Germantown proposes $211.3 million FY26 budget, backs 29¢ property tax increase; public hearings set for June 9

Germantown city officials on Monday presented a proposed $211.3 million Fiscal Year 2026 budget and recommended a 29‑cent increase to the property tax rate, moving the proposed rate to $1.79 per $100 of assessed value. The Board of Mayor and Aldermen voted on first readings for the budget and related tax ordinance and set public hearings for Monday, June 9.

Jason Heisman, city administrator, told the board the total proposed FY26 budget is $211,300,000 with $78,700,000 in the general fund and described the proposal as “structurally balanced.” Heisman said the increase is intended to fund long‑term obligations, including higher pension contributions and public safety staffing needs.

Why it matters: the proposed increase follows Shelby County’s 2025 reappraisal, which required the city to reset to a certified tax rate (the “rollback” or tax‑neutral rate) before proposing an upward adjustment. Officials said the additional revenue would help cover pension funding increases, public safety positions and capital projects including initial funding toward planned Houston High School renovations.

Key details presented to the board: - Property tax: the 2025 reappraisal reset the certified rate to approximately $1.4987; the administration proposed adding $0.2913 (29.13¢) above that certified rate to reach $1.79 per $100 assessed value and requested first reading approval of Ordinance 2025‑4 to set that proposed tax rate. - Budget totals: the FY26 proposed budget totals $211.3 million; the general fund is $78.7 million. - Pensions: the FY26 budget raises the city’s legacy pension contribution to $7.1 million, up from $6.1 million in FY25, reflecting updated actuarial data cited by staff as necessary to stabilize long‑term obligations. - Public safety and personnel: budget includes funding for three new firefighter‑paramedic positions to address increasing EMS calls and plans to fully fund four police officer positions added previously via a federal COPS grant by FY28. - Capital program: the FY26 capital budget totals $11,617,000 and includes 27 projects; $4.2 million of that is proposed from general fund reserves. Highlights noted by staff include acquisition payments for Germantown Elementary and Germantown Middle School properties, playground and bridge replacements, greenway and water‑supply extensions, a planned LED streetlight conversion, and an $8,000,000 placeholder in the six‑year CIP for phase 1 of Houston High School renovations.

Board members and staff emphasized fiscal constraints and risk factors. Heisman and Alderman Yulicki both noted sustained inflationary pressure since 2020 and market volatility that increases pension funding requirements. Yulicki said pension funding and interest‑rate risk were top concerns: “When the markets go down … we are required to fund any losses … amortized over five years,” which can add material costs to future budgets.

Public comment at the start of the meeting fed into the budget discussion. Residents during the Citizens to Be Heard segment urged more visible and accelerated city support for Germantown Municipal School District facility needs, including the Houston High School master plan. Karen Viati said $8,000,000 committed so far “is a very nice start, but it’s certainly not enough,” and urged continued collaboration between the city and GMSD.

Board action and next steps: - Ordinance 2025‑3 (Adopt FY26 proposed budget): approved on first reading; public hearing and second reading set for Monday, June 9, 2025. - Ordinance 2025‑4 (Real and personal property tax rate): approved on first reading to set the proposed certified tax rate at $1.79; public hearing and second reading set for June 9, 2025. - Ordinance 2025‑1 (Year‑end city budget adjustments) and Ordinance 2025‑2 (GMSD year‑end adjustments): both approved on first reading and set for June 9 public hearings.

Several aldermen, including Aldermen Yulicki, Sanders, Salvaggio, Hicks and Vice Mayor Gibson, praised staff work and requested more detailed materials at the June hearing. Mayor Mike Palazzolo asked administration to explore whether the city could increase bonding support for the school renovations from $8,000,000 to $10,000,000 and report back before the next reading.

What was not decided: the tax rate on June 9 will be the occasion for a final vote after the public hearing; the May 12 votes moved the measures forward on first reading only. The board did not finalize any bond issuances or school funding beyond the CIP placeholder; those actions would come later if approved.

Votes at a glance (actions taken on May 12, 2025): - Ordinance 2025‑1 (Year‑end city budget adjustments): Approved on first reading; June 9 set for second reading/public hearing. (Motion: Alderman Yulicki; Second: Vice Mayor Gibson; Roll call: unanimous yes.) - Ordinance 2025‑2 (GMSD year‑end adjustments): Approved on first reading; June 9 set for second reading/public hearing. (Motion: Alderman Yulicki; Second: Alderman Hicks; Roll call: unanimous yes.) - Ordinance 2025‑3 (Adopt FY26 proposed budget): Approved on first reading; June 9 set for second reading/public hearing. (Motion: Alderman Yulicki; Second: Vice Mayor Gibson; Roll call: unanimous yes.) - Ordinance 2025‑4 (Proposed property tax rate $1.79): Approved on first reading; June 9 set for second reading/public hearing. (Motion: Alderman Yulicki; Second: Vice Mayor Gibson; Roll call: unanimous yes.) - Consent agenda (contract extensions with Brightview, donation and grant items): Approved as presented. (Motion: Vice Mayor Gibson; Second: Alderman Hicks; Roll call: unanimous yes.)

The board will return on June 9 for second readings and public hearings before any final ordinances or tax rates are adopted.