How Communities Can Move Forward Together
Local governments and school districts across the nation are bracing for what many leaders describe as the most difficult budget year in more than a decade. During Polco’s December webinar, The 2026 Budget Crunch: How to Reveal Resident Priorities, Save Funds, and Avoid Fights, experts from GFOA, Wichita State University, Anchorage School District, and Balancing Act joined Polco’s leadership to discuss the converging forces behind today’s fiscal pressures and how communities can respond.
The conversation made one thing clear. Although the road ahead is challenging, leaders have powerful tools, data, and engagement strategies that can help them navigate 2026 with greater clarity, transparency, and trust.
Polco CEO Nick Mastronardi opened the webinar with a data-driven look at the financial environment facing public entities. Drawing on insights from the GPAL database, he showed familiar trends many leaders see reflected in their own books.
“We’ve got some ground we’ve got to make up,” Mastronardi explained. “This unhealthy trajectory is unfortunately common across cities, counties, and school districts.”
Michelle Kobayashi, Polco’s Executive Strategist, added the human dimension. Local governments are entering this budget cycle at a time when trust is already eroding.
“Trust is the glue of communities,” Kobayashi said. “And it’s dissolving just as we enter a period where difficult trade-offs are unavoidable.”
During the panel discussion, speakers unpacked why communities are facing such intense pressure heading into 2026. Their perspectives, drawn from research, practice, and lived experience, reinforced a shared conclusion: the budget crunch is not caused by a single factor. It is the intersection of multiple disruptive trends.
Wichita State University professor David Guo highlighted emerging “tax revolt” dynamics across several states, comparing today’s climate to Proposition 13-era movements. Some states are debating steep homestead exemptions or caps on assessed value growth. These proposals may be politically popular, Guo noted, but they constrain local revenue and threaten service sustainability.
Panelists described consistent upward pressure in labor, materials, utilities, insurance, and healthcare. School districts face additional challenges, including transportation costs and staffing shortages. Anchorage School District's Katie Parrott shared how the district’s bus driver shortage became a community crisis that required major wage increases - improvements that then triggered a later deficit.
Changes in population, student enrollment, and workforce mobility are creating volatility in both municipal and school budgets. In Alaska, for example, Parrott noted that reliance on oil and gas revenues leaves state funding vulnerable to global market swings.
Balancing Act founder Chris Adams connected the financial pressures to broader societal changes. Drawing on the work of Robert Putnam and others, he argued that many Americans now think less in terms of the collective “we” and more as individuals navigating a polarized environment. When residents lack trust, they are less willing to accept cuts, rate increases, or new revenues, even when these steps are necessary.
Despite the sobering trends, panelists expressed optimism about the tools and approaches available to leaders today. They stressed that communities can successfully navigate difficult budgets if they adopt new mindsets, clearer communications, and more collaborative engagement strategies.
Kobayashi emphasized that informing the public is no longer enough. Leaders need structured engagement that moves toward collaboration and empowerment. Tools like simulations, surveys, and project pages help residents understand constraints and participate constructively in decision-making.
Both Parrott and Kavanagh underscored the power of clearly linking what residents pay to what the community receives. When residents see how specific investments support valued outcomes such as safe schools, reliable transportation, or maintained parks, support increases. Research from GFOA and California ballot initiatives shows earmarked or purpose-specific taxes pass at significantly higher rates than general taxes.
Adams highlighted how simulations do more than generate preference data. They build understanding. When residents see that increasing wages, adding programs, or maintaining services requires trade-offs elsewhere, they are more likely to support the final budget even if it does not fully match their personal preferences.
Kavanagh noted that traditional budgeting methods were built for an era of steady economic expansion. The future requires more adaptive approaches, including priority-based budgeting, land use alignment, and models rooted in behavioral insights.
Adams pointed to Healdsburg, California as an example of how community-based organizations can help governments facilitate more inclusive, deliberative budget conversations. These partnerships support both better decisions and more durable trust.
Kobayashi closed the setup to the panel with a reminder that local governments and school districts face remarkably similar pressures: rising expectations, shrinking margins, and increasingly complex community needs. No one can solve these alone.
“We need collaborative approaches that bring residents, business leaders, nonprofits, employees, and elected officials into the process,” she said. “Structured conversations supported by clear data can help us restore trust and move forward together.”
The 2026 budget year will require courage, transparency, and creativity. But as this webinar demonstrated, leaders are not navigating these challenges in the dark. With better data, clearer communication, and more participatory engagement, communities can make smart, equitable decisions even when resources are tight.
Polco’s platform brings these ingredients together: benchmark data, resident input, simulations, and clear communication tools designed specifically for government. If your community is preparing difficult budget conversations, these resources can help you build understanding, set priorities, and reinforce trust exactly when it is needed most.