Breaking down the City of Cullman’s $158.8M FY2027 budget

CULLMAN, Ala. – The Cullman City Council on Sept. 14, adopted a $158.8 million budget for fiscal year 2027, including a $58.4 million General Fund that is approximately 1.3% smaller than the current-year budget.

City Clerk Wes Moore said no figures were changed between the Aug. 30 budget presentation and the council’s Sept. 14 adoption. The city also provided a 42-page line-item worksheet containing revenues and expenditures for each fund.

The budget takes effect Oct. 1.

City Council President Kim Hall said the council focused on maintaining city services while investing in infrastructure, completing previously approved projects and supporting city employees.

“Our goals were to prioritize the continuation of quality services for the citizens, ensure enhanced infrastructure projects are taking place, budget for the completion of previously approved capital projects and provide support and benefits for our employees,” Hall said.

The adopted budget includes:

• $158,775,893 in total appropriations across all city funds
• $58,427,213 for the General Fund
• $25,467,000 for the Water Fund
• $11,465,000 for the Sewer Fund

The FY2026 amended General Fund budget is $59,186,795. The FY2027 General Fund is $759,582 lower, a reduction of approximately 1.3%.

That comparison resolves discrepancies within the Aug. 30 presentation, which used several rounded General Fund figures and referred to an approximately 2% reduction.

$35.9 million decline largely tied to capital projects

Total appropriations across all funds decreased from $194,634,790 in FY2026 to $158,775,893 in FY2027. The difference is $35,858,897, or approximately 18.4%.

Moore said the majority of that decline comes from fewer capital projects moving through the city’s budget. City officials initially expected a $31 million project associated with U.S. Highway 278 to be administered through the city, but the state later decided to administer the project.

“The reduction in capital projects does not create a loss of revenue for the city,” Moore said.

The distinction means the city is not projecting a nearly $36 million collapse in revenue. The lower all-funds total primarily reflects how capital projects are funded and administered from one year to the next.

Parks project completion drives Quality of Life decrease

The Quality of Life allocation decreased by $5,154,668, or approximately 35.8%. Moore attributed most of that change to the completion of the Lazy River project at WildWater.

Other categories increased, including:

• Public Works: $3,017,928
• Public Safety: $796,689
• General Government: $639,423

“Currently, there is no plan to reduce services, staffing, operating hours or programming,” Moore said.

Moore said department heads will continue reviewing their operations for opportunities to restructure services. He cited the recent addition of utility bill collections at the City of Cullman Water Department as an example intended to make city services more convenient.

“The goal is to operate as efficiently and effectively as possible,” Moore said.

Local sales tax declines as online collections rise

Updated projections provided by Moore show the city expects to collect approximately $29.15 million in local sales tax during FY2026, down approximately 2% from FY2025.

Simplified Sellers Use Tax, or SSUT, revenue associated with online purchases is projected to reach approximately $1.95 million, an increase of approximately 14% from FY2025.

The updated comparison shows:

• FY2020: $587,802 in SSUT and $20,426,830 in local sales tax
• FY2025: $1,704,048 in SSUT and $29,698,755 in local sales tax
• FY2026 estimate: $1,947,990 in SSUT and $29,147,308 in local sales tax
• FY2027 budget: $1,875,000 in SSUT and $29,400,000 in sales and use tax

From FY2020 through the FY2026 estimate, SSUT revenue increased approximately 231%, while local sales-tax revenue increased approximately 43%. SSUT growth therefore exceeded local sales-tax growth by approximately 188 percentage points during that period.

Moore said Alabama collects an 8% SSUT on qualifying online transactions and distributes portions of the revenue to cities and counties based on population. The city’s most recent remittance was $159,565 from $45,067,726 collected statewide.

The presentation compared $100 spent at a local business with $800 spent online. Moore said the illustration was based on the city receiving approximately 35 cents from a $100 online purchase and approximately $1.75 from a $100 purchase made at a Cullman business.

Moore then applied a 1.6 economic-velocity multiplier to the local transaction, producing an estimated $2.80 local effect. An $800 online purchase would generate approximately $2.80 for the city under the model.

Moore said economic-velocity calculations often use a multiplier of four, which would make a $100 local purchase comparable to approximately $2,000 in online spending. He said he used the lower multiplier to produce a more conservative estimate.

Road figures cover different costs

The city’s FY2027 street plan identifies approximately $1.976 million in paving materials. Moore said that figure does not include city labor, sidewalks, curbs, gutters, utility risers or grant-funded projects accounted for through capital funds.

Moore said $5.065 million is the appropriate figure for the city’s broader road infrastructure investment.

Dedicated transportation revenues in the adopted budget include:

• Rebuild Alabama: $175,000
• 4-cent gasoline tax: $102,000
• 7-cent gasoline tax: $179,000

Those figures replace amounts shown in an earlier street plan document that was based on the previous budget.

Moore also identified several broader appropriations connected to street, neighborhood and downtown work:

• General Fund: $2.5 million, including maintenance
• Community Development Block Grant neighborhood projects: $800,000
• Downtown revitalization: $2 million, including utility work
• Transportation enhancement: $2.245 million, including utility work

Because some of those appropriations include maintenance or utility expenses, they should not all be counted as road construction. The city’s stated road infrastructure total remains $5.065 million.

Water and Sewer budgets increase

The Sewer Fund increased from $9,567,000 in FY2026 to $11,465,000 in FY2027, an increase of $1,898,000, or approximately 19.8%.

The Water Fund increased from $24,893,500 to $25,467,000, an increase of $573,500, or approximately 2.3%.

Moore attributed the increases to inflation affecting chemicals and repair materials, additional maintenance projects that city employees will complete in-house and debt service associated with sewer line rehabilitation and replacement of a primary water distribution line.

The water distribution project is estimated to cost approximately $10.5 million and is expected to be financed through two State Revolving Fund loans.

Moore said the city will provide the debt service schedules, including principal amounts, interest rates, repayment terms and anticipated annual payments, separately.

Employee pay and retiree insurance

The FY2027 budget includes a 3% adjustment to the city’s employee pay scale.

The city also established a retiree insurance benefit. Employees eligible to retire may qualify, while retirees with at least 25 years of service to the city will qualify for a 75/25 premium match.

Moore estimated the retiree insurance program will cost between $100,000 and $200,000 annually, depending on the number of participating retirees.

The city is also adding a flexible spending account and an additional employee wellness day. Moore said the flexible spending account is expected to save money for both the city and participating employees.

The city did not provide a separate total cost for the 3% pay scale adjustment or quantify the financial effect of the flexible spending account and wellness day.