Finance committee: city reports an estimated $2.6 million unaudited net loss for 2025; $2.2 million of fund balance used to buy land for Fire Station 1

City staff provided a high-level review of unaudited 2025 general fund results at the Finance Committee meeting on March 2, reporting an estimated net loss of about $2.6 million.

Jesse (staff presenting the report) said the city’s projected undesignated fund balance would fall from 28.06% to roughly 25.13% compared with the 2026 budget, noting that the Government Finance Officers Association recommends a minimum of 17%.

Key drivers cited by staff include a $2.2 million use of undesignated fund balance to purchase land for a new Fire Station 1 (a transaction the city had budgeted and carried out in 2025), and a health-insurance cost overrun that staff estimated at about $1,170,000. Jesse explained that the health-insurance overage stemmed from greater-than-expected program use and said human resources and the city’s carrier will dig into claims data to determine causes.

Jesse also explained that two revenues the city anticipates will offset part of the shortfall have been delayed: a SAFER grant (about $483,000) tied to federal payments and an insurance reimbursement for August flood expenses (about $327,000). Jesse told the committee the city expects to receive those funds “within the next 60 to 90 days, give or take,” and said that once realized the undesignated fund balance would be higher (staff estimated a rebound to roughly 27.42% after those revenues are recorded).

Committee members asked for further analysis of the health-insurance drivers and for staff to work with HR and the carrier to identify whether a small number of large claims or broader utilization had driven the overage. Jesse said staff would pursue that analysis and emphasized the need to “sharpen our pencil” on health-insurance projections going forward.

Baker Tilly (auditor) is scheduled to present final audited numbers at the committee’s second June meeting, at which time the city will have audited figures to confirm these preliminary results.

The committee approved related carry-forward appropriations later in the meeting and the items were included in the council’s consent agenda that evening.