Council receives budget overview in preparation for fiscal 2027 plan

City of Springfield Director of Finance David Holtmann offered the first of three scheduled presentations on the forthcoming fiscal 2027 budget to Springfield City Council yesterday, this one offering a broad overview of factors impacting the annual spending plan.

The city’s next budget year begins July 1. Holtmann said preparation began Dec. 1, 2025, with budget worksheets distributed to city departments, and two additional budget sessions are scheduled for April 27 and May 11. Council is scheduled to hold a first reading on the budget May 18 with a vote on June 8.

The city’s current budget, which topped the half-billion-dollar mark at $529.8 million, covers July 1, 2025, through June 30, and represented a 4.4% increase from the prior year.

The city charter requires a balanced budget and a finance plan for each budget year, including itemized statements of revenue and expenditures and provisions for contingent expenses.

The charter also requires that fees for services recover the cost of providing services and that ongoing expenses be funded with recurring revenue, not one-time revenue, such as carryover funds.

A reserve of 15%-20% of the operating fund’s balance – which Holtmann said is sometimes referred to as a rainy day fund – is required by a 2011 council ordinance.

The budget is due to council 60 days before the start of the budget year. The proposed budget is scheduled to be posted on the city’s website by April 27, Holtmann said.

Financial condition
Holtmann reported that the city’s population is 171,000, and the larger metro area has 497,000 people, according to the U.S. Census Bureau. The city’s 10-year population growth rate is 6.1%, and the metro area’s 10-year population growth rate is 11%, he said. The inflation rate as of January is 2.4% in the city.

Holtmann described the city’s economy as highly diversified with major medical, manufacturing, retail and educational institutions, and he said the credit rating agency Moody’s Investors Service described the economic growth rate as being in line with the nation’s rate.

From March 2023 to December 2025, the unemployment rate in the metropolitan statistical area has ranged from a low of 2.1% to a high of 4.3%, with 2025 ending at 2.9%.

Holtmann outlined business growth, including a new Target store and other retail offerings at Sunshine Towne Centre in west Springfield, and with five new or expanding businesses certified as enhanced enterprise zones with a total capital investment of $132 million, yielding 80 new jobs.

He also highlighted the Pinnacle on the Park redevelopment plan, with a $32 million renovation of the 142-unit Stillwell Columns Apartments and a $20 million bond issue to acquire and rehabilitate a 138-unit multifamily residential project at 2100 N. Clifton Ave.

Other growth noted includes the Hampton-Florence multiproject redevelopment plan, a 28-unit residential duplex development to be constructed south of Jordan Valley Park; The Table restaurant opening by Sisters Mill Redevelopment Corp. at National Avenue and Chestnut Expressway; and the 172-acre North Glenstone community improvement district established south of Interstate 44.

Holtmann showed a slide reflecting a lower per capita income in the city of Springfield than in the MSA, the state or the nation. In 2024, Springfield’s per capita income was $32,220; the Springfield MSA’s was $37,496; Missouri’s was $40,284; and the U.S.’s was $45,256.

The city has a bond rating from Moody’s of Aa1, the second-highest rate possible, set in December 2025.

Sales tax reliance
Holtmann said the city’s general fund gets most of its revenue from sales tax, which he called an elastic revenue source.

He noted Moody’s has called this reliance on economically sensitive sales tax revenue a challenge for the city, but he added that any new revenue source would take council support and possibly voter approval.

Some 70% of city revenue comes from sales tax, outpacing all benchmark cities. Huntsville, Alabama, comes closest among 14 benchmark cities identified by the city with 60% of its revenue from sales tax. Four cities – Fort Wayne, Indiana; Grand Rapids and Kalamazoo, Michigan; and Knoxville, Tennessee – receive no sales tax revenue at all, according to a chart presented by Holtmann.

Compared to 10 Missouri cities in the region, Holtmann said Springfield shows a lower reliance on sales tax as a general fund revenue source at 8.1% than all but one, Willard at 8%. Outpacing Springfield are Lebanon, 8.4%; Rogersville, 8.6%; Nixa and Joplin, 8.7%; Marshfield, 8.8%; Ozark and Bolivar, 8.9%; Republic, 9.1%; and Branson, 9.4%.

Holtmann projects general fund revenue of $17.8 million in fiscal 2026, up from an actual $16.7 million in fiscal 2025.