by Although Fort Worth municipal employees typically spend their summers analyzing the city’s budget, they anticipated considerable difficulties in balancing the budget for fiscal year 2026 this year.
Former and current Fort Worth officials described how the city balances its budget, which was projected to see $1.1 billion in expenses in May, by increasing revenues and reducing expenses.
According to forecasts submitted to City Council in May, a projected $16.7 million shortfall is being reduced by city staff, primarily due to lower property tax income expectations.
According to Fernando Costa, a former assistant city manager for Fort Worth who spent 26 years working for the city, it is not uncommon for local governments to discover that estimated expenses are higher than expected income.
Cities are required by the state to implement a balanced budget.
“It’s a difficult exercise, but it occurs frequently,” Costa remarked. Some years are more difficult than others, and this year’s budget is difficult for Fort Worth for a number of reasons.
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On August 12, the city manager will present the proposed budget to the council. Work sessions will then be held to answer any questions they may have. Before a final council vote on September 16, community engagement activities will be held in each council district in August and early September.
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Fort Worth faces increasing expenditures, decreasing revenue
The Tarrant Appraisal District’s 2024 acceptance of an appraisal plan that frozen residential property values for 2025 is the main cause of this year’s income reductions. The general fund, the city’s main operating budget, is mostly funded by property tax revenues.
According to early estimates in May, property values in Fort Worth increased by 8.6% in the previous year. Brady Kirk, associate director of the FWLab, stated in a presentation at a work session on May 13 that this gain is less than previous years, when property prices increased by almost 12%.
According to state legislation, the city can only keep 3.5% of the increase in current values. In May, Fort Worth projected that its property taxes will bring in $622 million in fiscal year 2026.
City Manager Jay Chapa stated during the meeting that although those percentages may appear to be very high, the real revenue received by the city isn’t. 3.5%, he pointed out, isn’t even keeping up with inflation.
According to municipal spokesman Preethi Thomas, Fort Worth received final property valuations on July 25 but is unable to make the information public until the meeting on August 12.
How Fort Worth navigates cutting costs
In an email, city spokesperson Valerie Colapret stated that budget preparation is a year-round endeavor. The city manager gives council members a budget briefing beginning in April and continuing through the summer so they are aware of the factors influencing the spending plan.
All departments were instructed to reduce their budgets by at least 1% by the budget planners. According to city estimates from April, savings of around $7.6 million would result from combined reductions across 22 departments.
The city manager assigned police and fire agencies lower goal reductions and invited most departments to make suggestions for an additional 3% in possible cuts.
According to Colapret, departments are advised under the city’s priority-based budgeting process to give financial priority to initiatives that promote health and safety, adhere to legal requirements, guarantee service continuity, and support the strategic priorities of the City Council.
Costa, the former city manager, advised against drastically reducing the budgets of all departments.
He listed public safety departments as priorities and stated that most people would agree that not all city functions are equally vital. Instead of making cuts arbitrarily, we should thoroughly consider our options.
According to Jiseul Kim, an assistant professor of public affairs and planning at the University of Texas in Arlington, targeted cost-cutting measures like Fort Worth’s are common in city planning.
According to Kim, firing workers or cutting their pay and benefits are simple targets. But those have long-term effects on morale and employee retention.
A total of 35.6% of the city’s adopted fiscal year 2025 budget was allocated to salaries and benefits. Chapa halted employment and instructed agencies to restrict discretionary spending on June 2. According to Thomas, critical public safety jobs, difficult-to-fill jobs, and tasks the city considers urgent are exempt.
According to Kim, postponing maintenance and capital expenditures is another way to save costs, which essentially pushes the issue of preventive infrastructure care down a path of constant decline.
Budgets are momentarily balanced, but there may be long-term repercussions, such as the requirement to use bond packages to finance postponed projects.
Costa agreed with Kim when she said that cutting maintenance would be unwise.
He claimed that soon after, (maintenance) becomes a major issue and that replacing or rebuilding the facilities would be far more costly than maintaining them.
City looks to create new revenue sources
According to Kim, cities will use new sources of income to offset costs. This can entail hiking the property tax rate, establishing additional levies, or selling assets that aren’t being used.
After then-City Manager David Cooke suggested hiking the tax rate for the first time since 1995, council members unanimously supported a flat tax rate in 2024. The city lowered financing for the well-liked Neighborhood Improvement Program, terminated a number of open staff positions, decreased funding for equipment and vehicle replacements, and boosted pay savings in order to maintain a balanced budget.
According to Colapret, Fort Worth talked this year about changing utility prices, city benefits, and remuneration in addition to establishing a new street maintenance fee.
City anticipates budget balancing to continue getting harder in future years
Recently passed legislation that, if supported by voters in November, would considerably boost company personal property exemptions has officials prepared for budget balancing to become more difficult in the years to come. Kirk projected at the May meeting that it would result in a fiscal year 2027 revenue loss of $8 million.
Together with recently enacted state restrictions on how towns can control the food service business, this results in a projected $36.4 million shortfall in the fiscal year 2027 budget.
According to Costa, budget balancing, although more difficult in some years than others, has the benefit of making city officials make difficult decisions between conflicting goals and push them to come up with innovative ideas for more effective service delivery.
Costa stated that it’s not always a cause for hopelessness. It’s a dilemma that frequently offers chances for creativity and advancement.
Drew Shaw works for the Fort Worth Report as a government accountability reporter. You may reach him at shawlings601 or [email protected].
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