Staff outlines deep accounting errors in proposed general fund budget as council questions tax increase

City staff presented a proposed general fund budget for fiscal year 2026–27 that, officials said, was prepared amid significant accounting irregularities found during recent reviews. The presentation, led by Mr. Chambers, said revenues had been overstated and expenditures understated in prior years; when the errors were corrected the general fund’s projected $3.6 million shortfall was reduced through expenditure reductions and other adjustments.

"The proposed budget has been developed using the best information currently available while taking a conservative and fiscally responsible approach," Chambers said, describing steps including placing 11 vacant positions on attrition hold (about $1.2 million in savings), department operating reductions and the elimination of a cost-of-living adjustment. Chambers recommended setting the ad valorem property-tax rate at 0.577011 per $100 taxable value; staff estimated that would raise an average homeowner’s annual city property tax by roughly $10.40 per month based on a $203,400 median home value.

Council members pressed staff on whether previously approved capital and bond funds had been charged correctly, asking if labor, equipment and other project costs were being misclassified in the general fund rather than charged to CIP/bond accounts. "If the shortfall without the tax is $1.1 million, do we have $1.1 million of labor, equipment and material cost that's an expenditure in our actuals today that should be funded by bond dollars that are sitting over there?" one council member asked, urging a reconciliation before approving a tax increase.

Several council members said they were uncomfortable adopting a tax increase while fundamental fund balances and transaction histories remained unclear; one member noted missing receipts and questioned whether the city had five years of verifiable transaction history. Staff said a finance director hire had been offered and that person would begin around early October, which staff said should help provide additional clarity.

A motion to accept the proposed general fund budget that included the proposed tax rate was made and seconded and followed by extended discussion. The transcript shows conflicting lines around the final vote (initially a tie, then a noted "it dies," and later a line stating "motion carries"). Because the meeting transcript contains contradictory vote notations for this motion, staff will need to confirm the official recorded action in the municipal minutes. The council proceeded to discuss utility and special funds and scheduled a public hearing for Sept. 29 on the budget and tax rate.