Franklin committee advances $243.3 million FY26 budget, proposes 32¢ property tax and 1% hotel tax increase

City of Franklin staff on Thursday recommended the fiscal 2026 budget to the full Board of Mayor and Aldermen, proposing an all‑funds total of $243,300,000 and a municipal property tax rate of $0.32 per $100 of assessed valuation to fund capital projects and operations.

The recommended rate is presented in three parts: a 23.1¢ equalized base (from a recent reappraisal), 6.8¢ dedicated to the “Invest Franklin 2” capital program (including a proposed partnership with the Tennessee Department of Transportation on Mack Hatcher), and 2.1¢ for enhanced city operations. The package also includes a proposal to raise the hotel occupancy tax from 4% to the 5% statutory maximum.

"It's my honor and my responsibility to to report to you and recommend to you today the fiscal 26 budget," said Eric Stukin, staff member leading the presentation. Michael Walters Young, chief budget performance officer, framed the amendment and revenue picture that preceded the new budget proposal.

Why it matters: the plan uses the newly certified reappraisal — the staff said the city's assessed tax base rose to $10.75 billion from $7.6 billion — to create dedicated capacity for capital investment while preserving reserves and funding operational needs. Under the new valuation, staff said one penny of tax now generates about $1,050,000 (versus $750,000 under the prior appraisal), and the current certified equalized rate is 23.1¢.

Key revenue and spending items in the recommended FY26 budget include: an all‑funds total of $243.3 million with the general fund at $128.1 million (a 9.7% increase), continued reliance on sales tax (staff projects 2.6% growth in local sales tax for FY26), a proposed 1% increase in hotel occupancy tax (from 4% to 5%), and assumed water and sewer rate increases effective Jan. 1 (6% water, 5% sewer). Staff also proposed a base 2.5% general pay increase and performance pay of 0.5%–2.5%, plus an organizational compensation reset to move pay targets from the 75th percentile toward the 90th percentile of comparable local governments.

On staffing, the budget adds 10 new positions across funds: eight positions in the general fund (seven in public safety — three firefighters, three police patrol officers, one victim support counselor — plus an information systems developer), one sanitation route operator, and one fiscal affairs manager in Water Management.

On capital and project funding, the budget includes: a proposed transfer of $1.5 million to the stormwater fund to stabilize balances and fund a recommended street sweeper; $11 million in Road Impact Fund transfers to cash‑fund approved projects (including Jordan Road and East McEwen improvements); and a $3 million transfer for Bicentennial Park improvements. Staff described Invest Franklin 2 as a 10‑year capital program aiming to deliver roughly $500 million in improvements.

Staff noted the city's AAA ratings from Standard & Poor's and Moody's and emphasized reserve policy: a maintained minimum reserve of 33% of operating expenditures and a threshold (45%) above which funds can be used for pay‑as‑you‑go capital. "This fully complies with your policies related to debt and related to fund reserves," Stukin said.

On the Mack Hatcher partnership, staff told the committee one of the two proposals (Southeast Mack Hatcher) already appears in TDOT's 10‑year plan; Northwest remains uncertain. Committee members and staff discussed using some of the dedicated Invest Franklin 2 capacity as early cash to accelerate design or right‑of‑way work so the city is ready if TDOT advances the project.

Process and next steps: staff told the committee first reading is scheduled for the board's May 27 meeting, a public hearing and second reading on June 10, and a final reading on June 24. Staff recommended preparing two ordinance options for the board to consider at first reading — the full 32¢ package and a smaller alternative — and the committee voted to forward the recommended budget and to ask staff to prepare both rate options for the board.

Committee reaction and fiscal context: aldermen praised the emphasis on public safety hires, the compensation reset and the city's cash funding of many capital projects. Some members urged guardrails on the Invest Franklin 2 component — for example, dedicating the 6.8¢ specifically to state partnership roadway projects — and asked staff to preserve clear accounting so any dedicated collections go to the stated transportation purpose or are held for cash funding of obligations.

Alderman comments also emphasized the distribution of revenue sources — staff reminded the committee that roughly 71% of the budget is consumption driven (sales and use taxes), which increases volatility and motivates higher reserve targets.

The committee voted to forward the FY26 budget recommendation to the full board and to request staff prepare written ordinance options reflecting the rate scenarios discussed.