FY 2026/27 Proposed Budget
May 12, 2026
Economic Update
General Fund Revenues
FY 2026/27 Proposed Budget ($427.1 million)
◦ General Fund - $289.1 million
◦ All Other Funds - $138.0 million
Summary
May 12, 2026FY 2026/27 Proposed Budget 2
National Economy Expected to Grow at Moderate Rate
◦ Stable labor market but elevated inflation
◦ Consumer spending has increased steadily over the past year Interest Rates will Remain Higher Longer
◦ Low unemployment and inflation pressures are prompting the Federal Reserve to delay reducing interest rates
City’s Primary Revenues Growing Modestly
◦ Continued consumer spending supports modest increases in sales tax, business tax, and hotel tax revenue
◦ Higher interest rates discourage property sales and new development, slowing property tax growth in FY 2026/27 and FY 2027/28 Prolonged Conflict in Persian Gulf Could Lead to Slowdown ◦ The longer gas and oil prices remain elevated, the more damage to the global economy and the longer the recovery period
May 12, 2026FY 2026/27 Proposed Budget 3
Dollars in Millions FY 2024/25
Actual
FY 2025/26
Estimate
FY 2026/27
Proposed
FY 2027/28
Projected
FY 2028/29
Projected
Property Tax $145.5 $152.5 $158.2 $164.4 $171.7
Sales Tax* 58.1 69.3 71.2 73.4 75.6
Business Tax 13.1 14.9 15.1 15.6 16.2
Franchise Fees 13.4 13.4 14.0 14.6 15.2
Hotel Tax 6.2 6.9 7.3 7.6 8.0
Charges for Services 8.1 7.3 7.7 7.8 7.9
Other 12.7 11.6 11.2 11.4 11.5
Revenue Subtotal 257.1 275.9 284.7 294.8 306.1
Transfers In 6.3 6.8 6.3 6.4 6.4
Total Resources $263.4 $282.7 $291.0 $301.2 $312.5
Percent Change 7.3% 3.0% 3.5% 3.7%
May 12, 2026FY 2026/27 Proposed Budget 4
* Sales tax in FY 2024/25 reflects the State’s recovery of FY 2022/23 overpayments – a reduction of approximately $11.9 million.
May 12, 2026 5
Dollars in Millions FY 2024/25
Actual
FY 2025/26
Estimate
FY 2026/27
Proposed
FY 2027/28
Projected
FY 2028/29
Projected
Sources of funds
Encumbrance reserve $ 1.5 $ 1.0 $ 0.0 $ 0.0 $ 0.0 Unreserved fund balance 0.0 0.0 1.7 1.7 6.1
Revenues and transfers in 263.4 282.7 291.0 301.2 312.5 Total sources of funds 264.9 283.7 292.7 302.9 318.6
Uses of funds
Expenditures and transfers out* 280.7 281.8 289.1 295.7 305.0 Encumbrance balance 1.0 0.0 0.0 0.0 0.0
Total uses of funds 281.7 281.8 289.1 295.7 305.0
Addition to Reserves -16.8 0.2 1.9 1.1 1.4
Unreserved fund balance $ 0.0 $ 1.7 $ 1.7 $ 6.1 $ 12.0 FY 2026/27 Proposed Budget
* The placeholder salary adjustment of 2% included in the FY 2026/27 proposed budget is assumed to be part of a three-year agreement.
Accordingly, additional 2% adjustments are included in the two forecast years.
May 12, 2026 6
*GFOA Recommendation is no less than two months of regular operating expenditures (16.7%) General Fund Reserves
Proposed
Funding
FY 2026/27
Contingency Reserve
(16.7%* of expenditures and transfers out - address unforeseen events) $48.3 Million Budget Uncertainty Reserve
(Financial risk in 3-year forecast - offset revenue/expenditure uncertainty) 4.3 Million Total Reserves $52.6 Million
Contingency Reserve fully funded in Proposed Budget
Forecast assumes $4.3 million of the Budget Uncertainty Reserve will remain at the end of FY 2025/26
*GFOA recommended level is no less than two months of regular operating expenditures (16.7%).
FY 2026/27 Proposed Budget
May 12, 2026FY 2026/27 Proposed Budget 7
Police
45%
Fire
27%
Maint.
15%
Other
13%
87%
Development
Recreation
Human Services
May 12, 2026FY 2026/27 Proposed Budget 8
Function
(positions shown as full-time equivalent – FTE)
FY 2025/26
Estimate*
FY 2026/27
Proposed
Staffing
Change**
Public Safety
Fire 174.0 174.0 0.0
Police 320.0 320.0 0.0
Other Community Services
Community Development 88.2 88.2 0.0
Community Services 46.4 46.4 0.0
Economic Development 4.0 4.0 0.0
Human Services 82.7 79.9 (2.8)
Maintenance Operations 111.0 111.0 0.0
Public Works 67.7 67.7 0.0
Administrative Services 102.0 103.0 1.0
Total 996.0 994.2 (1.8)
May 12, 2026FY 2026/27 Proposed Budget 9
* FY 2025/26 estimate reflects positions eliminated as part of mid-year rebalancing actions. ** General Fund: City Council (1 FTE).
Other funds: Human Services (-2.8 FTE).
National economy will continue to expand at a moderate rate, but interest rates will remain elevated
◦ Modest increases in sales tax, business tax, and hotel tax revenue ◦ Low levels of real estate turnover and new development activity constrain property tax growth
FY 2026/27 Proposed Budget balanced
◦ Staffing and services budgeted at current-year levels (with staffing and service reductions from FY 2025/26)
◦ No capacity to restore eliminated positions or services ◦ Labor negotiations underway – 2% salary placeholders in proposed budget and forecast year projections
Significant uncertainty in both revenues and expenditures ◦ Prolonged energy supply disruptions could lead to economic slowdown ◦ Budget Uncertainty Reserve projected to end FY 2025/26 at $4.3 million May 12, 2026FY 2026/27 Proposed Budget 10
June 2 First Public Hearing
June 9 Second Public Hearing and Budget Adoption
May 12, 2026FY 2026/27 Proposed Budget 11