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City manager: FY2025–26 budget planning shows $5 million projected surplus; property tax rate to remain at 75.5¢
Summary
City finance staff presented FY2025–26 forecasts showing a $5 million planning surplus in the general fund, large recurring efficiency savings, unchanged property tax rate, utility rate proposals focused on volumetric increases, and peer comparisons on debt levels.
City of Waco financial leaders presented the draft FY2025–26 operating and capital improvement budget during a June 17 work session, projecting a planned $5 million surplus in the general fund while recommending the property tax rate remain at 75.5 cents per $100 of assessed value.
Assistant City Manager and CFO Blue Kosteluk and Managing Director of Finance Colin Booth said the city expects $209.5 million in general fund revenue and about $204.4 million in expenses for the coming fiscal year, producing the planning surplus. Kosteluk credited a department-wide efficiency review for nearly $11.6 million in recurring reductions in the general fund.
Kosteluk and Booth briefed the council on utility fund rate modeling. For water, staff recommended no change to base meter charges while increasing volumetric rates to support capital projects. Wastewater recommendations include modest base and volumetric increases (about 5.4% base, 5.3% volumetric). Solid waste faces structural pressure: after a one-time payment in FY25, staff projected a deficit in out-years and recommended a 7% increase in monthly residential solid-waste rates and a 7% cart fee increase.
Debt and capital planning took a prominent role in the briefing. The presentation showed Waco’s general-government O&M/debt split at roughly 80/20, compared with peer averages closer to 65/35; debt per capita for general governmental services was under peer averages. Finance noted the need to balance maintenance-and-operations investments with measured debt issuance.
Council also completed a prioritization exercise. Given a hypothetical $10 million allocation, council members consistently prioritized IT and cybersecurity, facilities QA/QC and GIS/IT staffing; several members also emphasized funding reserves and neighborhood streets.
City staff said the FY26 budget will continue to plan at the 75.5¢ tax rate and monitor several volatile revenue sources—sales tax and interest earnings—while proceeding with the recommended utility rate structure to support debt service coverage targets.
