Title
Discuss and receive a presentation on the Fiscal Year 2026-27 Budget Update, including fiscal outlook, revenue considerations, strategic investment areas, and ongoing budget development topics.
Body
REQUESTOR:
Finance and Fleet Management Department
BACKGROUND:
The annual budget process serves as the City’s primary financial and policy-planning tool, ensuring that available resources are intentionally aligned with the City Council’s strategic priorities, including infrastructure reinvestment, neighborhood stability, mobility, economic vitality, public safety, and the maintenance of a high-performing organization. These priorities were affirmed during the February 2026 Strategic Planning Session and have guided the development of the proposed Fiscal Year (FY) 2026-27 budget.
At the April 21, 2026, Study Session meeting, staff kicked off the FY 2026-27 budget process by providing an overview of the City’s budget process, information on the City’s strategic focus areas, and the budget cycle timeline.
At the May 5, 2026, Study Session meeting, staff continued budget discussions by providing additional information regarding the City’s budget structure, revenue outlook, and infrastructure funding needs. Staff updated Council on the status of departmental budget submissions and internal administrative review efforts and discussed preliminary FY 2026-27 operational priorities. Council emphasized continued long-term financial planning and transparent public communication and requested follow-up information regarding the anticipated tax rate, utility-rate impacts, grants, community-event costs, and historical Minor Home Repair Program expenditures.
At the June 2, 2026, Study Session meeting, staff provided updates regarding current revenue and expenditure conditions, utility infrastructure funding needs, community-centered programs, grants, and strategic investment considerations. Additional discussion included reduced revenues due to an increase in Business Personal Property exemptions, increased expenditures related to increased appraisal district protest activity, North Texas Emergency Communication Center (NTECC) cost increases related to increased utilization, healthcare cost considerations, and increased expenditures related to utility infrastructure investments. Council expressed support for continued expansion and promotion of the Minor Home Repair Program and requested additional information regarding community-event expenditures and the increase in the City’s NTECC allocation.
At the June 16, 2026, Study Session meeting, staff continued budget discussions by providing updates regarding current budget development efforts, property tax, sales tax, employee compensation, fee considerations, and other fiscal matters impacting the development of the proposed FY 2026-27 budget. Council requested additional information regarding projected healthcare costs and employee contribution levels.
At the July 7, 2026, Study Session meeting, staff provided updated information regarding sales tax performance, the proposed increase in the Revenue Stabilization Fund transfer threshold from $23.0 million to $23.5 million, water and wastewater utility rates, and the City’s long-term strategy of funding infrastructure investments without issuing utility debt. Consistent with Council direction, the Firehouse Theatre sponsorship (not the facility-use agreement) was removed from the proposed FY 2026-27 budget and is being evaluated for funding during the current fiscal year. Staff also presented the results of the Medical and Pharmacy Benefits Request for Proposals, including the recommended medical and pharmacy administrators and the projected financial impact of employee healthcare costs for FY 2026-27. Council requested additional follow-up regarding the employee health plan and a future discussion of the Code Care Program.
At the July 21, 2026, Study Session meeting, staff provided an update on the final stages of the FY 2026-27 budget-development process, including the remaining budget-calendar milestones, proposed budget priorities, employee compensation, fee adjustments, public communication efforts, and the upcoming FY 2025-26 year-end budget review. At the direction of the City Council, a 1% merit-based compensation increase for eligible employees was allowed following the increased revenues, excluding directors and deputy directors, had been incorporated into the proposed budget. Council requested additional follow-up regarding employee health-plan options, community-garden efforts, and ensuring the availability of printed budget materials.
This study session continues the phased budget-development approach by presenting the certified taxable values received from the Dallas Central Appraisal District (DCAD) and updated property tax revenue projections for FY 2026-27. Staff will discuss how the certified tax base affects the property tax revenue assumptions incorporated into the proposed budget and provide additional context for the tax rate discussions that will continue throughout August.
DISCUSSION:
The Dallas Central Appraisal District annually provides the City’s certified taxable values on or before July 25, 2026. Receipt of the certified tax roll represents a significant milestone in the budget process because it provides the final taxable-value information necessary to update the City’s property tax revenue projections for FY 2026-27.
Staff will present the City’s certified taxable value and discuss changes from the prior year’s certified tax base. The presentation will also identify the resulting impact on projected property tax revenues and the revenue assumptions incorporated into the proposed FY 2026-27 budget.
Certified taxable values and the required truth-in-taxation calculations will provide the basis for the City Council’s upcoming tax rate discussions. This study session is intended to provide Council with the updated valuation and revenue information necessary to evaluate the City’s fiscal outlook before consideration of a proposed tax rate and the required public hearing.
Staff will also provide an update on the remaining budget-calendar milestones, including continued Council review of the proposed budget, the Budget Town Hall, the public hearing on the proposed tax rate, and final consideration of the FY 2026-27 budget, tax rate, and fee schedule.
Staff is seeking council direction on a request related to altering or delaying the approved water rate fee schedule spanning from fiscal year 2026 through 2030. No formal action is requested as part of this study-session presentation. The discussion will continue Council engagement in the budget-development process and provide updated financial information prior to future tax rates and budget decisions.
DISTRICT:
Citywide
FISCAL IMPACT:
Determined by the City Council direction.
POSSIBLE COUNCIL ACTION:
N/A
ATTACHMENT(S):
1. Budget Study Session After Action Reports #1, 2, 3, 4, 5, & 6
2. Presentation