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City staff explain FY26 transit spike: grant-funded buses, lagging reimbursements and transfers
Summary
Council pressed staff on why transit spending jumps to ~$9.9M in fiscal 2026; staff said the increase reflects grant-funded capital bus purchases whose federal/state reimbursements lag, requiring temporary general-fund transfers and explaining a projected additional transfer to transit for FY26 and the recurring FY27 transfer estimate of about $1.9M.
Council asked for clarity about a marked FY26 increase in transit expenditures and why the general fund was asked to transfer money to the transit fund. Staff explained the spike is driven by capital purchases — buses ordered under a matching grant — and by the timing of reimbursements from federal and state sources.
“As you're aware, buses usually take about 18 months to build. So whenever we place the order, that was in, I think, April '25 … we anticipated that this would impact in fiscal year 27. Regardless, we have the grant there; it's just waiting for the drawdown,” Demi Engman said. Finance and manager’s office staff emphasized that FTA and other grant dollars often arrive after expenditures are incurred, which can create uneven fund balances and require transfers to maintain operations. The city manager added that transit funding is a mix of fares, TxDOT dollars, FTA funds and other grants, so timing causes variability.
Council also reviewed the recurring transfer needed to sustain transit operations; staff said FY27 is projected to require a transfer of about $1.9 million to the transit fund under current assumptions, though projections for FY26 were revised downward after additional grants were accounted for. Staff committed to provide a longer-term, 10‑year fund-history breakdown to show trends and the precise composition of FY26 figures.
