City Commission Votes to Approve Budget With 11.4 Percent Cut From Previous Year
The City of Kalamazoo approved its 2026 operating budget totaling $344.4 million during a Monday evening meeting that stretched into Tuesday morning. The budget represents an 11.4 percent decrease from the 2025 adopted budget of $388.7 million.
Chief Financial Officer Steve Vicenzi said the reduction is driven by a one-time $110 million Drinking Water State Revolving Fund project to address PFAS and lead pipes that was included in the 2025 budget. The water project funds have been completed in 2025.
Two state revenue changes created additional pressure. Changes to the state Public Safety Trust Fund reduced projected revenue from $1.8 million to $1.1 million. Changes to how the gasoline sales tax is allocated reduces the general fund portion of state revenue sharing by approximately $367,000.
"These two items alone make up $1.5 million that we had to adjust for," Vicenzi said.
The city offset some costs by reducing its contribution to the Other Post-Employment Benefits Fund by $2 million from the general fund. Vicenzi said the city has provided enough funding to the OPEB that it can now start making smaller contributions.
"In an effort to address the lack of shelters for unhoused people, especially during extreme weather, the city budgeted $500,000," Vicenzi said.
The city allocated $300,000 to a winter shelter project, matched by $400,000 from Kalamazoo County, in fall 2025. Multiple nighttime shelters and support services were temporarily opened with that money. The 2026 funding will be released earlier than in 2025, according to Vicenzi, intended to cover both current winter needs and next winter's needs, depending on the weather.
The budget does not fund an increase to city commissioner, vice mayor, and mayor compensation as recommended by the Local Officers Compensation Commission in December. That pay raise is expected in an amendment in the first quarter.
If approved as expected, the mayor will earn $11,700 a year up from $11,350 currently. The vice mayor will earn $9,900 from $9,600, and the five commissioners will earn $8,700 from $8,400. They last received a raise in 2023.
"That was not anticipated at the time that we put the budget together, because the budget is prepared back in October," Vicenzi said.
Budget Includes Capital Spending on Local and Major Streets
The city is increasing capital spending on local and major streets, supported by new federal grants and higher state transportation funding. Work to convert Kalamazoo Avenue in downtown Kalamazoo from a one-way to a two-way street is expected to begin later this year.
The budget includes the Home Share program to allow homeowners who may have room to spare to accept transitional tenants. Commissioner Chris Praedel said he has been advocating for the program over a year.
"It's a meaningful way that we can create more capacity of housing in our community safe housing for folks and then hopefully also drive down costs of housing because you're creating that excess capacity," Praedel said.
The program would help match tenants to residents willing to share their homes. By the end of this budget year, the city is on schedule to have replaced 75 percent of its lead service lines, putting Kalamazoo well ahead of most other communities.
A public hearing of the proposed budget will take place on Dec. 15 inside the City Commission Chambers, followed by the final budget actions by the City Commission on Jan. 5, 2026.