) will go into effect. Additionally, the proposed budget includes a cost-of-living adjustment for non-bargaining employees (4%), which will also go into effect. The Police contract is currently being negotiated, as such, a cost-of-living adjustment will not occur until that contract is ratified and approved by City Council.
Staff has made the following adjustments to the originally proposed budget, which were discussed at the 6/11/25 City Council Budget and Finance Committee and included in the attached resolution:
1.) Remove $20,000,000 from the South TIF. This will be moved to the FY25 budget, as this project is beginning sooner that originally anticipated.
2.) Remove $1,500 from Mayor & Council. This was requested by the Mayor, as all other non-contracted car allowances had been removed from the proposed budget, consistent with Council direction.
3.) Remove $170,000 from Police Programs. It was determined that a DUI grant (both revenue and expense) was duplicated in the original budget.
4.) Add $101,800 to Building. The Building division is requesting an additional FTE for Project Coordinator. This position was discussed during the Building Division presentation to City Council.
With the addition of these adjustments the total FY2026 Budget, as presented is $417,842,407
Further, the attached Council proposed amendments were considered and recommended by the Budget and Finance Committee:
Rupsis 1 - 4 yes, 1 no. This amendment would dedicate $10,000 towards understanding how best a housing program could be designed. This amendment would be funded by ending the City's membership in the National League of Cities & Towns, which is slightly more than $10,000.
Rupsis 2 - 4 yes, 1 no. This amendment would allocate up to $5,000 from Council Contingency to provide funds for City Boards and Commissions to be used to engage with the community. This amendment would not result in an overall change to the City budget, but would allocate, specifically, some Council Contingency funds.
Kennedy 1 - 4 yes, 1 no. This amendment would eliminate the vacancy savings that were budgeted for Police Salaries ($500,000) and would be offset by an equal reduction in Police Overtime.
Kennedy 2 - 3 yes, 1 no. This amendment is to remove car allowances from the FY26 budget, and utilize the IRS mileage reimbursement for employees. The proposed FY26 budget does not currently include any car allowances, nor were they lumped into other areas. At the March 26 Budget and Finance Committee meeting, the committee voted to recommend that car allowances not be included in the FY26 budget. As a result of that recommendation, the proposed budget does not include funding for any car allowances other than the City Administrator, as required by contract.
These amendments are not currently included in the resolution attached for consideration, and will need to be introduced and voted upon by the whole Council.
ALTERNATIVES
City Council may:
- Approve; or,
- Not Approve the preliminary budget resolution. If not approved, staff would seek clarification on adjustments that need to be made before final adoption is required in August.
FISCAL EFFECTS
The attached resolution establishes the budget authority by fund (See Exhibit A). As currently presented the FY2026 budget is $417,842,407. Details on the proposed budget are available online at www.billingsmt.gov/finance.
This budget assumes 0% increase in property taxes, as a result of the 2025 State Legislative session. The impact to the median home, which is anticipated to be valued at $350,000, is expected to be the following:
| Revenues | FY26 Proposed Budget | FY25 Adopted Budget |
| TAXES | $ 70,629,199 | $ 70,156,849 |
| SPECIAL ASSESSMENTS | 23,795,253 | 29,721,512 |
| LICENSES & PERMITS | 4,753,445 | 4,252,576 |
| INTER-GOVERNMENTAL | 46,401,298 | 69,475,721 |
| CHARGES FOR SERVICE | 174,267,713 | 159,777,726 |
| FINES & FORFEITS | 1,700,400 | 1,725,046 |
| INVESTMENT EARNINGS | 9,234,760 | 5,677,060 |
| DONATIONS / CONTRIBUTIONS | 881,750 | 604,990 |
| INTERFUND TRANSFERS | 36,222,531 | 40,785,728 |
| DEBT PROCEEDS | 66,172,733 | 43,442,500 |
| MISCELLANEOUS | 2,274,624 | 2,434,117 |
| Total Budgeted Revenues | $ 436,333,706 | $ 428,053,825 |
| Expenditures | FY26 Proposed Budget | FY25 Adopted Budget |
| Personal Services | $ 123,398,041 | $ 118,773,439 |
| Operation and Maintenance | 127,455,679 | 126,646,165 |
| Capital Outlay | 105,067,821 | 170,719,720 |
| Debt Service | 25,698,335 | 24,319,375 |
| Transfers Out | 36,222,531 | 39,175,728 |
| Total Budgeted Expenses | $ 417,842,407 | $ 479,634,427 |
This budget assumes 0% increase in property taxes, as a result of the 2025 State Legislative session. The impact to the median home, which is anticipated to be valued at $350,000, is expected to be the following: