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City manager outlines tight budget, possible TOT ballot measure and steps to limit reserve draw
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Summary
City staff previewed the FY 2026‑27 budget: they aim to avoid drawing reserves, may pause hiring, and noted a council‑directed potential ballot measure to increase transient occupancy tax by up to 2% (estimated near $8 million in peak years but roughly $8M forecast for next year); commissioners probed sales‑tax weakness tied to the Galleria and constraints on incentivizing businesses to relocate.
A city official presenting the budget preview told the commission staff will deliver the fiscal‑year budget to the council in the coming weeks and that the administration is aiming to avoid drawing from reserves by pausing hiring and refining revenue and expenditure estimates.
The presenter said the council directed staff to place a transient occupancy tax (TOT) initiative on the ballot that could increase the local rate by up to 2% in next March's general election; staff estimated the impact at roughly $8 million for the coming year (presented as a rough order‑of‑magnitude estimate). Commissioners and other participants asked about factors behind weaker sales‑tax revenue (staff pointed to the underperforming Galleria site and the county sales‑tax allocation formula) and whether short‑term rentals remain prohibited. Staff confirmed short‑term rentals under 30 days remain prohibited in city code and that the city cannot use tax incentives to “poach” businesses from neighboring jurisdictions, limiting certain economic‑development levers.
Commissioners pressed on spending pressures: inflation and contract cost increases (tree trimming and maintenance) may require scope reductions in some contracted services if one‑time funds are not available. The city manager‑level presenter emphasized a cautious approach to hiring and one‑time expenditures while continuing to pursue strategic economic development and permitting improvements aimed at easing business attraction.
The commission did not take action on the budget preview; staff invited commissioners to provide input as the budget is refined and noted the budget release to the public is scheduled for May 15.
