Hillsdale’s proposed budget for FY2026–27 maintains current service levels and includes a small surplus, even as inflation and long‑standing revenue limits continue to pressure municipal finances, according to City Manager David Mackie.
“At a high level, this budget provides the same services to citizens as the prior two years,” Mackie said. “What’s different is the city has proposed major street improvements and other needed capital improvements within the water, sewer and electric funds.”
Those utility and infrastructure funds are separate from the general fund, which supports most core municipal services. The proposed general fund budget shows a surplus of roughly $55,000, or about 1% of total general fund spending.
“While a surplus is good, that level doesn’t provide for a lot of flexibility,” Mackie said.
The city’s most critical income streams continue to be tax revenue and state‑shared revenue, according to Mackie. Those aren’t always stable, since property taxes can be affected by a significant downturn in the local real estate market and state‑shared revenue depends on distribution formulas set by the Michigan Legislature.
“Those risks are always present, but we’re not seeing anything at the moment that would be concerning,” he said.
The planning department shows a hefty budget increase, but Mackie said the change reflects funding allocated for the demolition of blighted properties and not a permanent expansion.
His own department also shows a significant increase. Mackie said that change reflects a move toward a more standard administrative structure. He currently serves in a dual role, and the proposed budget begins aligning the department toward a future standalone operation.
Street funding remains a challenge as Hillsdale City Council moves away from special assessments. Mackie said revenue in the municipal street fund for FY2026–27 will be reduced by $100,000 as a result of that policy shift.
“If infrastructure and street costs continue to outpace revenues, we’ll have to size projects to fit the available funding or consider other revenue‑generating tools,” he said.
As the city prepares for a public hearing on the proposed budget, Mackie emphasized that it’s balanced, maintains current service levels and continues to invest in infrastructure.
“Achieving that balance requires careful planning as inflation and fixed costs rise, while positioning the city for long‑term financial stability,” he said.
— Contact reporter Corey Murray at cmurray@hillsdale.net or follow him on X, formerly Twitter, at @cmurrayhdn.
This article originally appeared on Hillsdale Daily News: Here’s what to expect in the proposed budget for Hillsdale 2026-27
Reporting by Corey J. Murray, Hillsdale Daily News / Hillsdale Daily News
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