CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
title
Receive the report on the addition of a Police Mobile Crisis Intervention Unit to the proposed 2026 Annual Budget
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DEPARTMENT: Finance Department
SUBMITTED BY: Raymond Munch, Director of Finance
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
During the 2025 budget process, the Police Department submitted a budget request to establish a Mobile Crisis Intervention Unit (MCIT). The initial program request totaled $1,078,905, which included the hiring of five new police officers and one new police sergeant.
To achieve a balanced General Fund budget, the initial request was reduced to three new officers and one sergeant in the City Manager’s proposed budget. This request was presented to the City Council at the second budget workshop on Oct. 22, 2024.
During the 2025 budget development process, the City faced several financial uncertainties, including the state’s elimination of the grocery tax and the outcome of negotiations with public safety unions. As a result, at the Oct. 22, 2024 workshop, the MCIT request was presented as pro-rated for the final six months of 2025, contingent upon identifying a long-term funding source to replace the grocery tax by July 1.
The third and final budget workshop was held on Nov. 12, 2024. By that time, the City Council had been informed that the early stages of collective bargaining with police and fire unions had indicated higher-than-anticipated salary increases for 2025 and beyond. At the workshop, staff noted that the outcome of various financial uncertainties would require financial flexibility and the potential reprioritization of funds to support existing services. Therefore, any new additions to the budget, including MCIT, could need to be reprioritized to support public safety salary increases. At the workshop, a motion was introduced to secure funding for MCIT through a property tax levy increase; this request failed by a vote of 1-8.
On Dec. 3, 2024, the City Council approved the 2025 budget, which included the pro-rotated MCIT program at a total cost of $474,000.
The financial uncertainties cited during the budget workshops became reality in early 2025. Final wage increases for public safety were nearly twice the amount included in the 2025 budget. To accommodate the unbudgeted increase in the General Fund, a budget transfer of $2.2 million from IT, Public Works and TED departments was approved by the City Manager. The funding included for MCIT was also reallocated to current police officer salaries. Regarding the grocery tax replacement, the City Council’s decision to implement a municipal grocery tax was not finalized until mid-September.
The 2026 budget process posed similar challenges to the previous year. Initial budget forecasts showed a deficit of $2.5 million, assuming the grocery tax would be replaced. In response, the Finance Director and the City Manager directed departments to hold the line on operating expenses, where possible. Departments were also informed that new personnel requests would be difficult to support in the 2026 budget, including those that were previously considered.
As presented during the 2026 budget workshops, staff achieved a balanced General Fund despite facing a $4 million deficit in August, due largely to increases in salary and health insurance costs. The deficit was solved primarily through a one-time revenue adjustment and departments’ efforts to hold the line on operating expenses.
DISCUSSION:
During the third and final 2026 budget workshop, the City Council requested an updated report on what the MCIT program budget would look like in 2026 when factoring in multiple scenarios. The estimates below are based on the 2025 budget proposal and have been updated according to the 2026 budget assumptions. The information is outlined based on the requested scenarios of two, four, and six MCIT positions.
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Table 1: 2026 MCIT Budget Options |
|
|
2 MCIT |
4 MCIT |
6 MCIT |
|
Officer - Salary and Benefits |
132,694 |
398,081 |
663,468 |
|
Sergeant - Salary and Benefits |
191,121 |
191,121 |
191,121 |
|
Radios, Body Cameras, Tasers, Uniforms |
19,533 |
39,067 |
58,600 |
|
Police Academy |
7,434 |
22,302 |
37,170 |
|
K9 Purchase |
- |
10,000 |
10,000 |
|
Subtotal - General Fund |
350,782 |
660,570 |
960,359 |
|
Vehicle(s) |
90,598 |
271,794 |
271,794 |
|
Computers |
10,660 |
21,320 |
31,980 |
|
Subtotal - Capital Projects Fund |
101,258 |
293,114 |
303,774 |
|
Total |
$452,040 |
$953,684 |
$1,264,133 |
The MCIT program would be budgeted as a recurring expenditure in the General Fund, with some initial, one-time expenditures in the Capital Projects Fund. The vehicle and computer costs would be allocated to the Capital Projects Fund. As a result, the Capital Projects Fund budget would need to be adjusted according to the Capital Projects Fund subtotal in Table 1, which would range from $101,258 to $303,774 depending on the number of personnel in the unit.
For the General Fund to support the MCIT program, the corporate (city services) portion of the property tax levy would need to be increased by the amount of the General Fund subtotal costs outlined in Table 1. The impact of this on the corporate portion of the 2025 estimated tax levy is illustrated in Table 2 below.
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Table 2: 2025 Estimated Tax Levy with MCIT |
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|
Current Levy Proposal |
Add 2 MCIT |
Add 4 MCIT |
Add 6 MCIT |
|
Corporate Levy |
$9,250,000 |
$9,600,782 |
$9,910,570 |
$10,210,359 |
|
Increase over 2024 ($) |
$1,073,843 |
$1,424,625 |
$1,734,413 |
$2,034,202 |
|
Increase over 2024 (%) |
13.1% |
17.4% |
21.2% |
24.9% |
|
Est. Property Tax Rate |
0.5506 |
0.5539 |
0.5567 |
0.5595 |
|
Bill per $100K of EAV |
$551 |
$554 |
$557 |
$559 |
|
Median Value Home Bill |
$1,019 |
$1,025 |
$1,030 |
$1,035 |
|
Increase ($) |
- |
$6 |
$11 |
$16 |
In addition to the budgetary impacts noted above, increasing the number of sworn police officers will have future implications on police pension funding. The estimated impact on the required annual pension contribution of adding one sworn officer (Tier 2 pension) is 23% of pensionable salary, with the officer contributing 10% towards that cost. Those additional pension costs are not factored into the 2026 budget because they would not be realized until the actuary updates contribution requirements for 2027 based on the new sworn headcount.
FISCAL IMPACT:
Maintaining a balanced budget with the addition of the MCIT program is only possible through an increase in the property tax levy as outlined above. Funding MCIT through the property tax levy requires a long-term commitment. If a future City Council were to adopt a more restrictive philosophy on property taxes, that could jeopardize funding for MCIT or other core public services.
The Finance Department maintains that the long-term fiscal impact of adding personnel in 2026 is a concern, as future budget cycles are expected to be challenged by the same issues discussed throughout the 2026 budget workshops. These issues include the moderation of revenues, rising salary and healthcare costs, and potential legislative actions to enhance Tier 2 pensions.
Adding additional burden to the property tax levy now could limit the City’s flexibility to leverage it in the future to support existing core services, which may be needed if other revenue streams do not keep up with increasing costs.