Carmel City Council 2026 Budget Presentation and Workshop Kickoff – September 8, 2025
Carmel City Council 2026 Budget Presentation and Workshop Kickoff – September 8, 2025
The Carmel City Council held a public budget workshop on September 8, 2025, from 9:00 a.m. to approximately 11:30 a.m. to receive a high-level overview of the proposed 2026 city budget. Mayor Sue Finkam and CFO Zach Jackson presented the budget, emphasizing a structurally balanced plan with no tax rate increase, strategic investments in public safety and infrastructure, and the creation of a new nonprofit, Experience Carmel, to manage events and marketing. The council will hold detailed department workshops on September 15 and 16, with a final vote anticipated by October 20.
Discussion Items
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Budget Overview and Fiscal Philosophy: The mayor stated that the budget reflects Carmel's values: safety, fiscal responsibility, transparency, quality of life, and community. The budget was built without raising the tax rate for 2026, but the mayor acknowledged that the flat tax rate likely cannot be sustained beyond 2026.
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Impact of Senate Enrolled Act 1 (SEA1): Jackson explained that SEA1 decreases property taxes for homeowners through increased homestead deductions. Since 91% of Carmel's property tax revenue comes from homesteads, the impact is significant. For a household with a $568,000 home and $176,000 annual income, property taxes will decrease over the next several years. For a senior with a $300,000 home and $40,000 income, taxes also drop. The city's forecasted property tax revenue post-SEA1 is significantly lower than pre-SEA1 projections. A local income tax increase to 1.2% could offset some revenue loss but would increase income taxes for most residents, except seniors with low income.
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Revenue and Expenditure Details: General fund revenue for 2026 is forecasted at $144.3 million, down from $147.2 million in 2025. The decline is due to SEA1, a reallocation of MVH (Motor Vehicle Highway) fund, lower local income tax (LIT) receipts, and a change in food and beverage tax deposit rules. The 2026 budget appropriations total $144.264 million, leaving a structural surplus of $1,300. The combined general fund and rainy day fund reserves are projected to be 17.7% of expenditures, exceeding the 15% target.
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Department Budget Changes: To close the budget gap, the administration reduced 2026 debt payments, used savings from 2025 to pay off capital leases, held some civilian positions vacant, and focused on service delivery innovation. Five positions were eliminated (four layoffs), including one in the mayor's office, one in the street department, one in the police department (vacant administrative position), and two in other departments. The fire department will outsource EMS billing, reducing three positions. The MAC (Marketing and Community Relations) department is being restructured: a new nonprofit, Experience Carmel, will receive a $1.8 million grant to handle festivals, events, and marketing. The remaining in-house communications team will have four people and a budget of $800,000.
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Experience Carmel Nonprofit: The mayor and CFO proposed creating a 501(c)(3) nonprofit with a board appointed equally by the mayor and city council (two each) plus three community members. The nonprofit will serve as the city's official destination marketing organization, contracting with the city to manage defined events. The 2026 funding plan includes $275,000 for city contract management, $848,000 for incumbent event and marketing staff, $600,000 in grant support for impact events, $227,000 from the 825 gift fund, and $1.2 million from the 902 non-reverting fund. The nonprofit will also receive rent-free office space. The administration expects the nonprofit to eventually reduce its reliance on city grants through fundraising, but no fundraising is required for 2026 to maintain current event levels. Councilors expressed concerns about loss of direct city control, transparency, potential pay-to-play dynamics, and whether the savings are real or merely shifting costs.
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Food and Beverage Tax Change: A state law change effective July 1, 2025, required food and beverage tax revenues to be deposited into a separate fund instead of the general fund. The city is now depositing $3.6 million annually into the food and beverage tax fund. The 2026 budget proposes using that fund to pay off capital leases and reduce ongoing operating costs, effectively lowering the city's structural spending. The food and beverage tax can be used for any legal government purpose per the city's ordinance.
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Paving and Infrastructure: The 2026 budget includes $8.5 million for paving from four sources: $4.5 million from MVH, $500,000 from local road and street fund, and $3.5 million from wheel tax and surtax funds. The city also has about $4 million in bonding capacity that could be used for priority projects like Station 47 design and energy center chiller replacement.
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Other Funds and Efficiencies: The administration highlighted several efficiency measures, including centralizing utility location services within the utilities department, creating a public safety quartermaster position, and pooling tuition reimbursement ($70,000 savings). The city is also exploring refunding callable bonds in 2026, which could generate additional savings but not yet included in the budget.
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Enterprise Resource Planning (ERP) System: The budget includes a critical investment in a new ERP system to streamline operations and improve transparency. A detailed white paper will be provided to the council.
Key Outcomes
- No formal votes were taken; the meeting was a workshop for discussion and questions.
- The council will hold detailed budget workshops on Monday, September 15, and Tuesday, September 16, 2025, to review individual department budgets.
- The administration will provide additional documentation, including:
- A simplified comparative spreadsheet of 2024, 2025, and 2026 budgets.
- A citywide org chart.
- A detailed breakdown of the arts support and operations budget for 2024-2026.
- A white paper on the ERP system.
- A summary of the food and beverage tax ordinance and its uses.
- The council requested more information on the Experience Carmel nonprofit, including a full list of events and how the $1.4 million in savings is achieved.
- The Finance Committee will discuss an ordinance to establish guidelines for nonprofits receiving substantial city support, which may affect Experience Carmel.
- The final budget vote is expected at the October 20, 2025, City Council meeting.
Meeting Transcript
Alright, I call this meeting to order. Welcome everyone today as we kind of start our public budget process. I'm going to lay out a few uh kind of expectations for today and then hand it over to the mayor and Zach. We are scheduled until 11 o'clock today. If we need to go a little later, we can. We do have the budget workshops next week on Monday and Tuesday, the 15th and the 16th. And that's when we'll get into specifics on department. Today is more of a higher level overview. My goal is around 10-ish. I'm not gonna do a hard cutoff, but 10-ish that will be ready for council questions to give us about a full hour to ask questions. In order to do that, I'm going to ask that we let the mayor and Zach kind of give their presentation uninterrupted. So take notes if there are questions you have, so that way they can kind of get through that. Just kind of set off the season. We have less than 50 days to pass a budget according to the deadline. I know there's some multiply of deadlines, but uh generally about that October 20th City Council meeting would be the one that we would want to have a vote on our budget. Uh so we have a lot of work to do in a short period of time, and some of the things that we'll be considering are very big changes for the city of Carmel. So I do ask that the council, you know, we're not going to shut down debate. We're going to let people talk as much as they want. But if there are ways you can say something in the same point in five words instead of 50, please help me there. Uh if there are technical questions that purely technical, please email them. Uh and we love every department, but if we spend 10 minutes each of us telling every department how great they are, that'll take up the entire time. Um with that, I will move on to. I think the mayor has some opening comments, and uh then Zach will get into the presentation, which we also have a copy of here. Good morning, council and Carmel residents and other parties joining us today. It's I'm honored to present today alongside the city CFO Zach Jackson, the 2026 Carmel City budget. Our team members have worked tirelessly to come to this final product, and I'm very proud of their work. Budgets are not simply columns of numbers, they're the clearest expression of what a city values, what it chooses to protect, and what it aspires to become. When we set a budget, we're declaring to our residents, our team member, and team members, and what and others what truly matters. And this 2026 budget speaks with clarity. It says we value safety. That means protecting neighborhoods and schools, equipping every firefighter and police officer with equipment and training, providing safe streets for all, and ensuring buildings and structures are safe. In all, it means ensuring no family doubts that Carmel will stand with them in their moment of greatest need. We value fiscal responsibility. In a time when revenues are flat and pressures are high. We have chosen discipline, paying off debt early, lowering annual obligations, and using today's resources to build tomorrow's stability, all without raising a tax rate. We also value transparency. That means more accountability in how we spend, more visibility in how we decide, and more openness in how we manage the people's money. We value quality of life. Great cities are built on the daily experiences of its residents, their safety, their opportunities, their cultural life, and their parks and public spaces. And we value building a community where dreams can root and grow. This budget does not just protect what we have, it invests in what it is to come. In short, a budget is more than just numbers, it's a statement of identity. It shows who we are as a city and who we intend to be. To dive in a little deeper, at the heart of this plan is public safety. Carmel Fire Department overtime is growing because of vacancies and need. This budget addresses that by filling open positions and planning ahead for retirements. With more firefighters in place, we reduce overtime, cut costs, and strengthen the services that our residents depend on. Think about the Carmel family who had a medical emergency and saw a fire crew at their door in under six minutes. They don't see overtime dollars. They see the reassurance of having enough trained firefighters to save a life.
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