Fort Worth finance staff: April valuation estimates push FY26 general fund shortfall to about $15–17 million

Fort Worth finance staff told council on Tuesday that April property‑value estimates and other adjustments increase the city’s projected FY26 general‑fund shortfall to roughly $15,200,000, and that pending state legislation could add to the shortfall in subsequent years.

Brady (Fort Worth Lab), newly promoted to assistant director overseeing revenue and special districts, said the April roll shows 8.6% nominal growth in values compared with last July, but staff expect protests and other final adjustments to reduce collections by roughly 5.5% (an effect staff called "erosion") before July’s final values, leaving the city about $12.5 million lower than the earlier forecast. Changes to delinquent‑tax collection assumptions and penalty/interest estimates produce a net reduction as well. Taking the adjustments together, staff estimated a July forecast shortfall near $15.2 million; when two pieces of pending state legislation are included, that number rises toward $16.7 million.

Brady warned the Council to expect further changes before budget adoption. "When we get the final values in July, they typically are not as high as what we see in April," he said. "We think about 5 and a half percent is going to come off as value loss between now and July."

Why it matters: staff said property‑value movements and legislative proposals will materially affect FY26 and create additional pressure in FY27, when staff expect a larger revenue hit unless the legislature or voter action changes assumptions.

Key numbers and drivers

- April roll growth vs. last July: 8.6% (nominal).

- Expected erosion (value loss from protests, exemptions, other causes) before final July values: ~5.5%.

- Change to collection assumption: staff reduced assumed collection rate from 98.5% to 98.0%, lowering expected revenue by roughly $3.5 million within the general fund.

- Delinquent tax collections budget reduced from $2,750,000 (prior) to $1,750,000 (down $1,000,000), with a partly offsetting $500,000 increase in penalty and interest estimates.

- FY26 projected shortfall before pending legislation: about $15,200,000; with staff’s current assumptions including two state measures, FY26 shortfall increases to about $16,700,000.

Legislation under review

Brady summarized two items the city is watching that could affect revenues and departmental fees:

- HJR 1 (as discussed in the presentation): would raise the business personal property exemption from $2,500 to $125,000; staff said that change—if enacted and effective for tax year 2026—would reduce property‑tax revenue available to the city in FY27 by an estimated 1% (about $6.25 million).

- Senate Bill 1008: staff said this proposal would impose statewide restrictions on certain fees charged by municipal environmental services programs and could reduce Environmental Services revenue by an estimated $1.5 million in FY26. Environmental services staff said they are reviewing their fee structure and that if SB1008 reduces revenue they might have to reevaluate staffing and service levels, including on‑site inspections for restaurants.

Council questions and context

Council members asked about the breakdown between residential and commercial valuations in the April estimates; Brady clarified the tax base mix is heavily residential and that staff would follow up with exact percentages. Council members also raised the real‑world impact on homeowners: staff noted that although individual home values may show large percentage increases, the city’s ability to capture value growth for revenue is limited by the voter‑approval tax‑rate cap (an existing rule that limits captured growth on existing properties to 3.5%).

Next steps

Staff said the FY26 budget will be balanced before adoption, but the new estimates increase the size of the adjustments the city must make. Council asked for scenario analyses and for staff to return with draft budget packages reflecting the April values and the legislative uncertainties.

Ending

Brady and staff will continue refining estimates before the July final values and ahead of June budget work sessions; council members requested further details on valuation composition and household impacts in follow‑up materials.