Waco staff outline proposed FY26 budget, warn homeowners will see higher bills despite flat tax rate

City Manager Ford and Chief Financial Officer Luke Costlik presented the city manager’s recommended fiscal year 2025–26 operating budget and capital improvement plan to the Waco City Council during a work session Tuesday, Aug. 19.

The presentation summarized a citywide budget of roughly $652 million and a general fund of about $210.3 million, with staff reporting “no change to your revenues and your expenses as a whole,” Costlik said. The proposal keeps the city’s tax rate flat at 75.5 cents per $100 of assessed value, but officials cautioned that rising property appraisals will raise the average homeowner’s bill.

Why it matters: The presentation showed how the city would allocate taxpayer dollars and highlighted that public safety and debt service consume most of the average homeowner’s payment. Council members pressed staff for clarity about trade-offs and service-level changes as the city balances a largely flat budget with rising costs.

Cost and tax impacts City staff explained that the citywide budget totals roughly $652 million, while the general fund totals $210.3 million. Costlik told the council the average Waco homeowner’s annual city payment would be about $3,212.51 — up $134.20 from the prior year, a 4.4% increase in annual homeowner cost. Staff attributed the increase to property appraisal growth rather than an increase in the municipal tax rate: "Even though we are keeping a flat tax rate at 75 and a half cents ... because of the appraisal increases ... that is gonna be a tax increase to the average home of $62.08 for the year," Costlik said.

Staff also displayed a breakdown of the average taxpayer’s bill, showing about 41% going to police and fire and roughly 23% going to debt service tied to capital projects. Costlik and City Manager Ford emphasized that transfers out of the general fund primarily finance longer-term capital projects and that much of the city’s borrowing is intended to spread costs of infrastructure over its useful life.

Efficiency measures and service-level changes Costlik and department leaders described ongoing efficiency efforts to balance the budget, including a multi-year push that began in fiscal year 2025. The city is seeking roughly $32 million in cumulative reductions through position management, scheduling adjustments and other operational changes.

Examples cited by staff include: - Parks and Recreation: a $1.2 million reduction achieved through multiple operational changes, including reduced community center hours where patron use was low. - Libraries: a systemwide reduction from approximately 217 open hours to 210, described by staff as a data-driven cut intended to maintain core service while saving costs.

City leaders framed these as targeted, data-driven adjustments rather than across-the-board closures. "They took a very data driven approach ... saw where patrons were actually coming to the community centers and saying, okay, instead of staying open until 9PM, there is nobody checking in at 9PM," the city manager said.

Next steps and schedule City staff said the budget process will continue with a public hearing and first reading of the tax-rate ordinance at the Sept. 2 council meeting, followed by a second reading and statutory adoption step at a special meeting on Sept. 9. Council members thanked staff for the presentation and asked for continued clarity as the budget moves to the hearing and adoption steps.

Context and caveats Council members repeatedly framed the budget decisions around priorities for public safety and long-term infrastructure. Staff emphasized that much of the city’s debt service reflects multigenerational capital projects. No final budget or tax-rate votes were taken at the work session; the item remains before council for formal hearings and possible adoption in September.

Ending City staff requested feedback and indicated they would return with public hearings and formal vote items in early September.