DeSoto presents balanced FY2026 budget proposal, recommends water rate increase and personnel changes

Interim Finance Director Lakita Sutton on Tuesday presented the City of DeSoto’s updated proposed budget for fiscal year 2026, telling the City Council the plan would leave the general fund in surplus while preserving the current property tax rate and proposing several personnel changes and service restructures.

Sutton said the updated proposal shows a general fund revenue total that is about $409,412 greater than expenditures, an improvement from the $33,640 surplus shown in the July draft. The proposal keeps the city’s combined tax rate at 0.684934 per $100 of taxable value and does not propose using reserves. Sutton also recommended a 2% cost-of-living adjustment for employees and a 3.5% step increase.

The budget matters because it sets the city’s services, staffing and capital workplan for the coming year. Sutton told council that the budget assumes opening the Aquatics and Recreation Center in March or April 2026 and includes the start of onboarding for the municipal golf club, along with continuing capital improvement projects funded by the city’s most recent bond sale.

Key details in the proposal include a recommended 9% increase in water base and volume rates — the base would move from $11.60 to $12.64 and the volume charge from $4.03 to $4.37 — and no use of fund balance to cover operations. Sutton said the enterprise funds still show capital-driven expenditure timing differences that make them appear “under” on revenue compared with expenditures because capital programs often lag.

On personnel, Sutton outlined department-level changes and cost impacts. Examples she cited: - Parks and recreation and the aquatics center: projected operating expenditures reduced from an earlier $9.8 million estimate to about $8.4 million after proposing a private operator to run daily facility operations; the staffing originally budgeted for city-run operations (about 51 positions) would be removed if a contractor operates the facility. - Multiple reclassifications and new positions across departments, including public utilities, sanitation, development services, police, municipal court and information technology. Combined personnel cost changes called out in the presentation included six-figure increases in several departments (public utilities: $295,195; sanitation: $286,211; DeSoto Cares team additions: $323,193).

City Manager Majid Algaffrey and staff said the reclassifications are intended to align pay with market rates and job duties. “Those reclassifications are typically for people who are acting out of class, meaning that they are doing more than what the job description that they have,” Algaffrey said, and staff described a recent salary survey used to update pay ranges.

The council spent substantial time on the DeSoto Cares team, a community crisis response program. Staff said the city proposes a restructured model that shifts emphasis toward social services and clinical responses and expands hours with two teams to provide broader coverage. The proposed model would move one sergeant and one officer back to regular police duties while adding two full-time paramedics and one full-time social service provider; staff said the net effect of the reorganization compared with an earlier proposal produces roughly $55,000 in savings relative to what had been submitted in July.

Sutton also described the technical work needed to bring the golf club onto the city’s books under governmental accounting standards (GASB), and said the city has engaged a consultant to manage onboarding and auditing preparations. She said those consulting costs are included in the proposed budget and will be reflected in financial services in 2025 and the 2026 budget presentation.

The council opened and then closed a public hearing on the budget; resident Nicole Rockeyale urged the city to clarify how community engagement and grants staffing will be aligned and asked for modest improvements at the library. The council did not adopt the budget Tuesday; staff plans to bring the final adoption package, including the capital improvement program and the tax rate, to a vote on Sept. 16 at 7 p.m.

Council members asked for additional materials and clarifications during the presentation, including comparisons to prior years’ reclassification activity, details about which positions are new versus reclassified or backfilled, and the basis for the water rate calculation. Sutton and Algaffrey said staff would provide follow-up details and that earlier survey responses the city has already collected will be shared with consultants who prepare outreach and engagement materials.

The public hearing was conducted under City of DeSoto Charter Article VII procedures; no final budget votes were taken at Tuesday’s meeting.