Fort Worth projects $15.2 million FY26 shortfall after April property‑value estimates; state bills could deepen gap

Fort Worth finance staff told the City Council on May 13 that April property value estimates and anticipated midyear protests have reduced expected FY26 property‑tax revenue and left the general fund with an estimated $15.2 million shortfall heading into budget season.

"We think about 5 and a half percent is gonna come off as value loss between now and July," said Brady, assistant director in the Fort Worth Lab who leads revenue and special‑district analysis, describing how appraisal protests and exemption applications typically reduce the April estimates before final values are certified in July.

Brady said current April values show 8.6 percent growth compared with last July’s roll but that the city cannot capture all of that increase because of the 3.5 percent voter‑approval rate cap for existing properties. He described two near‑term legislative risks: HJR 1, which staff said would raise the business personal‑property exemption from $2,500 to $125,000 and likely take effect in tax year 2026 (impacting FY27), and Senate Bill 1008, which staff said could impose statewide limits on environmental‑service fees and would likely affect FY26. "This would take off about 1 and a half million dollars in revenue for the upcoming fiscal year," Brady said of SB1008's preliminary estimate for Environmental Services.

Environmental Services staff cautioned that a revenue loss could force staffing or service‑level changes. "If we had to assume this hit, we might have to reevaluate our staff and and reconsider our service levels," said Cody Wittenberg of Environmental Services, noting that fee reductions could require the department to fill gaps with general‑fund dollars or reduce inspections.

Brady outlined additional technical adjustments staff would make to the revenue forecast before July: lowering delinquent collections by $1,000,000 to $1,750,000, increasing penalty and interest by $500,000, and reducing the assumed collection rate on the roll from 98.5 percent to 98 percent to account for midyear litigation and protests. The net effect of those changes and the anticipated erosion of values is a roughly $12.5 million reduction from the earlier forecast and a $15.2 million projected FY26 shortfall; staff said the FY27 gap could be substantially larger if HJR 1 becomes law, removing about 1.0 percent (an estimated $6.25 million) from property‑tax revenue.

Council members raised the household impact of rising property values and caps on city revenue. Brady emphasized that although homeowner appraisals may rise substantially, the city’s ability to capture that growth is constrained by the 3.5 percent cap: "you can only capture 3 and a half percent of growth on existing properties." Councilors requested staff prepare typical tax‑bill examples and to continue community outreach; staff said appraisal districts will report typical home values and that the city would model the translation of valuation changes into tax‑bill impacts for residents.

Why it matters: staff said the updated values and potential state actions increase the scale of budget adjustments the council will face when adopting a FY26 budget. Brady presented a long‑term forecast showing a deeper FY26 deficit under current estimates and an additional multi‑million‑dollar adjustment needed for FY27 if the constitutional amendment and fee restrictions become law.

Actions, direction and next steps: no formal vote was taken. Council directed staff to refine the July forecast and present budget balancing options at scheduled budget work sessions in June, including typical tax‑bill examples for residents. Staff also flagged the legislative timeline and said final budget work will reflect July certified values and the outcomes of pending bills.

The council returned to scheduling and other budget items after the forecast presentation.