Waco manager proposes flat $649.8M FY26 budget, holds tax rate amid lower certified property values

City Manager Bradley Ford presented the Waco City Council with a proposed $649,800,000 fiscal 2026 budget that preserves the current property tax rate at 75.5¢ per $100 of valuation and includes a $134.2 million capital improvement program.

The proposal, outlined at a July work session, holds the tax rate constant after certified values fell short of preliminary estimates and directs $2,300,000 in surplus to balance the general fund. "We are proposing a structurally balanced budget," Ford said, adding the plan includes an estimated $20,300,000 investment in personnel compensation and benefits.

Why it matters: certified property values released in July were substantially lower than the preliminary figures the city used in budget planning, creating an immediate estimated $4,000,000 shortfall in general-fund maintenance and operations. Finance staff told the council they expect the gap to be covered this year because departments identified more than $32,000,000 in operational efficiencies, but cautioned the revenue pressure could persist in future years.

Colin Booth, the city's managing director of finance, reviewed third-quarter results and year-to-date collections that feed the FY26 plan. "Our total revenue budget for the general fund is $217,600,000. We've collected $178,200,000, so that's good for 82% of collections," Booth said, noting sales tax, charges for services and intergovernmental revenue were tracking ahead of plan while property-tax collections were lagging.

Key components and assumptions - Tax rate: Proposal holds the combined maintenance-and-operations (M&O) and interest-and-sinking (I&S) rate at 75.5¢. Council staff said this would be the third consecutive year at that rate. The staff analysis shows the proposed rate sits above the certified "no-new-revenue" rate (74.0487¢) but well below the voter-approval rate (83.0148¢). - Property values: Preliminary values rose to about $18.2 billion, but the appraisal review board certified net taxable values at approximately $16.6 billion, a drop that reduced projected M&O revenue by roughly $4 million. Officials attributed the change to a larger-than-usual number and size of property-value protests and adjustments. - Revenue conservatism: Staff recommended budgeting sales tax at $60.5 million for FY26 (roughly 7% above FY25 budget) but said recent industrial and construction use-tax receipts warrant caution; those receipts drove several recent monthly spikes. - Personnel and benefits: The proposed budget includes a 3.5% general-service pay increase (non–civil-service employees) and continues multi-year commitments to police and fire pay increases. The plan also budgets a 14% increase in the city's portion of health insurance premiums (6% passed to employees). - TMRS: The budget keeps the city's current TMRS (Texas Municipal Retirement System) plan in place (30% non‑retroactive COLA adopted in 2024). Staff warned that selecting larger COLA options would materially increase the city's contribution and that two lower-cost, nonretroactive options expire under state law after 2025. - Capital: A $134.2 million five-year CIP is included, with a heavy emphasis on transportation ($51 million), utility infrastructure, public safety preconstruction (Fire Station 8), airport runway work (95% FAA grant-funded), and an initial allocation tied to the Cameron Park Zoo master-plan efforts. - Reserves and one-time funding: The budget relies on $2.3 million of surplus for the general fund and uses available fund-specific reserves for certain CIP and transitional items. Staff signaled intent to consider reducing the city-managed reserve policy from 27.5% to 25% in a future year to increase deployable cash for capital projects.

Outside agencies and new project fund The proposed FY26 package continues contracts and grants to outside agencies but pivots how those dollars are delivered: staff proposed seeding a new $1,000,000 outside-agency project reserve to fund time-limited, performance-based project work rather than recurring operational support. Ford described the change as a shift from sustaining agency operations toward funding discrete projects and gave Prosper Waco priority access to the initial allocation to stand up the program.

Utility and fee changes The proposed budget maintains the base water rate but includes volumetric adjustments; wastewater base and volumetric increases are proposed; a proposed solid-waste base pickup change (aligned with a new transfer station and landfill schedule) would raise the solid-waste fee by $1.41; drainage fees would drop slightly and the street-maintenance fee would rise from $2 to $4 per month.

Next steps and calendar Council must set public hearings for both the budget and tax rate under state law. Staff included resolutions on the agenda to set public hearings for Sept. 2 and a special meeting for Sept. 9 for second reading and adoption. The council may amend the manager's proposed budget during the public process.

Ending: Council members praised staff for identifying operational savings and for delivering a rapid close of quarterly financials; several asked staff to return with more detailed scenarios, especially around property-tax sensitivity, TMRS cost implications, and CIP funding options.