Texarkana council previews FY2026 budget, proposes 65¢ tax rate for publication

The Texarkana, Texas, City Council proposed publishing a tax rate of $0.65 per $100 of assessed valuation for fiscal year 2026 and received a detailed briefing on the proposed budget, city Chief Financial Officer Kristen Peoples said Monday. The council voted to authorize publication of the proposed tax rate, a step required before a public hearing and final adoption.

Council members heard that the proposed 65¢ rate exceeds the city's no-new-revenue tax rate of 0.603797 and falls below the voter-approval rate of 0.650101. Kristen Peoples said the publication step does not adopt a tax rate but gives public notice; the council will hold a required public hearing and roll-call vote on Sept. 8 to take final action.

Peoples, the city's chief financial officer, summarized revenue and spending highlights. Sales tax collections account for about 52% of the general fund; fiscal-year-to-date collections through May (reported in July) were $14.7 million, and projected FY2026 sales-tax collections were just over $23 million, a roughly 2% increase from the prior year. Property valuation increases included roughly $176 million in taxable value, a 4.68% increase overall, of which the city's jurisdiction accounted for 3.11% of the increase, Peoples said. The proposed budget uses some additional property-tax revenue for debt service and anticipates issuing tax notes of approximately $1,475,000 to be repaid over about 13 months, with formal consideration of that issuance slated for the Sept. 8 meeting.

The proposed FY2026 budget includes personnel cost changes: a 3% increase to base pay for police and fire department personnel (with step and longevity increases), and longevity/step increases for non-civil-service employees. The budget also factors in higher employee health-insurance costs, which Peoples estimated at about $1.8 million in additional expense; total medical premiums were described as just under $7 million with employers covering roughly 79% and employees 20% of premiums. The proposed budget also includes placeholders related to the city's fire pension plan, which staff said currently has a funded ratio near 81.3% and an unfunded actuarial accrued liability described in the presentation.

Capital and one-time items outlined in the presentation include $1.7 million for a Quint fire truck, airport runway project funding and transfers, technology investments, demolition and downtown enhancement funds, and a contingency of approximately $1.4 million (about 3% of general fund operating expenditures). The proposed budget shows recurring revenues and expenditures in balance, with one-time uses of fund balance supporting capital and other nonrecurring projects. The city's policy target of maintaining 60 days of general fund expenditures was noted; staff estimated unassigned fund balance at about 113 days at the end of the fiscal year.

Peoples said recommendations from the city's budget advisory committee included preparing a popular annual financial report, implementing the proposed personnel increases for civil-service and non-civil-service employees, using additional property-tax revenue to pay debt service for capital projects, and continuing several Texas Water Utilities (TWU) projects including wastewater-plant upgrades and a Highway 82 water-main relocation. Staff also noted a planned increase in water and sewer rates based on an adopted rate study effective Oct. 1 and implementation of wholesale water contract CPI increases in January.

The council voted to publish the proposed 65¢ rate for public notice. No final budget or tax-rate adoption occurred Monday; those actions require public hearing and roll-call votes at the Sept. 8 meeting.

Council and staff members available for questions on the budget included Kristen Peoples, chief financial officer; David Lohr, city manager; and several council members who participated in the briefing. Peoples said, “I'll be happy to answer any questions you have.”