Montgomery council adopts FY2026 budget, sets 40¢ tax rate; adds $60,000 for city events

The Montgomery City Council on Sept. 15 adopted an operating budget for fiscal year 2026 and set the city's ad valorem tax rate at $0.40 per $100 of assessed value, council members said during a special meeting at City Hall.

Council approved a $60,000 increase to the general fund allocation for the public works department to support quality-of-life events, reducing the city’s projected general-fund surplus from $411,483 to $351,480, according to staff. The adopted budget document presented to the council notes the budget "will raise more revenue from property taxes than last year's budget by an amount of $292,343," described on the agenda as a 13.2% increase compared with the prior year. The agenda also states the portion of that revenue coming from new property on the tax roll this year is $147,211.

The council opened and closed a public hearing on the proposed FY2026 budget before taking action. Staff said the only change made after the 30-day posting period was the $60,000 addition to the public works budget; the budget as adopted is the version that will be posted as of Oct. 1.

Separately, the council held a public hearing on and then approved the city’s 2025 tax rate. The council approved separate components of the rate: a maintenance and operations rate of $0.3258 per $100 of valuation and a debt-service rate of $0.0742 per $100. The combined rate was adopted as $0.40 per $100 of assessed valuation on taxable property within the city limits as of Jan. 1, 2025.

Council members discussed the difference between a flat tax rate and rising revenue. Staff noted that although the tax rate itself has been held at roughly 40¢ in recent years, rising property valuations mean the city collects more revenue even without increasing the rate. The agenda language presented to taxpayers said the budget would "raise more revenue from property taxes than last year's budget by an amount of $292,343," and that the tax on a median homestead under the "no new revenue" calculation would be $1,024.36, versus $1,118.60 under the adopted 40¢ rate.

Votes: council members recorded on the budget vote included Miss Langley (aye), Mister Olson (aye), Miss Fox (aye) and Mister Donaldson (aye). On the separate ordinance setting the overall ad valorem rate at $0.40 per $100 (which incorporated the two component rates), the motion carried after a roll-call and voice vote; named ayes included Mister Lisonbee, Miss Fox, Miss Flaney, Mister Olson and Mister Donaldson as recorded on the meeting transcript.

What this means: the fiscal 2026 operating budget as adopted, and the tax ordinance, are effective per the city's ordinance schedule; staff said the adopted budget will be posted on Oct. 1. The added $60,000 is allocated to public works for event support; no additional details on how the city and the Montgomery Economic Development Corporation (MEDC) might share event costs were finalized at the meeting.

Background: staff told the council the proposed budget was posted for the required 30 days before adoption, and that changes must be brought forward at the meeting if needed. Council members asked when the city last had a tax increase and discussed the technical distinction between a rate increase and increased revenue because of property-value growth.

The council took the votes as part of a special meeting that also included ceremonial items and other agenda topics.