Fayetteville council signals preference for no tax-rate increase, directs staff to rebalance budget and strips $450,000 from makerspace FY27 plan

FAYETTEVILLE — Fayetteville City Council continued its budget work session on May 29, focusing on how to balance the FY2027 operating and capital budgets without raising property taxes. Councilmembers directed staff to return with a budget plan that holds the tax rate steady while identifying operating cuts, reallocated capital funds and other options; staff was also asked to present what an additional 1¢ or 2¢ in tax revenue would buy.

The council’s informal consensus for a zero tax-rate increase emerged after members reviewed the “parking lot” of council-driven priorities and staff’s recommended one-cent and two-cent packages. A group of councilmembers expressed a desire to see staff produce a balanced, zero-increase scenario and, separately, a clear comparison showing the additional projects and services that would be funded at 1¢ and 2¢. “I made myself perfectly clear … I am with a zero tax increase,” a councilmember said during the session.

Why it matters: The decision frames funding for a long list of city needs — capital maintenance, sidewalks, transit subsidies and recurring public-safety costs — and forces staff to show what would be cut or deferred if revenue is not increased. Staff told the council they have identified roughly $4.3 million in prior-year CIP funding that can be reallocated and showed how certain penny-based investments can unlock outside funding: for example, a small city match was described as a way to leverage millions in state or federal grants for specific road projects.

What council directed: Staff will return with a detailed zero-tax plan that (a) identifies operating reductions large enough to offset recommended recurring items (the staff-recommended operating additions total about $2.4 million), (b) enumerates one-time capital reuses and project closures that can be reallocated toward council priorities, and (c) separately details the projects that would be funded by 1¢ and 2¢ tax-rate increases.

Makerspace funding trimmed: During the session council debated the makerspace project, a larger multi-year capital item. Council voted to remove the $450,000 FY2027 allocation for parking-lot and drainage work linked to the makerspace project while leaving the underlying project on the CIP for future consideration. The council indicated the removal is intended to preserve flexibility in the FY27 capital package; staff said the full project appropriation totals roughly $1.6 million and could be reprioritized in later years.

Developer loan and stadium-related request: Council members also asked for clarity about a proposed developer loan tied to a stadium/adjacent development. Staff said the developer (referred to in the meeting as Mr. Floats) indicated he likely would not need the full $5.7 million loan commitment in FY27 and that he had discussed a phased schedule (staff reported the developer suggested a 12–18 month timeline). Staff emphasized that a formal loan commitment letter and development agreement remain outstanding and that the council should not assume the full amount in the FY27 cash plan until contractual documents are finalized.

Public-safety and personnel tradeoffs: Department leaders warned that some of the operating reductions and pay-plan permutations would have a measurable impact on recruitment, retention and overtime. The police and fire chiefs told council that reduced recurring pay increases (for example, moving from the recommended 4% COLA to 2%) would risk losing staff and raise overtime costs; one chief said, “If we go back to 2%, I’m going to start losing people.” Council asked staff for reconciled figures showing the costs of alternatives (4% base COLA, one-time $1,500 bonus, a 1% 401(k) parity increase and combinations of those options).

Next steps: Staff will return at a reconvened work session with (1) a zero-tax balanced option showing explicit operating and capital tradeoffs, (2) side-by-side comparisons of 1¢ and 2¢ packages, and (3) clarifications on project-reallocation assumptions including any legally restricted or grant-tied balances. The council set follow-up meeting dates to complete the prioritization exercise ahead of formal budget adoption timelines.

— Reporting from the Fayetteville City Council budget work session; staff and council comments are taken from the session transcript.