Mountain Brook Mayor Graham Smith.
The financial strength you don’t see: As we begin Mountain Brook’s 2027 fiscal year, our community is in excellent financial health. While worth celebrating, it’s also worth taking a moment to ‘nerd out’ with me about one of the least discussed and most important strengths of our city: pre-funded municipal depreciation.
Lloyd Shelton, City Councilor and finance committee liaison, recently spoke about our depreciation strategy at the State of the City luncheon. It may not be the most exciting topic, but it is one of the clearest examples of how Mountain Brook thinks differently about financial stewardship.
Simply put, depreciation is the reality that everything a city owns eventually wears out. Roads need resurfacing. Buildings need roofs. Police cars and fire equipment need replacing. Parks, sidewalks, drainage systems and other infrastructure require significant investment over time.
Many municipalities largely address those needs when the time comes. They’ll rely on future revenues, debt or difficult budget decisions. Mountain Brook’s approach is different — we plan for the expense before it arrives.
Each year, the City makes a depreciation-based transfer into its Capital Fund. That means we are essentially setting aside money today for the eventual replacement and renewal of the assets we already own. It’s the municipal equivalent of responsibly saving for a future expense rather than waiting until the bill arrives.
And this is not simply a year-to-year strategy. Through careful leadership and planning, Mountain Brook looks 20 to 30 years ahead.
Our annual depreciation transfer has grown from $4.08 million in 2023 to $6.48 million in 2027. As a result, by Sept. 30, 2027, our Capital Fund reserves are projected to reach approximately $36 million — roughly three years of average annual net capital spending.
It’s an impressive position for any municipality, and the approach itself is relatively uncommon. Few cities consistently and systematically fund depreciation in this manner. It requires discipline because it means choosing to set aside money today for something that may not need to be replaced for five, 10 or even 20 years.
We believe the payoff is flexibility, stability and independence. When a major capital need arrives, Mountain Brook is far better positioned to address it without dramatically raising taxes, cutting services or taking on unnecessary debt.
Even our 2026 results demonstrate this discipline. General Operations finished with an approximate $500,000 surplus, even after transferring $1.5 million to the Capital Projects Fund.
That doesn’t happen by accident.
It is the result of conservative budgeting, careful management and a willingness to think beyond the next budget cycle.
So, yes, depreciation may not be the most exciting subject in municipal government. But in Mountain Brook, saving for tomorrow is one of the reasons tomorrow looks so good.
