At the July 12 workshop, city finance staff walked council members through key fiscal indicators underlying the FY2025–26 budget, highlighting differences between consumer inflation and the municipal cost index and warning that sales‑tax growth—an important revenue source—has begun to soften.

Kevin, a city finance staff member presenting the data, said municipal costs differ from headline consumer indexes because cities purchase different goods (pipes, fuel, steel, asphalt). He presented a municipal cost index that—except for a brief period—has outpaced the Consumer Price Index. He told the council that while year‑to‑date CPI was about 3%, the city’s inflationary pressures were closer to higher municipal indices, requiring adjustments to budgets either through revenue increases or cuts.

Staff also showed a rolling monthly sales‑tax analysis and said the trend—though still positive on a multi‑year basis—was weakening over recent months. “Take a look at the overall trend; the trend is starting to soften up,” Kevin said. Sales tax is a large component of the general fund and staff said they had used conservative projections for FY2025–26.

The presentation included a discussion of property valuations and the county appraisal process. Staff described two practical problems: appraisal districts often lack complete sales‑transaction data because sellers are not required to report sale prices to the appraisal district, and appraisal methods have shifted in some cases to place a larger share of value in land rather than improvements. Council members said they had seen examples where the land component rose substantially and the improvement value dropped, producing the same total value but changing the tax‑base composition.

Council members asked about the city’s role with the appraisal district. Staff said the city is one of several taxing entities that use the appraisal district’s certified values; the appraisal district is a county entity subject to state oversight and audit. Bob Anderson of RBC Capital Markets and others advised that constrained state policy—“no new revenue” limits on allowable local tax revenue growth and other legislative pressure—means local governments must plan carefully and be prepared to educate voters if they seek revenue increases.

Staff emphasized timing constraints built into the budget calendar, including the city’s need to receive certified property values from the appraisal district and the state schedule for publishing notices and conducting public hearings. Council members asked for additional comparative tax‑rate data for neighboring cities and for a five‑year view of household impacts so citizens could see how inflation and rising property values have affected bills over time.