The city of Mexico will have a proposed budget of around $25 million for fiscal year 2026.

Mexico City Council got a rundown of the budget at a work session on Aug. 11. A public hearing and vote on the budget will be Sept. 8. The city tax rate will be set Aug. 25. The proposed property tax rate, at this point, would remain the same - $0.7591 - as last year. The city budget statement said city tax rates will be adjusted in compliance with the Missouri State Auditor’s Office Pro Forma Calculation accepting the state-imposed revenue neutral formula.

“The total budgeted expenditures are estimated at $24,999,138 with total revenues estimated to reach $21,841,552,”  City Manager Bruce Slagle said in the budget statement, although both figures could change slightly before the budget hearing because of last-minute minor adjustments.“The expenditures exceed revenues by $3,157,586 and will be funded by project reserves, unreserved surpluses from prior years’ budgets, grants and American Rescue Plan Funds. The additional expenditures are for planned equipment purchases, planned capital improvement projects, project reserves and carry-over improvement projects.”

The budget statement, which is a letter to the mayor, council and residents, said the budget is balanced and represents a “responsible spending plan that will play a vital role in maintaining the City’s ongoing progress, while strategically preparing for future opportunities and challenges.”

In an interview with the Ledger, Slagle said the city has a “very sound, reasonable budget” and that the city provides “very good services for what we do,” adding that city officials are addressing a number of planned projects and infrastructure needs. Those include street, stormwater and wastewater projects, downtown revitalization efforts, hospital demolition and computer network upgrades.

The budget statement said the city, like many regional jurisdictions, “faces the challenge of balancing growth with sustainability. To ensure long-term growth and improve the quality of life for our residents, it is crucial that we continue collaborating with stakeholders, employing creative solutions, and leveraging opportunities to address these challenges.” 

The statement added that during the current budget year, low unemployment, supply chain issues, higher interest rates and rising retail costs have led to inflation, affecting the city in the process. 

“Additional resources are funded in the upcoming budget to help mitigate the increased costs of supplies and materials,” the statement said. “Concerns of a slowing economy due to the impacts of reciprocal tariffs on the U.S. economy, federal spending reductions, increasing consumer debt, higher consumer prices and geopolitical uncertainty around the globe continue to loom.

“The proposed budget balances continued positive momentum against unknowns that could impact the City's fiscal health. The City is experiencing modest growth in the current fiscal year and expects similar growth for next year. The City continues to live within its means and is well positioned moving into FY2026. This budget preserves existing municipal services levels, meets our contractual obligations, complies with regulatory and legal requirements and funds a competitive employee compensation plan.”

Mayor Steve Haag told the Ledger that the city leadership does a “pretty good job” each year of preparing and creating a sound budget and working within that budget within statutes.

“I think the biggest thing there is, what are we going to do with city hall?” Haag said, noting how leaders are examining a new building for the city headquarters. “And luckily, with how frugal  Bruce and the staff’s been, we have money available to start on things like that.”

Budget highlights:

• Assessed property values

They jump from $173,554,893 in 2024 to $187,031,295 in 2025. Slagle told the Ledger that some of that increase can be attributed to growth - new construction, in general - and reassessment by the county.

“Whether that’s going to hold or not, we don’t know,” he said about reassessment.

• Insurance rates

Property and liability renewal rates are assumed to rise by 12%, but the city does not have a bid on that yet. And that’s mostly because of claims and natural disasters, and Slagle said that increase is the industry standard. 

“That’s kind of the average of what most policies have renewed for recently,” Slagle told the Ledger. “We’re assuming the same, because we don’t know yet.” And that number is the best guess or industry standard average now. 

“And that is kind of the same even with health insurance, because we won’t even know that until Jan. 1,” Slagle said about the rate, estimated to go up 20%. “We’re four months away from even knowing what that is, to a great extent. So we’re basing it right now on what they’re telling us is the average of what others are experiencing in their rates. We’re putting that number in and hoping for the best.” All rate increases are also based on industry averages, and all policies will be bid to ensure the best possible rate, the budget statement said.

The way the city’s health insurance works is that the city will continue with a high deductible plan that includes a health savings account, and those premiums do get split proportionally between the employee and the city, so the employees have to pay for part of their coverage, Slagle said.

• Funding for outside agencies

The council decided that it would fund to the level that it had been funding, and it would fund agencies it had been funding.

“So no new money, no new agencies,” Slagle told the Ledger.

For charitable agencies, the Mexico Senior Center Inc. would receive $14,000, although it requested $20,000, and the Audrain County Historical Society would receive $7,400, although it requested $10,000. The requested amounts - $10,000 from the Miss Missouri Scholarship Pageant, $7,500 from The Help Center and $7,500 from Optimist Youth Sports - were the same as the budgeted amounts.

For contract agencies, the requests and budgeted amounts would be the same: Handi-Shop (recycling program), $12,000; Mexico Chamber of Commerce (marketing), $13,000; Presser Arts Center (community theater), $10,000; and Mexico Chamber of Commerce (economic development activities), $5,000.   

• Utility Rates

Residents can expect a wastewater rate of 2% higher and a sanitation rate of 4.1% higher. The sanitation rate is rising because the contracted company’s rate is going up, Slagle said, and the wastewater rate is rising to help cover additional costs for operation.

• Compensation study and employee pay

The proposed budget includes funding for a compensation study, which is projected to be about $33,000, Slagle told council. The budget statement said the city has faced challenges recruiting and retaining staff members in key positions. 

“As we look at our local region, we know that we compete against many other employers for fellow employees,” the statement said. “As an organization we have taken many steps to recruit and retain a quality workforce, but it is not enough. More work must be done in future years to remain competitive; therefore, this budget includes funding for an independent compensation and benefit study.”

The full-time authorized staffing level will remain the same at 84 positions, the budget statement said, but maintaining a full staffing level has been “impossible” in the current employment market, as staffing levels have been continuously below authorized levels during this past year and the problem impacts all city departments. The proposed budget has a 1% cost of living adjustment for all positions and a step increase for an average 3% increase for two of the three position classifications and pay schedule employees (schedules A and B, or general hourly employees and public safety officers, respectively) and a 3% increase for Schedule C, exempt employment positions.