Austin projects multi‑year general fund deficits as sales tax growth slows and property tax cap limits revenue

City Manager T. C. Broadnax convened an April 8 briefing on the city’s five‑year financial forecast, and staff told the Austin City Council the general fund faces near‑term deficits if current revenue assumptions hold. “This forecast describes the headwinds the city’s general fund will be facing,” Broadnax said at the start of the presentation.

The forecast presented by Carrie Lang, director of the Budget and Organizational Excellence Office, and Eric Nelson, acting deputy director, shows a $33.4 million projected shortfall in fiscal year 2026 under baseline assumptions and a projected cumulative gap that grows to about $79.9 million by the end of the forecast period if no policy changes are made.

Why it matters: City staff said revenue pressures are concentrated in weak sales‑tax collections and limits on property‑tax revenue growth imposed by state law (SB 2). While property tax remains the largest general‑fund source, staff said earlier‑year caps reduce how much the city can rely on rate increases to offset rising costs. The forecast also incorporates contractually driven wage and pension costs and higher internal service charges.

Most important facts

- Fiscal year 2025 estimates: staff said they now expect an overall fiscal‑year‑to‑date revenue shortfall of about $5.7 million, driven mainly by sales tax results. Eric Nelson…