Finance committee reviews midyear budget, flags reserves and subsidy needs

Kim Kaufman, budget manager, presented the midyear budget packet to the Finance Committee on Jan. 15 and said audited FY25 figures produced an ending general fund balance of $11.6 million, about $400,000 less than the amount assumed when the FY26 budget was adopted. She told the committee the difference largely reflects timing and outstanding purchase orders that remain as encumbrances rather than final expenditures.

Kaufman noted a $3.5 million reserve for encumbrances—purchase orders issued in FY25 or earlier that had not been paid by audit—so those dollars are budgeted but not yet expended. She also pointed to internal transfers and subsidies: public safety sales tax (PSST) activity and the insurance/risk-management fund both needed additional support in the current fiscal year, and staff modeled conservative revenue assumptions for FY27 (1% sales-tax growth and 4% use-tax growth).

Staff outlined options to restore or protect fund balance, including a “rollover” budget that would freeze FY27 departmental expenditures at FY26 levels unless council authorizes additions. "We can freeze expenses for fiscal year '27 at the current year levels," Kaufman said, describing that option as a way to remove guesswork from next year’s budget.

The presentation also reviewed capital funding: a voter-approved 0.7% sales-tax earmark for capital produces roughly $18 million annually but constrains flexibility because those dollars are dedicated to capital projects. Staff reported recent capital funding notifications totaling about $44 million from ACOG and federal sources; the capital fund nevertheless shows much of its balance committed to bond projects, which limits new-project capacity despite a large headline fund balance.

Committee members asked for follow-up materials and clarified assumptions staff used in five-year projections. Staff agreed to return with machine-level Flowbird parking data, combined sales-plus-use tax graphs, and additional detail on encumbrances and planned capital commitments ahead of budget adoption.