DeSoto presents proposed FY2026 budget; ARC operations, staffing and tax rate key issues

Mayor Rachel Proctor on July 24 convened a DeSoto City Council workshop where staff presented the proposed fiscal year 2026 budget, highlighting personnel changes, capital priorities and the anticipated operating impact of the new ARC (aquatic and recreation center).

Lakita Sutton, interim director and the city's budget presenter, told the council the proposal maintains the existing tax rate of 0.684934 per $100 of assessed valuation and presents a balanced general fund for FY2026. "We are looking at maintaining the existing tax rate of 0.684934 per $100 of assessed valuation," Sutton said during her presentation.

Why it matters: The ARC and other new commitments are driving notable changes in personnel and operating costs across departments. Council members questioned the timing, cost assumptions and how reclassifications and freezes on typical pay increases would affect retention and service delivery.

Top-line figures and major drivers - General fund revenue and proposed appropriations are roughly $71.5 million for FY2026, according to the presentation. - Personnel costs increased citywide; staff said the ARC adds 53 positions that, as staffed in-house, produce an estimated personnel cost of about $1.8 million. City staff estimated total ARC operating costs (personnel, utilities, chemicals, insurance, cleaning and other operating costs) could be about $4 million if the city runs it in-house. - Sutton told the council the 53 ARC positions were budgeted to start when the ARC opens (staff said they budgeted about nine months of cost in 2026), and that the 53 positions include a mix of full- and part-time positions amounting to 32 FTE if run in-house.

Personnel, reclasses and compensation changes City administration proposed several reclassifications and a modest net of additional positions across departments. Staff said departments submitted 98 position requests; the administration is recommending adding about seven or eight new positions and several reclassifications instead of approving all requests.

Several council members pressed staff for detail on reclassifications. Sutton and Human Resources staff said the reclassifications reflect employees already performing higher-level duties and are intended to align pay with responsibility rather than add vacant headcount. Denae (HR representative) described reclassification as an upward move in pay grade to match the scope of work for occupied positions.

Compensation assumptions in the proposed budget differ from prior practice: the proposal includes a 1% cost-of-living adjustment (COLA) for civilian employees (staff noted the typical COLA has recently been larger) and does not include a planned step/merit increase this year for civilian employees; police and fire step/contractual increases remain intact. The city manager also proposed a one-time $500 net stipend for all employees in FY2026.

ARC operations, marketing and alternatives Council members asked detailed questions about ARC staffing, lifeguard sourcing and alternatives to in-house operations. Staff said the council will see cooperative agreement language for a turnkey operation and expected a proposal on a turnkey operator for the ARC on the August 19 agenda; a separate cooperative agreement item was expected earlier in the cycle.

Sutton and the city manager said the administration is pursuing a cooperative/turnkey model as an alternative to operating the ARC entirely with city staff; staff said if the city contracts operation, the $1.8 million personnel cost for ARC positions would be replaced by the contractor cost in the operating budget.

Council members also pressed for an updated pro forma and marketing plan for the ARC. Staff said the RFP for branding and naming rights would close the following day and that marketing funding in the pro forma was about $51,000; the city manager and staff said marketing and sponsorships are part of efforts to reduce net operating impact.

Police overtime, staffing and public-safety costs Council and the police chief discussed overtime and staffing. The proposed budget shows an increase in police overtime (the chief reported sworn overtime budget rising from about $500,000 to $750,000 for FY2026), and the chief said hiring additional officers helps but does not immediately eliminate overtime because of training and academy timelines. The chief confirmed he has requested five officer positions annually and said retention and regional pay competition are key drivers of vacancy and overtime pressure.

Other highlights and contingency items - The city manager and staff flagged recent acquisitions and liabilities that affect FY2026 planning, notably the Thorn Tree purchase and the new golf course accounting responsibilities tied to that acquisition. - Financial services noted an increase of $30,000 in professional services to address first-time accounting work connected to the Thorn Tree purchase and to ensure compliance with GASB reporting and lease accounting standards. - The proposed budget includes an updated IT and dispatch plan, with a move to enterprise-grade CAD/RMS and associated subscription/implementation costs; staff said the technology is intended to improve field response and dispatcher efficiency.

What the council asked to receive Council members asked staff to provide: detailed breakdowns for professional services by department; a personnel impact scenario that shows the budget with and without the proposed reclassifications; the ARC pro forma vs. actual tracking; a line-by-line explanation of the parks and recreation increase; a full list of professional-services changes for FY2026 and FY2027; and documentation about hotel-occupancy tax delinquencies and collection options.

Votes at a glance The workshop concluded with a procedural motion to adjourn, moved by Council member Leticia Hughes and seconded by Mayor Pro Tem Crystal Chisholm; the motion passed unanimously (7-0).

Taper: Staff said remaining budget slides and additional departmental detail will continue in the next meeting (the city secretary announced an executive session to begin the following morning).