Richardson budget update: officials cite a $3.2M property-tax impact and stronger-than-expected sales tax

Richardson finance staff briefed the City Council on the second-quarter performance of the city's five main operating funds, reporting a midyear revenue shortfall tied primarily to property-tax roll adjustments but noting sales-tax strength that helped stabilize the general fund.

Budget officer Bob Klimar presented the report and told council the primary pressure point is property-tax revenue: "revenue from current year taxes is expected to be down $3,300,000," he said, attributing the shortfall to a combination of a court-ordered exemption for a university‑affiliated residential property and a post-certification correction by the Collin Central Appraisal District (CCAD) that reintroduced a large tax abatement to the roll. Klimar said CCAD's supplemental adjustment removed roughly $592 million of value from the certified roll in the supplemental filing; that change translated to an estimated revenue loss for this fiscal year of about $3.2 million across city funds, with roughly $1.9 million affecting the general fund and $1.3 million affecting debt service.

At the same time, Klimar reported sales tax receipts were above budget and above last year’s receipts. He said sales tax was about $1.1 million above last year and roughly $2.7 million above the budgeted target for the year as of the second quarter; the city’s top 50 sales taxpayers account for roughly half of its sales-tax revenue, and those large accounts showed mixed trends.

Other fund highlights - Water and sewer revenues are running ahead of targets in part because of irrigation-related and large‑meter usage; an unanticipated eight-inch meter installation at UTD also affected installation charges. - The golf fund trailed targets in rounds played earlier in the year but produced unusually strong months after both courses reopened; staff said they expect the fund to meet minimum fund balance policy by year end. - Hotel‑motel revenues are down modestly year over year, influenced by room remodels at two properties and reduced weekday business travel at economy hotels; the Iseman Center’s activity is up but slightly below plan.

Klimar and other staff outlined next steps: staff will continue to monitor revenues and expenditures, apply one-time receipts where available, and provide a more complete revenue forecast for FY26 in late July after the certified property rolls are finalized. Klimar noted the city faces longer-term pressure from rising water and wastewater costs and national economic uncertainty that could affect sales tax going forward.

Questions from council and staff response Council members pressed staff for detail about the CCAD adjustment and how the city could reduce exposure to similar surprises. Klimar and the city manager described the issue as a supplemental roll correction by the appraisal district that was discovered after the city adopted its budget; staff said they rely on the appraisal district’s certified rolls during the budget cycle and that large supplemental adjustments can affect midyear projections.

No action was taken; the report was received and staff will return with updated revenue expectations and departmental budget deep dives ahead of FY26 planning.