City Manager's Budget Message

March 16, 2026

The Honorable Mayor and Town
Council Town of Normal

It is my pleasure to submit to you the Operating and Capital Investment Budget of the Town of Normal for fiscal years 2026-27 through 2030-31. Reflected in this document are expenditures and transfers totaling $986 million over the next five years, including $235 million in fiscal year 2026-27. For a quick review of budget highlights, readers are
encouraged to view the Town’s “Budget In Brief” found on our website. This brief provides a snapshot of revenues, expenses, priorities and other noteworthy details pertaining to the budget.

This budget continues the Town’s tradition of crafting a data-driven spending plan throughout the five-year financial outlook that is fiscally responsible and responsive to current trends and conditions and aligned with strategic priorities. Beyond informing revenue projections, data analyses help align spending with strategic priorities, ensuring resources are directed where they can have the greatest impact. Should the Town incur unexpected expenses that exceed projected revenues, the Town’s practice is to utilize contingency funds or additional operating reserves to support any shortfalls. These modifications to the budget are fully disclosed to the Council and the public through Council agenda reports, open meeting discussions and the annual budget adjustment report presented to Council at the end of the fiscal year. The budget adjustment report is typically presented to Council following the conclusion of the annual audit. In the interim, monthly financial reports identify actual revenues and expenditures for the fiscal year compared to budgeted revenues and expenditures.

The FY2026–27 budget was developed using comprehensive analyses of local and state data to ensure financial planning remains responsive to fiscal trends and community needs. The Town experienced a revenue downturn in the prior fiscal year (FY2024–25), driven primarily by a decline in sales tax receipts. This decrease was likely attributable to reduced consumer spending amid recessionary concerns.

In the current fiscal year (FY2025–26), the national economic outlook has improved, supported by relatively low inflation and unemployment. Most economists predict continued economic stability and moderate growth through calendar year 2026. Increased consumer confidence and spending have resulted in a significant rebound in the Town’s sales tax revenues compared to last year’s performance. This economic recovery has alleviated many of the fiscal concerns that shaped last year’s budget cycle.

General Fund

The General Fund is the Town’s primary operating fund, supporting daily municipal services and a variety of capital needs and debt obligations. The Fund’s fiscal position remains strong, and the economic recovery in FY2025–26 has placed the Town’s five-year budget outlook beginning in FY2026–27 on a more stable path.

Last year’s budget was balanced through a combination of drawing down excess reserves and reducing funding for capital projects, contingencies, economic development resources and supplemental contributions to public safety pensions. Staff intentionally deferred recommending operational reductions to programs and services in order to assess whether economic conditions would improve. The economy has since strengthened, resulting in a more favorable and stable outlook for the General Fund.

While staff will continue to exercise fiscal caution, the General Fund’s outlook has improved during this year’s budget cycle.

Community Investment Funds

Community investment projects are funded through a variety of sources, including the Capital Investment Fund, Roadway Fund, Motor Fuel Tax Fund, Parkland Dedication Fund, Community Development Fund, Vehicle and Equipment Fund, American Rescue Plan Fund, Underpass Fund, Fire Station Capital Investment Fund and the Water, Sewer, and Storm Water capital-related funds. As part of the Town’s annual budget process, each of these funds is carefully evaluated and incorporated into the Community Investment Plan (CIP), which was presented to Council at the January 5, 2026 meeting. The CIP serves as the framework for prioritizing projects and defining the Town’s capital investment spending plan.

As discussed with Council during the January CIP review, the Town has a strong history of investing in transportation infrastructure, facilities, parks, fleet and other municipal assets. The current plan identifies 365 projects totaling $188 million in planned expenditures from FY2025–26 through FY2030–31. These projects are based on community needs assessments, impact analyses and adopted plan priorities, and are categorized by project type across multiple funding sources.

Below is a summary of key capital initiatives by type.

Transportation ($99.3 million)

• Normal Uptown Connector (Underpass Project)
• Street resurfacing
• Specific road and intersection improvements
• Bridge and culvert repair and maintenance
• Sidewalks & ADA ramp construction
• Pavement preservation

Other ($31.5 million)

• Public Works vehicles and equipment
• Police vehicles and equipment
• Fire vehicles and equipment
• Parks maintenance vehicles and equipment
• Technology equipment

Water Distribution ($$17.9 million)

• Water main replacement
• Well maintenance
• Meter reader equipment upgrade
• Water relocation

Sewer Collection ($21.8 million)

• Sewer lining
• Utility improvements
• Vehicles and equipment
• Manhole rehabilitation

Storm Water Drainage ($5.7 million)

• Creek maintenance, ditch drainage and detention
• Sump pump discharge improvement

Parks and Facilities ($11.9 million)

• Maintenance and facility improvements
• Playground and shelter replacement
• Aquatic center maintenance
• Parking lot improvements
• Trail repaving

Enterprise Funds

The Water Fund, Sewer Fund and Storm Water Management Fund comprise the Town’s Enterprise Funds. While the Water and Sewer Funds are currently in a strong financial position, operating and capital costs continue to outpace revenues, placing significant strain on the Town’s ability to adequately fund the systems’ long-term capital needs. The budget includes a 2.0% rate increase in all years for both the Water and Sewer Funds; however, this increase is insufficient to meet long-term operating and capital requirements. The same fiscal constraints exist for the Storm Water Management Fund.

As a result, staff were unable to program several critical capital projects into the five-year capital plan, particularly within the Sewer Fund, and have begun reducing previously planned out-year capital investments to ensure that operating fund fiscal targets are maintained. These capital reductions are not sustainable over the long term. Additional rate increases will be necessary to ensure the Town can keep pace with infrastructure demands and continue to provide high-quality, reliable services. Rate discussions will occur in FY2026–27 as part of the preparation for the FY2027–28 budget cycle.

The Storm Water Management Fund is supported by storm water utility fees. Projected expenditures include the implementation of a creek restoration and stabilization program, flood control projects (such as detention basin development) and sump pump discharge improvements. While the fund is currently in a stable financial position, additional work is required, and rate increases will be recommended as part of the FY2027–28 budget discussions.

Other Funds

Police and Fire Pension Funds

As in the prior year, the most recently approved pension levy (the 2025 levy, to be collected in 2026) supports funding the Town’s pension plans at 100% by 2040. Staff anticipate that funding requirements for the police and fire pension plans will continue to increase significantly over the coming years. Accordingly, ensuring adequate pension funding while maintaining a low property tax burden remains a key fiscal priority.

Employee Group Insurance Fund

Health care costs continue to rise, particularly in the prescription drug sphere, and this has put upward pressure on health premiums. Additionally, claim costs continue to be unpredictable. The Group Health Insurance Fund will continue to face financial challenges, and its trend is difficult to predict, but the fund’s current fiscal position and outlook for this budget cycle is positive.

As a self-funded group benefit program, we promote informed healthcare decision-making and wellbeing strategies that support a healthy and productive lifestyle. Staff works closely with consultants to maintain the long-term financial health of the fund and provide a high-quality, affordable benefit program.

Organizational Strategic Goals and Plan Implementation

The Town seeks to provide exceptional public services in a responsible and efficient manner, plan for the future and add value to our residents and our community. To achieve this, the Town works strategically to implement various plans. The following plans drive key initiatives in the FY2026-27 through FY2030-31 operating and capital investment budget.

Comprehensive Plan

Each action taken by the Council is linked to the Town’s comprehensive plan. Every agenda item for City Council meetings is identified with an icon that links to comprehensive plan initiatives. This helps identify for the public how the
municipality is advancing toward the long-term goals addressing Housing, Economic Vitality, Health and Sustainability, Infrastructure and Public Safety, Humanitarian and Social Aspects, Town and Gown and Community Identity and Public Places.

Strategic Plan

For nearly two decades, the Town Council has defined organizational strategic goals. The Town continues to pursue these short-term and medium-term priority areas addressing innovative economic growth, infrastructure and core services, organizational adaptation and effectiveness, and community engagement and development. Specific projects and initiatives defined in the strategic plan and reflected in this budget: completion of fire station #2, continued development of housing solutions, review of municipal fees, continued advancement of pension funding goals, update municipal codes, implement public art plan, increase investment in pavement using PASER study data decision-making, plan for infrastructure investment throughout Town and specifically in North Normal to support continued economic growth and develop a plan for future Fire Station #3.

Smart City Plan

With the purpose of advancing on our smart city journey, the Town strategically and intentionally invests in technology solutions to improve operations, engages with residents to guide policy decisions and utilizes data to ensure effective governance. Key focus areas have been strengthening our technology infrastructure and improving cybersecurity to provide a solid foundation for effective and sustainable advancement toward our Smart City Plan implementation. Staff annually update the Council on how we are advancing with smart city initiatives. Throughout the year, we are committed to data-informed decisionmaking as an enterprise strategic priority in guiding service delivery, policy and governance, fiscal management and municipal growth and development. Our efforts are supported by tools such as the Open Data Portal and the Town’s “What Works Cities” certification strategies which enhance accountability and transparency.

Vision 2050/Sustainability Plan

The citizen-created plan challenges the Town to become a model for sustainability, using community-driven initiatives, advanced green technologies, and science-based green practices to reduce greenhouse gas emissions, minimize waste, support resilient ecosystems and enhance quality of life. The Town Council will continue to adopt policies and support strategies to advance toward our sustainability goals, using data and evidence-based criteria.

Public Art Plan

The Town has a long history of embracing art and culture as a key component of a vibrant community. Implementation of the Town’s public art plan will promote the value of visual arts, increase our cultural arts assets, support mental wellbeing and add value to public spaces.

Infrastructure Plans

The Town has adopted various infrastructure plans to guide our capital asset investments to ensure long-term viability of stormwater, sanitary sewer and water systems, municipal facilities and transportation network. Annual financial obligations and prioritization of projects are defined in the Community Investment Plan (CIP). The CIP
reflects data-informed investment planning and is publicly available on the Town’s website in
an open data portal.

Conclusion

I am pleased to present this five-year operating and capital investment budget and am extremely proud of the Town’s long-standing tradition of presenting Council with a budget that maintains strong financial health. The continued support of Council enables staff to prepare a transparent and user-friendly budget document that advances the municipality toward the goals established by Council. We are especially proud to have received the Government Finance Officers Association’s Distinguished Budget Presentation Award for 37 consecutive years.

I would like to thank all Town leadership team members and staff for their hard work and dedication in preparing this budget. I would also like to extend special recognition to the members of the Budget Committee for their tremendous efforts: Finance Director Andrew Huhn, Finance Manager Felicia Auth, Assistant City Managers Brian Day and Jenny Keigher and Administrative Analyst Jacob Smith. This budget is presented with sincere appreciation for Council’s continued support and commitment to ensuring a vibrant community.