| ITEM #: 1. DATE: 04/14/2025 AI #:2335 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | CITY MANAGER'S RECOMMENDED FY2026 ANNUAL BUDGET AND FY2026-2030 CAPITAL IMPROVEMENT PROGRAM |
| STAFF PRESENTER(S): | Ryan Bittle, Finance Manager |
Summary
Staff will present, answer questions, and receive input from the City Council on the FY2026 City Manager’s Recommended Budget and five-year FY2026-2030 Capital Improvement Program (CIP). Council discussion and feedback will be used to make any required modifications prior to presenting the Tentative Budget and preparing required publications for final adoption of the FY2026 budget. The City Manager’s Recommended Budget for FY2026 is $915.5 million. (Ryan Bittle, Finance Manager)
FISCAL IMPACT
This is an informational step in building the city's FY2026 budget. As proposed, this budget complies with the Council-adopted financial policies that provide for fiscal conservatism, flexibility, and adherence to legal requirements and professional practices. Property tax rates are within legal limits and the combined rate is below the maximum established in the adopted financial policies. This is a balanced budget with no proposed tax increases, and service levels have been maintained despite increasing cost pressures.
BACKGROUND AND PREVIOUS ACTIONS
The FY2026 budget process began in calendar year 2024 and included meetings with departments and the City Manager's office to discuss upcoming budget requests. This list of requests, in addition to associated new capital projects and updating of existing capital projects, forms the basis of which most of our work session discussion will be centered on. Base budget increases related to current city operations have already been reviewed and implemented as part of our starting point in coming up with what new money we have available to deploy. All of these requests are reviewed by the Budget and Research team and the Executive team at several different touchpoints prior to this step of sharing recommendations with Council. Related to capital projects, Engineering Project Management, Information Technology and Procurement are highly involved in reviews to ensure that all elements of a project are captured within its scope/budget and that we have the organizational resources to deliver the projects proposed. Council was provided an initial General Fund five-year forecast that included risks and budget priorities during the City Council Retreat in February, and those discussions were utilized in the development of this recommended budget. That forecast served as the basis for this recommended budget and any changes from our discussions will be shared and reconciled with Council as part of this presentation. This budget was developed within the framework of our financial plan and complies with all aspects of that plan. Attachment A, our City Manager's Recommended Budget Book contains supporting figures and detailed schedules used to help facilitate discussion.
STAFF ANALYSIS
The proposed budget complies with financial policies and General Fund resources exceed proposed uses by $50.5 million, the majority of which will be programmed as CIP Reserves for use in future fiscal years of our fully funded five-year CIP with the remainder used for future year operating costs of capital improvement projects. Any changes that arise impacting this number will be reflected when the Tentative budget is presented for adoption in May. This recommended budget is built around the core financial policies previously adopted by Council. The budget maintains current programs and services for an expanding population base and addresses the highest priorities expressed by the City Council, including public safety, sustainability, prudent financial stewardship, compensating employees fairly, providing capacity to absorb capital cost increases and actively pursuing economic development opportunities while maintaining a focus on investing in infrastructure through our capital improvement program. As presented, the recommended budget retains all base budget programs and adds $11.8 million in ongoing supplemental requests, 69.52 new full-time equivalent (FTE) positions and $18.2 million in one-time supplemental requests. The overall FY2026 budget reflects an increase of 12% over the FY2025 revised budget driven primarily by the programming of 1-time capital improvement project expenditures. Carryovers from FY2025 will be added, reconciled, and presented to Council as part of the FY2026 Tentative budget presentation in May.