Surprise council gives informal direction to post 0.5534 property‑tax rate for FY26 budget

At a Feb. 18 Surprise City Council work session, councilmembers gave staff informal direction to post a property‑tax rate equal to the “keep levy plus growth” option — 0.5534 — for inclusion in the city’s fiscal 2026 budget, with formal adoption of the rate to occur at public hearings in June.

The discussion anchored a broader budget overview that finance staff provided, laying out that Surprise’s draft “billion‑dollar” budget includes about $415,000,000 in operating expenditures, a $137,000,000 contingency ceiling and about $11,000,000 in annual debt service. Staff told the council the general fund is roughly $260,000,000 and enterprise funds about $64,000,000; sales tax is the single largest general‑fund revenue source.

Why it matters: property‑tax choices determine how much new revenue the city captures from growth and reassessments. Staff illustrated with a worked example: for a $300,000 assessed valuation a homeowner would pay roughly $170 a year under current assumptions, with about $90 of that attributed to public safety and smaller shares to streets, community development and parks.

Budget process and options

Andrea (staff) and Sandy (staff) led the overview. Andrea explained that state rules and the county assessor’s abstract drive valuation changes and that the council’s choice now is procedural direction so staff can build a balanced FY26 proposal. Andrea said the city can post a higher rate and later adopt a lower rate if circumstances change: “Typically, you post high, you can always adopt something lower.” The staff presentation reiterated the city’s practice of matching one‑time revenue to one‑time capital needs and prioritizing operating asks against projected revenue.

Council debate

Councilmembers voiced three main positions. Several members argued for holding the levy so long as core services remain funded: Councilmember Haney and Councilmember Duffy both emphasized protecting public safety and transportation investments before making deeper tax cuts. Vice Mayor Hastings and Councilmember Judd expressed support for the keep‑levy‑plus‑growth approach as a way to hold most residents’ bills flat while not foregoing revenue from new development. Councilmember Greenberg urged caution and recommended waiting to see possible state actions that could reduce shared revenue; he called special attention to pending state bills that could affect the city’s income‑tax and corporate‑tax receipts.

State uncertainty and staff guidance

Staff noted several state legislative proposals under consideration that could reduce state shared revenues or change income‑tax distributions; Jody (staff) summarized potential income‑tax reduction proposals and warned those bills were evolving. Andrea told the council the posted rate would be incorporated into the FY26 calendar and that formal adoption would occur in June if the council approved it then. The staff timeline noted the tentative statutory budget adoption date of May 6 and property‑tax public hearings planned for June 3 and June 17.

Next steps and limits

Council members settled on informal guidance to staff to proceed with the “keep levy plus growth” posting (0.5534) for budgeting purposes and asked staff to return with the formal truth‑in‑taxation materials and the final FY26 budget for action in the May–June schedule. Staff emphasized that the direction at the work session was not a formal adopted rate; formal adoption and any required notices will follow later in the public process.

Ending

Staff will post the 0.5534 rate for budget construction and return to council for the statutory hearings and final adoption. Councilmembers asked staff to continue prioritizing public safety and transportation when allocating limited general‑fund resources.