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Fredericksburg staff present FY26 proposed budget showing larger deficit after one‑time revenues removed
Summary
City staff and council reviewed a draft fiscal year 2026 budget that shows revenues falling when one‑time items are removed, producing a larger projected deficit and a timetable for finalizing the package in mid‑July.
City finance staff reviewed a draft fiscal year 2026 budget Thursday and told the Fredericksburg City Council that removing one‑time receipts leaves the city with a larger projected deficit.
Krista, finance staff, said the city’s amended fiscal 2025 revenue total is about $74 million and expenses about $79.5 million, leaving a roughly $5 million shortfall in the current year. The proposed FY26 request, she said, shows a larger gap — about $9.7 million — driven in part by the removal of two one‑time revenues: a $2.6 million stormwater grant and about $2 million returned from AEP for electric work.
The budget presentation listed those adjustments and line‑item changes across personnel, maintenance and capital. Krista said staff had targeted a 10% reduction in maintenance and operations but, overall, produced a 2% increase year over year given automatic cost increases such as insurance.
City staff said sales tax and lodging/tourism receipts are currently forecast to be flat for next year at about $9 million and $6 million, respectively, while other enterprise lines show small increases driven by rate changes or demand (water utilities +5%, EMS revenues +6%).
Officials also noted that the revenue total reported to council is the citywide rollup (general fund plus enterprise funds), and that final property valuations and certified numbers from the appraisal office will arrive in July. Scott Fair of the Gillespie County appraisals office was cited by staff as the source for certified valuation timing.
Direction and next steps: staff will incorporate council comments and deliver a detailed proposed budget package on July 14 and continue follow‑up workshops before final adoption. Krista said the July 14 packet will include a breakdown of revenue sources, capital listings and personnel requests.
Budget staff cautioned council that the draft assumes no recurring revenues for the items removed and that multi‑year planning will be necessary to understand reserves beyond FY26.
Ending: Councilmembers asked for one‑on‑one reviews of the detailed packet and signaled willingness to meet again before formal rate and budget votes in mid‑August and September.
