Three individuals signed up to speak at the Henderson City Council’s public hearing on the FY 26-27 budget that was held on Thursday, May 21 but it took more than 40 minutes for those speakers to address the Council members.
For the first half hour or more, several Council members had questions for City Manager Paylor Spruill and Finance Director Joey Fuqua that centered around how the city got itself into the undesirable situation of having to dip into fund balance in order to balance the budget.
In his response to Mayor Pro Tem Tami Walker’s question about the pay study implementation, Fuqua reminded Council members about how more than $4 million in federal ARPA funds had been used to help address employee turnover and retention rates.
About 80 percent of municipalities across the state offer a cost of living adjustment each year, he added, but Henderson has been able to offer a COLA only four out of the last 10 years.
It was FY 2025 that the salary increases started, and Fuqua said the city spent “an enormous amount of fund balance” to balance that budget.
“When those salaries hit the bottom line,” he said, “we’re on the hook for that every year.”
This year’s $51.7 million budget also earmarks $5 million from the fund balance to balance the budget. As Fuqua explained, that doesn’t mean that is the final number that will be needed, but represents a maximum amount from the unassigned fund balance that could be used.
The FY 26 budget audit has not been finalized yet, but Fuqua said if the city uses another $1.2 million or so as it needed for FY 25, then his prediction becomes clearer: the fund balance is set “to take another record-breaking hit. Without new revenue streams, next year at this time we’ll be in an even more challenging situation” because there won’t be enough money in fund balance to offset the shortfall.
The City Council will have another budget session on Thursday, May 28 at 5 p.m. in Council chambers.
The 2026-27 budget must be approved before the new fiscal year begins on July 1.
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