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FROM STAFF REPORTS

PELHAM – The city of Pelham has released its draft budget for fiscal year 2026, highlighting strategic investments, conservative fiscal planning and a commitment to transparency, efficiency and quality of life.

The proposed budget was developed earlier than in previous years, giving the Pelham City Council and the public time to review and provide feedback. This year’s draft budget estimates revenues at $91.2 million, with operational expenses at $74.2 million. The budget supports the city’s growing needs in public safety, infrastructure, parks and recreation and employee compensation—all while maintaining a structurally balanced approach and strong reserve policies.

Fiscal year 2026 will see the full implementation of Pelham’s vision, mission and values, as well as the city’s Seven Pillars of Excellence, which were completed in fiscal year 2025. These include well-managed city, public safety, infrastructure, physical character, smart and responsible development, community engagement and recreation and cultural arts.

City Manager Gretchen DiFante noted that fiscal year 2025 was “the year of planning,” and fiscal year 2026 will launch a joint goal-setting initiative across departments to align operations with these pillars, supported by new budgeting and strategic planning software approved by the council this year.

The draft budget is built on cautious assumptions amid national economic uncertainty, including tariffs and slowed federal funding. Sales tax revenues, the city’s largest source at 69.4 percent of General Fund income, are projected to remain flat. Modest gains are anticipated in property taxes and service charges, with the overall revenue increasing by $2.5 million compared to fiscal year 2025.

Top contributors to the city’s sales tax revenue include Walmart, Publix, Home Depot, Chick-fil-A and several automotive retailers. Pelham’s proactive enforcement of business licenses and ongoing growth in residential construction are expected to further bolster revenues from licenses and permits.

The largest operational increase in the fiscal year 2026 budget is for the Pelham Fire Department, consisting of a $1.4 million rise to support a full year of EMS transport services launched in January 2025 with conservative revenue estimates. The city will see that bill/payment/collection cycle catch up in mid-2026 when true costs will be easier to estimate. More than 500 residents were transported by city ambulances in the first four months of service.

To remain competitive in recruiting and retaining top talent, the city is budgeting a 3 percent cost-of-living adjustment and step increases totaling more than $1.4 million. An additional $285,000 is allocated for healthcare and $109,000 for retirement contributions.

With the usage of Pelham’s recreation facilities surpassing Oak Mountain State Park for the first time, the budget includes investments in a new maintenance building and elevator upgrade at Pelham Racquet Club, driving range improvements at Ballantrae Golf Club, electrical upgrades and new dasher boards at the Pelham Civic Complex and Ice Arena, design for expanded Senior Center space and a new disc golf course and drainage improvements at city parks.

In 2026, Pelham will invest $1.25 million in citywide street resurfacing. The city will also invest in ADA improvements, a design for Fire Station No. 1 renovations, a new traffic signal infrastructure when approved via a signal study and landscaping at major interstate interchanges. Capital planning is supported through conservative reserve use and multi-year infrastructure planning.

All water and sewer improvements, funded by service fees, include major pump replacements, tank maintenance and pipe rehabilitation projects totaling more than $5 million. These are part of a five-year capital improvement plan to maintain system reliability.

The budget is structured for long-term sustainability. Pelham continues to exceed its goal of maintaining four months of General Fund reserves and adheres to the Government Finance Officers Association’s best practices for a structurally balanced budget. The fiscal year 2026 budget includes no use of unencumbered funds and maintains the city’s focus on accountability.

“Great progress is being made in Pelham, and it has been a privilege to work together these past five years,” DiFante said. “We are more aligned than ever before—staff, leadership and elected officials—on a path that puts our citizens first.”

The budget is not final. By law, the city manager is bound to submit an annual balanced budget to the city council. The council is tasked with considering and approving a budget by Wednesday, Oct. 1.