Finance staff outlines constrained $635M operating budget, $731M CIP and school funding pressures

Finance staff presented the special commission with an overview of the proposed operating budget and capital-improvement plan.

Staff said the proposed operating budget totals just over $635 million, representing roughly a 1.75% increase over last year. Presenters said the budget process began in November, produced an initial planning deficit of about $35 million, and relied on analyses to avoid tax increases while prioritizing services and targeted investments.

On revenues, staff reported an expected $7.3 million revenue increase tied to an adjusted assumed collection rate; they said the change partly reflects removing Roger Williams Medical Center from the levy denominator after the hospitals prior financial problems. Staff noted the city will pursue legal options for owed pre-petition funds, and that post-petition bankruptcy claims will be handled in bankruptcy court in Texas.

School funding was flagged as a key pressure. Staff said the governor did not fully fund school-construction reimbursements for FY2026, producing a roughly $1.5 million shortfall that will be phased over three years and reduce next years available projects. Presenters said state enrollment adjustments and the final state budget could change final aid numbers.

On costs, staff described salary increases and benefits as principal drivers: examples given included a 3.5% general staff increase, 4.25% for police and 4% for firefighters; medical insurance and utilities also were cited as upward pressures. Staff said roughly 97% of the citys budget is fixed; about $21 million (3.4%) is discretionary and available for reprioritization.

Capital projects: staff previewed the CIP book and said the proposed CIP includes about $731 million in proposed projects and that the city is planning over $1 billion in construction over the next five years. The administration proposed a green revolving fund to support sustainability capital projects and maximize available tax/IRA credits.

Targeted investments mentioned for possible funding via proceeds from capital-asset sales included allocations described in the hearing as roughly $1 million for a rent fund, $500,000 for addiction-related supports and $500,000 for another program described in the transcript (transcript wording garbled); staff said an ordinance will be introduced to authorize transferring proceeds and to direct those dollars into the general fund to free up debt-service dollars for housing supports.

Smaller program investments discussed included a $50,000 cultural-festival fund, $272,000 for a records-digitization/modernization effort, modest community-center increases and EMS gear purchases. Staff said the committee will review the CIP in greater detail at upcoming hearings, with hopes for first- and second-passage votes in early June and billing timelines that would get tax bills out as early as July 1.

Next steps: staff will return with ordinance language where needed, a fuller CIP presentation at the next scheduled hearing, and documentation of grant timelines and amounts that were discussed prospectively in committee.