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Addison previews FY2026 budget; staff projects modest surplus and no water/sewer rate increase
Summary
Finance staff introduced the town’s fiscal 2026 budget calendar and preliminary assumptions, citing a projected 4% increase in taxable values, a 3.6% sales-tax revenue increase, a 4% personnel cost increase and a projected $300,000 surplus available for decision packages or tax relief.
Addison — Finance staff presented a preliminary budget calendar and assumptions for fiscal year 2026 (Oct. 1, 2025–Sept. 30, 2026), describing revenue and cost projections and how those assumptions will feed the town’s multi-month budget process.
The presentation, led by finance staff, described the timeline: departments submitted budgets in April, the city manager’s proposed budget will be delivered by July 31 after the Dallas Central Appraisal District certifies values on July 25, and council workshops and public hearings are scheduled in August and September. Staff emphasized that the numbers presented are preliminary and subject to change during the July–September process.
Key preliminary assumptions presented included an approximate 4% overall increase in taxable property values (based on preliminary May 15 values), a projected 3.6% increase in sales tax collections, a 4% compensation increase for personnel, and a preliminary 7% projection for health insurance cost increases. Staff said the utility fund’s water and sewer rate model previously projected a 5.5% rate increase for FY2026 but that current revenue trends allow staff to project no rate increase for water and sewer in FY2026 (subject to wholesale cost updates from the City of Dallas and Trinity River Authority).
Staff described longer-term financial planning based on the town’s asset management system. The town is tracking about 66,000 assets with a reported aggregate replacement value of about $1.05 billion; staff said the average annual investment needed to maintain asset condition is about $26.25 million. Staff reported that roughly 3.3% of total asset value is in “poor” condition and that departments maintain multiyear plans to address those items.
On the general fund outlook, staff showed a preliminary 10-year projection that includes a policy target of 25% operating reserves and a “stable” target of 30%; the projection currently shows the fund balance staying above those policy lines and a potential surplus of roughly $300,000 that could be used for recurring decision packages or tax relief. Staff said the projected surplus already accounts for the jail services cost discussed earlier in the meeting.
Other fund notes: the hotel fund projects about a 2.8% increase in hotel-related tax revenue tied to a new tourism public-improvement district assessment; the stormwater and airport funds are playing down previous projected increases (stormwater reserves are being drawn down for planned projects). Staff described internal service funds (capital equipment replacement, IT replacement, facility maintenance) as largely “pay-as-you-go” reserves used to smooth capital needs.
Councilmembers asked for clarification on the reserve lines, how the debt-service tax rate and maintenance/operation (M&O) tax rate interact, and whether common complaints about pavers, tree beds and landscaping in certain districts are captured in the capital-improvement plan; staff responded that those items are in the CIP and will be addressed in upcoming presentations. Staff noted the town has dedicated portions of the property tax rate to economic development and infrastructure investment (the latter generating about $400,000 per year) and that the resource‑maximization committee has produced recurring savings in prior years.
No formal action was taken; staff will continue budget work and return with the city manager’s proposed budget by the legally required July 31 deadline and hold public hearings in September prior to adoption.
