Raleigh manager proposes $1.78 billion FY2026 budget with no property tax increase; highlights pay raises and capital plans

The city manager presented the proposed fiscal year 2026 operating budget and five‑year capital improvement plan to the Raleigh City Council on May 20, saying the plan balances at $1,780,000,000 and requires no property tax increase.

The budget “represents the operational cost for the city of Raleigh for the period of 07/01/2025 to 06/30/2026,” the city manager said during opening remarks. The proposal dedicates $657,100,000 to the general fund and includes a planned full implementation of a recently completed classification and compensation study.

Budget director Sadia Sitar, Budget and Management Services director, told the council the study will be fully funded in the budget and implemented in September 2025 at a total cost of $35,800,000 across all funds. Sitar said the proposed pay adjustments include a 9% increase for exempt employees, an 11% increase for public safety and nonexempt employees, and a 5% increase for temporary and part‑time employees. She added that some employees who fall below new minimum ranges will receive larger increases to meet the new minimums.

Sitar outlined other highlights in the manager’s package: an emphasis on investments in public safety and Dix Park, additional programming and maintenance funding for Gibson Play Plaza, and about $25,000,000 allocated to affordable housing initiatives (a combination of remaining 2020 housing bond funds and the penny for housing), including $3,000,000 for homelessness prevention. She said the FY2026 capital budget totals roughly $6,616,900,000 and the five‑year capital improvement program is approximately $2,470,000,000.

To create a predictable pipeline for major capital projects, the proposal sets aside an $18,000,000 advanced planning fund (described in the presentation as generated by a steady‑state accounting change), intended to support preliminary design for projects such as fire‑station priorities and a southeast remote operations center before full debt issuance replenishes the fund.

Council members asked for clarifications about the budget’s real‑world impacts. Councilor Patton asked for the property tax impact on a median‑valued home; councilors and staff noted that the median tax bill cited from last year was $13.90 but that reassessments may have changed the figure. Sitar said enterprise fees for water, stormwater and solid waste will increase; a median household could see a $4.33 annual increase in utility fees in the proposed budget.

On affordable housing, staff said demand exceeded available funds by many projects. Melissa Sutton, director of Housing and Neighborhoods, said the office received “double digits” more eligible applications than it could fund this cycle and that staff will begin discussing bond strategy this summer to identify future funding options.

Finance director Allison Bradshaw confirmed the city intends to maintain the policy target for fund balance and noted the city’s AAA bond rating as evidence of overall fiscal strength. The city manager and staff emphasized that the package was constructed without a property tax increase despite revised downward revenue projections for sales and property tax growth.

The council set a public hearing on the proposed budget for June 3 at 7 p.m.; budget work sessions will begin Monday, June 2 at 4 p.m. and continue each Monday in June as the council reviews the proposal and budget notes submitted by council members.

The manager’s written message and the full proposed budget are available online at budget.raleighnc.gov for residents who want the complete document or to use the public budget dashboard.