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McKinney staff outline proposed budget and tax rate as city plans response to $15 million federal funding withdrawal
Summary
City Manager Paul Grimes told the McKinney Economic Development Corporation board that the proposed FY26 budget reflects a 2.88% increase over the no-new-revenue rate and a proposed tax rate of 0.412; he also said $15 million in federal funding for the "Lower 5 Plaza" subgrade crossing was withdrawn and city leaders will evaluate options.
McKinney City Manager Paul Grimes told the McKinney Economic Development Corporation board on July 15 that staff have proposed a fiscal year 2026 budget and a proposed tax rate and that the city is evaluating alternatives after federal funding for a downtown infrastructure project was withdrawn.
"We have proposed a budget that is plus 2.88%," Grimes said. He told the board the city's total budget is roughly $950,000,000, with a general fund operating budget around $231,000,000, and that the proposed tax rate is 0.412. Grimes said the formal tax-rate setting and budget adoption are scheduled for the City Council public hearing and meeting on Sept. 2.
The City Manager also reported that $15,000,000 in federal assistance for the Lower 5 Plaza — described in the meeting as a "subgrade crossing across underneath Highway 5" — was withdrawn. "So that money was withdrawn," Grimes said, and he added the city is meeting with the council to evaluate options going forward.
Why it matters: the budget, tax rate and the lost federal funding could affect timing and scope of local infrastructure projects and capital planning. Grimes told the board the proposed tax rate reflects the city’s approach to offsetting rising property values: "If your property values go up, you reduce your rate to produce a levy. Our levy is the no-new-revenue rate plus whatever percent. Ours generally tracks inflation."
Grimes urged board members and the public to engage in the process and said the required single public hearing on the budget will be Sept. 2. He also announced a downtown infrastructure open house on Aug. 27 at 6 p.m. in the council chambers to present reconstruction plans for Tennessee, Lamar, Hunt and Kentucky streets and related utilities in the area around the library and the old City Hall redevelopment.
No formal board action on the budget or the withdrawn federal funds was taken at the EDC meeting; Grimes said city staff and council would consider options later. The transcript records the Board asking procedural questions about when the tax rate would be set and Grimes confirmed Sept. 2 as the adoption date.
Board discussion and next steps: Grimes said the legislature’s special session had items that could affect cities, including proposals on property tax caps and other matters he listed; he did not identify any city action tied to those bills. He encouraged board members to attend the council budget meeting and to direct budget questions to him or to attend the public hearing on Sept. 2.
Looking ahead: city staff will bring options to council after evaluating alternatives for the Lower 5 Plaza funding loss and will continue outreach on downtown infrastructure work at the Aug. 27 open house.
