The City Commission on Wednesday began shaping the city’s fiscal year 2026-27 budget, indicating support for setting a tentative property tax rate increase below the 1-mill increase initially presented by staff while emphasizing that the budget remains a work in progress.

No formal action was taken during the budget workshop because workshops are for discussion only. However, commissioners supported directing staff to prepare next week’s tentative millage resolution using a 0.75-mill increase rather than the full 1-mill increase initially outlined in the preliminary budget presentation.

Mayor Nick Nesta stressed throughout the workshop that the proposed budget remains subject to change.

“This is preliminary. We want feedback,” Nesta said. “This is the point, as we start to continue these workshops, we start getting more and more narrow and more rigid with this budget, but right now we still have the ability to fix it and change it.”

He added that commissioners must think beyond a single fiscal year.

“Keep in mind that we’re not just doing this year’s budget; we’re doing next year’s budget and the budget after that,” Nesta said. “This is not set; we can adjust it 100%. There’s nothing set in stone right now that we can’t change, adapt, or adopt in some way as we navigate this process.”

Finance director Blanche Sherman presented the preliminary $287.3 million budget and explained that the city’s original 1-mill proposal had been based on preliminary property value estimates. After certified taxable values were released, projected additional revenue declined by about $1.4 million.

Sherman said one additional mill would now generate about $8.8 million, with each quarter-mill producing roughly $2 million.

Nesta said his goal is to reduce the proposed increase further before formal budget hearings.

“My personal goal for an increase would be .5 max,” Nesta said. “We’ll work to get there.”

Sherman said the city is attempting to replace declining growth-related revenue with more stable recurring revenue.

“The objective here is that we’re losing recurring revenue because the growth is going down,” Sherman said. “The objective here is we need to replace that with recurring revenue.”

As staff refined the preliminary budget, several large capital projects were removed or deferred.

Sherman said the proposed $40 million Fire Station No. 1 replacement and $10 million Fire Station No. 7 project were removed from the preliminary spending plan while the city works to secure debt financing.

Other projects—including improvements at Camp Wewa, additions to the dispatch center, portions of the Northwest Recreation Complex improvements, the police department’s mobile command center and several fire training projects—were either deferred or pushed into future fiscal years as staff continued refining the preliminary budget.

Commissioners also discussed the city’s long-term capital improvement program and the importance of prioritizing infrastructure projects while maintaining fiscal stability.

Vice Mayor Diane Velázquez said delaying projects has contributed to the city’s current infrastructure challenges.

“There are a couple of projects out there that I’ve been involved with over the years that I’ve seen have not moved yet, but we’ve been budgeting for,” Velázquez said. 

During public comment, resident Rod Olsen echoed those concerns.

“We’ve been kicking stuff down the road,” Olsen said. “That’s why we have trouble with water pressure. That’s why we have trouble with reclaimed water. That’s why we have flooding. That’s why we have sewer issues, because it’s been kicked down the road, and we have to stop.”

Nesta agreed that delaying projects only increases future costs.

“Every year that we push this off, it’s only going to get more expensive,” he said. “There’s nothing getting more affordable right now.”

The commission is expected to set a tentative maximum millage rate July 15. The rate may later be reduced during the budget process but cannot be increased.