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STAFF REPORT <br />DATE: August 14, 2025 <br />WORKSHOP DISCUSSION <br />AGENDA ITEM: 2026 Budget Information – General Fund, Utility Funds and Tax Levy <br />FROM:Clarissa Hadler, Finance Director <br /> <br />CORE STRATEGIES: <br />☐ Vibrant, inclusive, connected community ☒ Efficient, reliable, innovative services <br />☒ Responsive, transparent, adaptive governance ☒ Balanced Finances now and future <br />☐ Managed Growth ☒ Resilient Infrastructure <br />BACKGROUND: <br />In preparation for adoption of the preliminary tax levy in September, this memo addresses the following <br />information: discussion on preliminary levy, and assumptions being used to prepare the preliminary <br />budget. <br />ISSUE BEFORE COUNCIL: <br />1) What changes, if any, should be made to the draft budgets or levy? <br />OPERATING BUDGETS: <br />Attachment 1 includes the entire General Fund Operating Budget and Utility Operating Budgets. Below <br />are a number of points that provide brief context for changes within department budgets. <br />Revenues <br />Revenues are expected to remain largely the same as 2025 Budget amount for Licenses and Permits and <br />Charges for Services. Actual revenues in 2025 are expected to be higher than budgeted due to the two school <br />projects. Revenues in this area were over $1 million in 2020 and 2021, but due to a changing housing market <br />moving toward more multifamily, residential revenues are lower than when single-family residential <br />development was stronger. We are currently projecting 200 - 250 new homes, with a larger percentage of <br />those being townhomes, which bring lower permit fees. <br />A fiscal disparities distribution is another larger revenue of the city. This can vary significantly year-to- <br />year. The estimated Fiscal Disparity Distribution for 2026 is $ 400,000. Preliminary County estimates <br />have not been released as of the writing of this report. <br />Total taxes for the General Fund budget are planned to increase by 19.88% to fund higher operations costs <br />over the prior year. <br />Salary and Benefits <br />The 2026 preliminary budget is currently being prepared with assumptions of moving staff to the next step <br />of the pay plan on January 1, 2026, including a proposed 3% COLA increase. For new or vacant positions, <br />they are budgeted at the midpoint of the range. Medical benefits are budgeted to increase by 10% as we <br />won’t receive final numbers until late-September/early-October so a contingency has been included. Staff <br />will revise the numbers for final adoption of the budget in December. <br />There are some new staff positions recommended in Public Works and Fire. See attached memos for more <br />information.