City manager: sales-tax receipts below budget; staff outlines savings and hiring freezes ahead of FY26 workshops

City Manager Mr. Atkinson told the Lubbock City Council on July 2025 that sales‑tax collections are below the adopted fiscal‑year 2025 budget and that the city is pursuing expense reductions and a hiring freeze to keep the General Fund balanced.

Atkinson said the city’s budgeted sales‑tax revenue was $105,600,000 and staff’s current forecasted receipts are $100,664,000. “We were still about $313,000 shy of the budget projections or just under 4%,” he said, adding that the city now projects being roughly $5,000,000 below the adopted sales‑tax target for the year.

The city manager said the pattern in Lubbock mirrors statewide receipts reported by the Texas Comptroller — construction and online retail showed mixed results while hotel occupancy taxes have declined. Atkinson noted the city’s hotel occupancy receipts are down “not quite 5%,” similar to statewide figures.

Why it matters: sales‑tax and new property values are primary revenue drivers for the General Fund and for next year’s budget. Atkinson reminded the council that FY26 budget workshops begin Monday, Aug. 4, and said staff’s preliminary sales‑tax projection for fiscal 2026 is $103.5 million — about $2 million lower than the current adopted budget figure.

How the city is responding: Atkinson said staff has reworked departmental budgets to find roughly $2,100,000 in savings and has eliminated five full‑time, non‑public‑safety positions from the General Fund. He said multiyear contractual obligations — including the police department’s Axon video system and computer‑aided dispatch services — will be honored and are drivers that limit further cuts. The city also keeps a hiring freeze in place that will remain until it is safe to reinstate positions.

Atkinson highlighted an offsetting revenue item: higher interest rates are producing additional investment income for the city. “Because those [rates] have stayed up for so long…that has become the number 1, basically, revenue growth that we have, and it's a positive $3,000,000 in the general fund,” he said, noting the city intends to use that money for next year rather than to offset near‑term expense adjustments.

Staff cautioned the council that certified taxable values from the Lubbock Central Appraisal District could change the projections; Atkinson said certified values are due by the statutory deadline at the end of the coming week. He also reminded council members that the taxable value of new property — the maintenance & operations portion — is preliminary at about $2.1 million, a reduction the manager described as “25% down just in 2 years,” reflecting a slowdown in the construction market.

The presentation concluded with the manager saying staff believes the General Fund can be balanced for the remainder of the year if council approves the recommended measures and directors maintain expense controls. He invited questions before the council moved on to the rest of the agenda.

Ending: City staff and the council will address the numbers during the FY26 budget workshops scheduled to begin Aug. 4, when certified values and additional revenue forecasts will be available.