Council holds public hearings on FY26 budget and proposed 1¢ debt-service tax increase; hotel-tax allocations put partly in contingency

The Denton City Council held public hearings Sept. 9 on the city manager’s proposed fiscal year 2026 budget and the proposed property-tax rate. The manager’s proposed tax rate is 0.59542 per $100 of assessed value — unchanged for maintenance and operations at 0.33478 and a proposed one-cent increase on the debt-service rate to 0.26064 per $100. Staff estimated the proposed change would raise about $1.94 million for debt service and would increase the typical homestead’s tax bill by roughly $84 annually (about $7 per month).

Council and staff reiterated why the debt-service increase was proposed: recent debt service obligations from the city’s capital program produce new annual payments that must be funded, and the debt-service portion of the rate is set to match those scheduled payments. Finance staff noted that a lower overall tax-rate decision would need to come from the maintenance and operations side and would require reductions to general-fund services.

Budget deliberations and hotel-occupancy-tax (HOT) debate: Council reviewed proposed FY 2026 revenues and expenditures and heard public feedback. A central discussion focused on allocations from the hotel occupancy tax (tourist and convention) fund and, in particular, the future of the downtown “ambassador” program (a downtown safety and hospitality presence). Councilmembers expressed differing views about whether the ambassador program should continue to be city-funded or be retooled, funded by HOT funds or absorbed by an in-house city program. Members raised concerns about legal eligibility to use HOT funds (which must promote tourism and generate “heads and beds”), the program’s measurable impact on hotel stays, and the lack of comprehensive data to demonstrate compliance with HOT fund rules.

As a compromise to allow more study, council directed staff to adopt the manager’s proposed total appropriation for the tourist/convention fund but to hold the ambassador-program allocation (about $300,000 as discussed) in contingency and bring the allocation back for council review. Multiple councilmembers supported allocating $200,000 for Denton County Office of History and Culture and $30,000 for Dog Days of Denton as suggested by the city manager, while asking staff to return next week with options and the legal compliance analysis for the ambassador program and for other requestors.

Votes and next steps: Council approved routine consent agenda items earlier in the meeting by roll-call (motion by Representative District 4; second by Representative District 2; vote 6-0). No final action was taken on the budget or tax rate at this meeting; the public hearings were left open and council scheduled adoption and final tax-rate action for Sept. 16. Finance staff said the city must get a super-majority (five of seven councilmembers) vote to adopt a tax rate above the no-new-revenue rate.

What to watch: Staff will return with (1) a refined recommendation for the tourist/convention fund showing the contingency and allocation options; (2) legal analysis and data collection plan to determine whether the ambassador program can be funded from HOT revenues; and (3) the regular final budget and tax-rate ordinance for adoption on Sept. 16.