Elyria again expected to spend more than it makes in 2026

ELYRIA — Though he admitted 2025 had been easier on city coffers than he anticipated, Elyria Finance Director Ted Pileski said Monday that the city was still expecting to spend more than it brings in in 2026, and warned that this trend could not continue. The city's 2026 permanent appropriations must be approved by City Council before the end of March, and so the body began its review of the proposed budget on Monday with a presentation from Pileski. Pileski led off last year's budget debate process with a dire warning that the city would expend much of its cash balance by the end of the 2025 fiscal year. In 2026, his warnings were less demonstrative, but Pileski still encouraged city departments to cut back on spending. Monday's discussion was focused on the city's general fund, which covers most day-to-day expenses such as salaries, not the city's total budget. According to the projections from the Finance Department, Elyria is expected to bring $38,522,218 of revenue into its general fund in 2026, while city departments have requested $50,889,122 in funding. "At some point in time we have to stop," Pileski told Council on Monday. "We can't continue to spend more than what we are bringing in, obviously." Elyria enters the year with a cash balance of about $12.4 million left over in its general fund, which it can use to cover expenditures beyond its revenue. "So worst-case scenario, if revenues came in as estimated and we spent everything that was appropriated, we would be finishing the year with just under $1 million in the general fund. I don't believe that is going to happen. I believe, looking at everything, I think we will probably dip into our cash balance by about $4 (million) to $5 million." In 2025 the city had entered with more than $15.3 million in its reserves, the most it had ever carried over, but Pileski had warned that as COVID money dried up the city could be left with just $5 million to $6 million left over. The current cash balance of $12.4 million more than doubled those conservative estimates, which Pileski credited largely to a better-than-expected bump in city revenue. Elyria brought in $38.8 million in 2025, about $2 million more than the year prior. Pileski said that this new money was primarily driven by a 6.3 percent increase in income tax revenues, which came as a surprise to him. Although the city's revenue rose last year, its expenses did as well, and Elyria anticipates paying about $4 million more out of the general fund than it did last year. Pileski said the most immediate cause of this increase is that 2026 has an odd payroll quirk: the year will have 27 biweekly pay periods rather than the standard 26 pay periods. Pileski said this phenomenon occurs every 11 to 12 years because of a similar principle to leap years, which occurs in the fiscal year. Pileski said that city departments had initially requested about $46 million in funding, but largely because of this additional pay period, he had to increase those appropriation requests to the $50.1 million now before Council. The city also approved a new pay scale for non-union employees in 2025 that increased the salaries of some city employees. Pileski said that the raises would cost the city about $500,000 more in 2026. Including the general fund, the city has a total of 51 funds making up a total budget of $277,064,585 in 2026. Several funds aside from the general are seeing increases in costs, and Pileski pointed to the employee health care fund as a major source of this. "Besides the extra pay period, health insurance has gone considerably higher over the last couple of years," Pileski said. "Last year I believe claim costs were up 14 percent. We had to adjust the funding mechanism for that fund, so the employee share went up for 2026 and the city went up for 2026 because the fund was getting dangerously low on its cash balance." The 2026 budget must be approved by City Council, and Councilman Phil Tollett, D-at-large, who chairs the Finance Committee, said that Council members would have two weeks to review the proposed budget before it would be back before the committee on March 9. In that time, Tollett encouraged Council members to review the budget proposal and ask questions to Pileski and his staff so they could discuss it at the next meeting. Contact Owen MacMillan at (440) 329-7123 or omacmillan@chroniclet.com.