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Plano officials present five-year forecast warning revenue gap unless tax policy changes
Summary
Plano budget staff and consultants told the City Council that, under current assumptions, expenditures growing about 3.2% annually outpace projected revenue growth of roughly 2.4%, creating pressure on reserves by 2031 unless the city adjusts policy, uses contingent sales tax, or voters approve higher rates.
Plano budget officials and outside consultants presented a five‑year financial forecast to the City Council that, under the city’s current assumptions, risks eroding working capital by the end of the decade.
Karen Rhodes Whitley, the city’s budget director, introduced the forecast kickoff and said the presentation marks the start of the FY26–27 budget process. Consultants from NewGen, including Matthew Garrett and Steve Du, walked the council through expenditure and revenue assumptions. "General fund expenditures ... will grow at approximately 3.2% per annum," Garrett said, noting the city’s total appropriations rise from roughly $430 million in 2026 toward just over $500 million by 2031.
Big drivers baked into the model include changes to fire shift staffing (about $21 million in additional expense by 2031) and operational costs for Fire Station 14 (about $4.6 million in 2031). Garrett said the forecast relies on a set of assumptions about inflation, health benefits and utility costs; the presentation used a professional forecasters survey and targeted a conservative inflation percentile rather than the simple municipal cost index.
On the revenue side, the consultants and staff emphasized that property and sales taxes together account for about three‑quarters of general‑fund revenue. "We project sales tax using a methodology of a 3‑year average plus 3% and project total market‑value growth at about 3.3% per year," Steve Du said, adding the model assumes approximately $650 million per year in new taxable market value coming online.
The presenters contrasted two tax‑rate scenarios. Under a no‑new‑revenue rate (holding property tax from existing properties flat), revenues would grow about 2.4% annually and the city could fall below target days of working capital by 2028 and reach a shortfall by 2031. Under a voter‑approval rate (modeled at up to 3.5% additional revenue from existing properties), the forecast comes closer to balance: Garrett said that rate would produce average revenue growth nearer 3.8%, enough to offset the 3.2% expenditure growth.
Council members pressed staff on what is and is not included in the model. Mayor Pro Tem asked whether anticipated transportation (DART) funds were included; Whitley said they were not and that those funds are managed in a separate transportation/CIP fund. Staff also warned the council that legislative changes (including changes to voter‑approval thresholds or exemptions such as the senior property tax freeze) could materially change the numbers and that the finance team will run additional models as legislative proposals firm up.
Whitley and the consultants stressed the forecast is an early snapshot and that staff will refine assumptions as appraisal districts and state actions are clarified. "This is the start of our budget process," the city manager said; staff said they will return periodically with updated numbers and scenario analyses ahead of the formal budget adoption timeline.
What happens next: staff will model alternate scenarios (including lower voter‑approval rates and carve‑outs for public safety), incorporate updated appraisal‑district rolls when received in April and May, and bring decision points back to council as the FY26–27 budget process continues.
