FRANKFORT, Ind. (August 12, 2025) – Frankfort Mayor Judy Sheets said Monday night that she has a “doable budget” for the city in 2026. Council member Eric Woods called her spending plan “unsustainable” after 2027, with the cash reserve potentially dropping to 12% by 2027 and becoming negative by 2028.
The mayor’s comments were made during a work session with members of the city council and came after two days of budget hearings a week ago.
The proposed budget on Monday night differs from the one that was heard last week and incorporates significant changes aimed at reallocating funds and addressing critical needs. Key adjustments include:
• 2% salary increase for employees, up form 1%.
• Four new firefighters, up from two.
• Capital expenditures moved from the general fund to the Cumulative Capital Development (CCD) fund.
• Utility costs shifted: Electric, water, and sewage expenses moved to the Riverboat fund.
• Insurance adjustments: A projected health insurance increase was reduced from 5% to 3%, aligning with a 2.6% projection for next year. Life insurance budgeting was adjusted downward due to historical overbudgeting, while dental, vision, and hearing budget lines were increased after years of underbudgeting.
• Fire pension changes due to the increase in firefighters.
• Zoo operations discontinued: The park’s zoo operations, including zookeepers and related petting zoo funds, were removed from the budget, with a donation fund of over $10,000 available for future petting zoo needs.
• Police vehicle funding sought: The mayor plans to ask the Redevelopment Commission (RDC) to purchase three police vehicles at $159,000, noting that the RDC can fund public safety needs.
• Other shifts to CCD: Police vehicle equipment, body cameras, fire radios, and a fire vehicle were moved to the CCD fund.
• Trail initiative halted: Funding for the trail initiative was reduced from $25,000 to zero, as it has not been utilized in the past two years.
A primary focus of the budget is public safety, particularly the fire department.
Fire Chief Matt Stidham emphasized that the addition of four firefighters is crucial for adequate coverage, especially with a new fire station planned. He highlighted that the department frequently operates below National Fire Protection Association (NFPA) standards for staffing. For instance, NFPA suggests 16 personnel for a single-family dwelling fire and 29 for an apartment fire, but the department typically responds with only 10 or 11 individuals. This understaffing often leads to significant overtime costs and can hinder critical operations, such as deploying the ladder truck, which is essential for ISO ratings. The chief also raised concerns about the department’s aging equipment, including a 2014 engine and a 2006 ladder truck for which parts will soon be unavailable.
The new fire station build was “forced” on the council and “wished we would have delayed it a year” according to Woods during the August 5 budget hearing.
According to The “AGREEMENT FOR FIRE SERVICE INCLUDING PETITION FOR ANNEXATION AND PRE-ANNEXATION PAYMENTS,” dated February 11, 2021, and signed by Mayor Sheets and NHK, specifies that the City of Frankfort will build a fire station west of County Road 450 West, in the vicinity of the interchange of Interstate 65 and State Road 28 and “will provide that construction will commence within two years of the effective date of the annexation.” NHK is currently paying $84,121 for fire service and will likely be annexed into the city in 2026.
The new station being built is located at County Road 600 west and State Road 28 is scheduled to open in the Fall of 2026 at a cost not to exceed $10,350,000.
Chief Stidham argued that the department’s manpower issues “is not all about [Senate] Bill one” when answering council member Steve Beardsley during the August 5 budget hearing. “[It] wasn’t here four years ago when we started talking about it. Wasn’t here three years ago, wasn’t here two years ago.” Chief Stidham stated that he first began addressing the need for firefighters since at least December 3rd of 2021, which is when he took over as chief.
Despite the mayor’s comfort with a cash reserve of 23.12% across all funds and 21% in the city general fund projected for the end of 2026, concerns linger among council member Woods about long-term financial sustainability. Projections from the financial firm Reedy Financial indicate that the current path is “unsustainable” after 2027, with the cash reserve potentially dropping to 12% by 2027 and becoming negative by 2028. Woods asked Mayor Sheets if the sanitation fund was included in the cash reserves and whether or not it should be removed due to the fund can only be spent of specific items. The mayor will talk with Reedy if the fund was included.
A significant contributor to this uncertainty is Senate Bill 1 (SB1), which is expected to alter the local income tax (LIT) structure in 2027. Under SB1, fire and EMS services could fall under a county-controlled levy, potentially up to 4%, with distributions based on population, square mileage, and call volume. City officials expressed concern that they would have “no input” on this county-level decision, leading to “gray areas” regarding how these funds would meet local fire and EMS needs. Additionally, there are projections of a 1.2% levy once the Public Safety Income (PSI) tax is removed in 2028 due to SB1.
To mitigate these challenges, city officials are exploring alternative revenue strategies. Besides seeking RDC funding for police vehicles and other public safety-related projects, discussions included ensuring that new industrial park developments do not abate the fire rate and developing a master plan for the industrial park to maximize future tax revenue, including half of the 10% Conagra revenue starting in 2026.
The budget process is on a tight schedule. The proposed budget must be advertised by August 29. The first reading is slated for September 8, with a second reading and public hearing in October 13. A special finance committee meeting is expected next week to further discuss revenue options and sustainability before the advertising deadline. The city council will hold its optional second meeting of the month on August 25. The city will ask the RDC to hold a special meeting ahead their regular meeting set for August 28.
