Durham manager proposes FY2027 budget that holds tax rate steady amid one-time revenue drop

City Manager Bo Ferguson presented the City of Durhams proposed fiscal year 2026-27 budget and a six-year capital improvement plan on May 18, 2026, telling the City Council the proposal protects core services while responding to an unusual, one-time revenue shortfall created by property tax-appeal refunds.

Ferguson said the citys total proposed budget is $766.1 million, while the general funds operating core would fall slightly to about $326 million. The administration attributed the decline primarily to successful property tax appeals after last years revaluation, which the manager said reduced the assessed base by roughly $2.6 billion and drove refunds that cut into both the current and next years revenue.

The proposal holds the property tax rate at 43.71 cents per $100 of assessed value, yielding an estimated tax bill of about $1,853 for a median-value Durham home under the proposal. To address operating and capital needs without a rate increase, the budget recommends targeted service reductions, a modest set of position eliminations, and repurposing or one-time uses of fund balance.

Key elements in the proposal include:

- Public safety: authorization of 16 firefighter positions to staff an additional ladder company; funding for cancer screenings, station security improvements and equipment; continued investments in evidence-based violence-reduction work with county partners.

- Homelessness: a reimagined homelessness response with a proposed $13 million community investment in year one, including $9 million in direct rental assistance. The city plans a $4.55 million one-time contribution (federal/ARPA interest funds) and is seeking county, university and philanthropic partners to fully fund year one.

- Transit: continued fair-free bus service for another year supported by an anticipated one-time $8.22 million contribution from Durham County Transit Plan partners; the city highlighted Go Durhams record 2025 ridership as evidence of transit growth.

- Utilities and fees: a proposed water and sewer rate increase of about 12% for the average customer; stormwater and parking rates unchanged; adjustments to select development, parks and recreation fees.

- Employees: a 2% across-the-board raise, full funding of the Durham minimum livable wage (a 14% increase to $15.92/hour in the proposed schedule), and a new classification and compensation study. The budget does not fund pay-for-performance or step increases this year due to the revenue loss.

Ferguson emphasized the proposals one-time constraints and the need for conservative stewardship, while noting that the citys fund balance remains healthy and that Durham retains AAA bond ratings from the major agencies.

What happens next: the proposed budget and CIP will be reviewed in detail at budget work sessions scheduled for May 27-28 and at the public hearing on June 1. Council members and the public will have additional opportunities for deliberation before a final adoption vote later in June.

Quote: "For the first time in many years, we project that we will have less property tax revenue next year than this year," Ferguson said, describing the combined effect of appeals, inflation and rising benefit costs.

The manager posted detailed materials at durhamnc.gov/budget for public review and solicited resident input at the upcoming hearings.