Graham discusses FY2026 budget shortfall, $15 million sewer plant rehab and tax/rate choices

Graham — At a fiscal year 2026 budget workshop called to order by the mayor, City Manager presented a budget picture that leaves the council with three stark choices: raise the property tax rate, cut services or reduce staffing.

The City Manager told the council that year-to-date sales-tax collections stand at $977,000 and, on current trends, are likely to finish the year near $2.9 million — about $200,000 below the $3.1 million assumed in the adopted budget. "If sales tax revenue does not recover to a level of $3,100,000 or higher and property tax values increase by 4% or less ... we won't be able to give any cost-of-living adjustments to any employee without cuts to another program," the City Manager said.

Why it matters: the shortfall, combined with expected contract and insurance increases plus state-mandated certification costs for police and fire, means limited discretionary funds. The manager asked the council for guidance on several boundaries for the proposed budget: a conservative $2.9 million sales-tax assumption for planning; whether to pursue a hybrid cost-of-living adjustment (COLA) approach for staff; whether to defer some vehicle replacements; and how to finance a large wastewater-plant rehabilitation projected at roughly $15 million.

Sales tax and tax-rate scenarios

The manager walked the council through three tax-rate…