Decatur proposes 0.565713 tax rate, schedules hearings and advances budget to second reading

City Manager Nate presented the Decatur proposed fiscal year 2025–26 budget and a proposed property tax rate of 0.565713 per $100 of taxable value during the July 20 City Council meeting.

Nate described the rate as split between 0.407008 for maintenance and operations (M&O) and 0.158705 for interest and sinking (I&S), and said the rate would generate $591,335 in additional revenue, including $67,676 attributable to new construction. He said the city’s certified taxable value rose to $1,495,281,348, a roughly 7.5% year-over-year increase, and that the proposed rate would reduce the overall tax rate by “just over a penny.”

The council voted to schedule public hearings on the budget and tax rate for the next regular meeting on Aug. 25. A separate, roll-call resolution (R2025-0820) certifying the city’s property tax values also passed by recorded vote. The council then approved a motion to propose the 0.565713 ad valorem tax rate and to schedule the tax-rate public hearing on Aug. 25; both actions advanced the tax and budget process to first-reading ordinances and set the items for second reading and adoption at the next meeting.

Why it matters: the council balanced competing priorities—funding employee pay and benefits while lowering the rate for homeowners. According to the presentation, the average market value indicator for a home in 2025 is $324,234; with the proposed rate and recent increase in the over‑65/disability exemption from $25,000 to $30,000, the average homeowner’s tax bill would increase by about $37 if the rate is adopted as proposed.

Key budget details and constraints Nate said the budget funds a merit program and step increases for public safety, and that staff budgeted for a roughly 25% increase in health insurance costs (described as about $2,500 per FTE and a health‑benefit total near $1.8 million). The managers proposed no new general‑fund debt for FY 2026; a future bond package discussion was noted for September and could affect FY 2027.

Revenue assumptions and structural changes Sales tax was forecast at a 2.5% increase (modeled with Zactax) to $4,720,000. Staff recommended pausing the water‑fund transfer to the general fund for FY 2026 after consulting auditors and Moody’s because water sales fell short of forecasts this year (the water fund revenues were down roughly $617,000 in the presentation). American Rescue Plan Act funds that had previously been included are exhausted and no longer provide ongoing revenue.

Fund and service implications City staff presented a balanced general fund with $622,744 in new revenues (including the property-tax revenue cited above) directed largely to employee pay and benefit commitments. The presentation emphasized a conservative approach to capital and operating outlays to protect fund balance goals (targeted at 25% of operating costs for the general fund and 20% for the water fund).

Public safety staffing and capital Council members asked about staffing for a planned new fire station and police staffing. Chief Bennett, participating remotely, said Station 2 could open with a single apparatus under the department’s staffing plans and that the department commonly supplements with part‑time personnel; he recommended a phased staffing approach and said minimum effective staffing and response‑time goals were motivating the station plan.

Next steps and calendar - Council scheduled public hearings on the proposed budget and the proposed tax rate for Aug. 25, 2025 (motions passed). - First readings of the budget and tax‑rate ordinances were taken; second readings and adoption are scheduled at the next regular meeting.

Quotes (from the meeting) "Good evening, mayor and council. I wanna start off our budget and tax rate conversation by giving a quick thank you to the budget committee…" — Nate, City Manager

"Our 2 priorities this year were our citizens and our employees. … we felt like we were able to take care of our employees with raises and the insurance, and we feel like we were able to take care of our citizens by lowering the tax rate." — Melinda Reeves, budget committee member

"If Station 2 were to open today, they would have a piece of equipment running in it." — Chief Bennett, Fire Chief (participating remotely)

Ending: The council advanced the budget and tax‑rate items and set public hearings for Aug. 25; staff said it will return with second readings and final adoption at the next council meeting.