Homewood reports $5.2 million midyear surplus; council to accelerate select capital projects

A city staff member told the Homewood City Council on May 18 that the city recorded a $5.2 million surplus through March 31, 2026, with total revenues at $46.8 million — 61.6% of the fiscal-year budget — and total expenditures of $41.65 million, or 49.5% of budget.

The presenter said sales- and use-tax collections were up compared with the same point last year and licenses and permits were nearly fully collected (97.57% through March). "It's good to see that in the middle of the year, you're not greater than 50," the presenter said, describing the expenditure-to-budget ratio as a sign of controlled spending.

Why it matters: the mid-year surplus and stronger revenue trends give the council flexibility to accelerate capital projects the administration has been holding to review budget shape. Staff said they slowed capital early in the year but are gearing up projects including the US 31 pedestrian tunnel landscaping, Central Avenue capital work and other prioritized public-works items.

Supporting details: staff highlighted that fleet spending appears higher this year because the city centralized fuel purchases in the fleet department; previously those costs were spread across departments. Staff also noted that certain sanitation functions were absorbed into the streets budget after service-contract changes and that some historical savings (pensions, personnel changes) are not visible in mid-year operational lines.

Debt service and reserves: the presentation flagged a large amount currently in debt-service accounts (roughly $13.58 million collected to date) and said staff will propose a policy this summer to set clearer targets for how much to keep on hand (guidance discussed in-session suggested a rule of thumb of 90–120 days of debt-service coverage).

Risks and watch items: staff recommended monitoring sales-tax trends tied to local activity (including renovation of a downtown Pig property) and noted the $3.8 million budgeted carryover balance has not been tapped. The administration said it will continue to track revenue volatility and bring a clean set of reserve and transfer policies back to council.

What comes next: staff will circulate the supporting mid-year packet and financial schedules to council and department heads and bring formal policy recommendations and any needed budget-transfer requests during the summer budget process.