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Purpose of Budget Review

The purpose of our review was to provide an independent evaluation of the Town’s preliminary 2026 budget.

Background

Based on our review, we determined that the Town’s preliminary budget significantly underbudgeted the appropriations for the Cherry Valley Community Health Center (Health Center). In addition, even if Town officials had included more realistic budget appropriations, the Board would still need to include additional revenues or financing sources in its budget accordingly. Although all other significant revenues and appropriation estimates were considered reasonable and accurate, we identified long-term financial concerns regarding the lack of recurring revenues to fund recurring expenditures.

Key Findings

• The 2026 preliminary budget includes an estimate for Health Center appropriations of $495,000 in the general fund. Our projection of Health Center expenditures for 2025 is approximately $1 million. The Board’s unrealistically low estimate for Health Center expenditures enabled the Board to lower the Town’s tax levy in the preliminary budget. However, without a source of additional revenues for the Health Center, the Board could nearly deplete the Town’s general fund by the end of 2026.
• The 2026 preliminary budget includes a tax levy for the general fund, which includes the Health Center, for $478,534 – a decrease of $390,736 (45 percent) from 2025.
• The budget accurately estimates Health Center revenue of $540,000. However, we estimate the Health Center will need $425,000 in transfers of non-Health Center revenue to subsidize the operations. If Town officials transfer the $425,000 to the Health Center in 2026, they would nearly deplete the Town’s general fund resources by year-end, and projections indicate a potential total fund balance of approximately $40,000.

Key Recommendations

1. Consider increasing the 2026 budgeted appropriations for the Health Center to reflect a more realistic estimate and consult with legal counsel and/or their local State representatives to determine whether options are available for the Health Center and to address its impact on the Town’s financial operations.
2. Increase budgeted revenues or other funding sources to balance the budget.