Gilbert council sets maximum FY26 budget amid $14 million in ongoing revenue losses

The Gilbert Town Council on Tuesday adopted a preliminary FY2026 budget ceiling and set the final property tax hearing for June 10 after staff presented a fiscal outlook that includes roughly $14 million in ongoing annual revenue reductions.

Town Manager Patrick Banger told the council the town faces two principal ongoing revenue impacts: the permanent loss of a residential rental sales tax category that equates to about $9,000,000 a year and a state shared income tax reduction of about $5,000,000. “That was a permanent, elimination of that tax category for us rolling forward,” Banger said, summarizing the change that will fully impact FY26.

The nut graf: Staff framed FY26 as a difficult budget year with tightened revenues, continuing construction inflation that raises capital costs, wage pressures that affect staffing, and a large capital improvement program. The council voted 7-0 to set the preliminary budget (an upper expenditure limit) and to schedule the final property tax public hearing for June 10.

Finance staff described the town’s capital program and operating pressures. Kelly Faust, who presented the budget details, said the preliminary adoption “will be the maximum amount, budget number expenditure that the town can have for next year,” noting the final budget adopted June 10 can be equal to or lower than the preliminary number but not higher. Faust and other staff described a $1.7 billion 10-year capital improvement program (CIP) portfolio, with roughly $1.2 billion in ongoing projects carried forward and about $490 million of additional project scope identified for planning purposes.

Staff also highlighted that Gilbert’s per-capita sales-tax resources available for general-fund spending are lower than peer cities in the region. The presentation noted the town’s vehicle license tax is dedicated to streets rather than general fund purposes in Gilbert, a structural difference from most peer communities. Kelly Faust and Patrick Banger urged the council to continue evaluating staffing and service priorities as revenue conditions tighten.

Council discussion included questions about specific line items and the ability to remove or delay individual purchases; staff explained the preliminary adoption sets an upper limit and council can reduce items before final adoption. Council member Jim Torgerson asked about lowering the town’s property-tax rate; staff said lowering the rate would increase future interest costs and estimated roughly $10 million in additional cost over the bond’s life to reduce the rate by a small fraction.

Formal actions: Council voted 7-0 to (1) set the public hearing date for the property-tax levy and (2) accept the preliminary FY26 budget for the purpose of setting the maximum authorized expenditures. Staff noted the council could still direct adjustments before final adoption on June 10.