FY 26 Budget Process & Thoughts
Posted: Sat Jul 12, 2025 7:33 am
Colleagues—
Before I get into budget stuff, I want to recognize that the past week has been difficult for our community and the surrounding areas in the Hill Country. It’s impossible to express fully the grief and sadness we are all experiencing. The destruction and pain seen across our region last weekend is heartbreaking. The loss of life, including children’s lives, is awful. I know you join me in thanking all of those who have helped with rescue and recovery, and you stand with all Austinites in praying for the families and friends who are mourning the losses.
Late last night, the City Manager has shared his proposed budget for fiscal year 2026 (FY26). This kicks off the process for how the city will go about funding our essential city services. http://assets.austintexas.gov/austincou ... 073215.pdf
I wanted to share a budget timeline for FY 26. You’ll recall that I set this out initially in a Message Board post back on May 7th.
Tuesday, July 15th, 2025, 9:00am:
While the City Manager has released the proposed budget yesterday, next Tuesday we will meet as a full Council. The Manager and his staff will present the proposed FY26 budget. The meeting will start with a staff presentation followed by a Council discussion. Please note that the meeting next Tuesday starts at 9:00am.
Tuesday, July 22nd, 2025, Audit & Finance Committee, 3:00pm:
As we all know, there has been discussion by the Council and the Austin community generally about whether a base budget proposal, even one that uses the full 3.5% tax rate increase is sufficient to meet our growing city’s needs and help us maintain our success, especially considering things like the end of ARPA money, increased cost of living, loss of federal grants, and other factors.
We all know that the state has placed limits on how much property tax revenue a city can collect without asking the voters to speak on the matter through a Tax Rate Election (TRE) This Council has been very thoughtful about this, even going so far as to adopt a new policy and approach for considering a TRE. It’s the first policy the city has had regarding TREs. This policy was adopted by the full Council based on a recommendation from the Audit & Finance Committee.
As part of the ongoing discussions of meeting the city’s needs, and in compliance with the new TRE policy, there will be a special called Audit & Finance Committee meeting to discuss potential budget scenarios for a TRE. I will discuss this further down below.
Please note that there will be a regular Council work session on this date also since we have a regular Council Meeting on Thursday, July 24th. The work session will relate to the regular meeting. The Council work session, as it typically does, will begin at 9:00am. The Audit & Finance Committee special meeting begins at 3:00pm.
Wednesday, July 23rd, 2025, 9:00am:
We will hold a Council budget work session focused on the City’s General Fund. The meeting will begin with public comment at 9:00 am. Public comment is not limited to the General Fund; it can be about any aspect of the budget
Following the public comment, we will have a staff presentation and Council discussion of the General Fund. Again, this is meant to be a session to allow staff briefings (and Council questions) on topics of specific interest to members to get complete discussion and understanding.
Thursday, July 24th, 2025, 10:00am:
This will be our regularly scheduled Council meeting.
Tuesday, July 29th, 2025, 9:00am:
We will hold a budget work session focused on Enterprise Funds and CIP. Again, we will have a staff presentation followed by Council discussion, including any briefings and Council questions that are desired. There will also be public comment at the beginning of the work session.
Thursday, July 31st, 2025:
We will conduct a work session beginning at 9:00am and then hold a public hearing on the budget to hear public comment on the maximum tax rate starting at 3:00pm.
Please note: Setting the maximum tax rate is a requirement of the state’s Truth in Taxation process, in which the city’s governing body publicly declares what maximum property tax rate it will consider for the upcoming budget process. The state law requires this potential tax rate be declared by a vote of the governing body. Historically, the city has set this maximum tax rate at the voter-approval rate—the highest property tax rate the city may adopt without triggering an election.
Importantly, the declaration of a maximum property tax rate is not necessarily the tax rate we will ultimately adopt. As noted, this will be a declaration of the maximum rate that can be considered. The Council may actually set the rate lower.
Because our community has raised important issues and questions about Austin’s needs--and the potential need for a tax rate election to meet those needs--it is likely that the maximum tax rate we declare on July 31st, will be a tax rate that, if ultimately adopted, would trigger an election. This is because, if we don’t declare the possibility of such a rate, then we preclude a TRE. I believe we will want to keep our options open as we go through the budget process. It is possible (more likely, probable) that the maximum rate we declare on July 31st is higher than what we will finally adopt when we pass a budget.
Monday, August 4th, 2025:
I’m requesting that we set a goal of filing all proposed Budget Amendments and Budget IFCs by Monday, August 4th, at 6:00 pm.
The goal is to allow for us to all have a feel for potential amendments and IFCs so that there’s more transparency for us and the public and sufficient time to allow staff to prepare fiscal notes for our proposals so that we will be able to determine budget impacts and increase efficiency. Please see the post about August 7th below. I’m suggesting the filing of proposed amendments and IFCs on the 4th so that we can walk through them on the 7th.
Proposed budget amendments can be filed with Katie Stewart in the Office of Budget and Organizational Excellence at katie.stewart@austintexas.gov
Proposed budget IFCs can be filed with Catie Powers in the Agenda Office at catie.powers@austintexas.gov.
“Budget Amendments” are items where a Council Member seeks to amend an appropriation in the budget. This could be by increasing it, reducing it, or eliminating it. The amendment will need to be drafted like we do amendments in the ordinary course so that it will flow into the body of the main motion (the Budget Ordinance).
“Budget IFCs” are items from a Council Member that address policy that a member wishes to be made as part of the budget process. That includes direction to the City Manager and our professional staff. The procedures we use for IFCs generally will apply. For example, an IFC will need four sponsors.
To assure transparency and openness, Budget Amendments and Budget IFCs need to be in writing. This process will allow each of us to have a good idea of what to expect and not be surprised. It will also be good for the public and staff to know what is being contemplated.
The FY26 Budget Amendment form will be sent to Mayor and Council by the Office of Budget and Organization Excellence with instructions in the coming weeks.
Tuesday, August 5th, 2025, 9:00am:
We may not need this date. But we’ll leave it for now. It might allow Council Members and staff to review proposed Budget Amendments and IFCs in anticipation of the August 7th Work Session. However, canceling it will allow staff time to prepare fiscal analysis of the proposals.
Thursday, August 7th, 2025, 9:00am:
We will have a work session. The purpose is to have each Council Member publicly lay out any proposed Budget Amendments and/or Budget IFCs. This will allow members to ask questions, provide comments and, in some cases, determine if we have redundant proposals or proposals that could be consolidated. The plan is to also have as many fiscal notes as possible from staff to assist in our analysis and discussion.
Wednesday, August 13th, 2025, to Friday, August 15th, 2025, 10:00am:
We consider and adopt the budget for FY26.
I thank City Manager Broadnax, the Director of Budget & Organizational Excellence Kerri Lang, and their staff for all the hard work so far in presenting the Council with a proposed budget. I anticipate the headlines will be that this budget is over $6 billion.
That, of course, is true. For clarity, however, it should be noted that the General Fund budget that is paid primarily out of property and sales taxes and pays for public safety, public health, parks, libraries and more is $1.5 billion. The larger number includes the Enterprise Funds such as Austin Aviation (the airport), Austin Energy (our electric utility), Austin Water (our water utility), Austin Resource Recovery (our solid waste services), Transportation & Public Works and our Watershed Department.
I specifically want to highlight the following line items that I believe will help our city move forward:
- 4% cost-of-living adjustment for our city employees, with a living wage for hourly employees at $22.01; no increase in employee health premiums
- $1million for Street Outreach Coordinators within the Homeless Strategy Office and $11.5 million in funding for the 8th Street Shelter and the Marshalling Yard shelter
- $375 thousand for improved maintenance of the Parks & Recreation Department athletic fields at recreation centers
- $4.0 million for the emergency rental assistance program
- $2.5 million for the Austin Infrastructure Academy
- Funding to meet contractual requirements for public safety and cover pension needs, including the new legislatively created pension needs of our retired firefighters
As noted, the Manager’s proposed budget utilizes the maximum tax rate of 3.5%. By “maximum”, I mean that any increase to the tax rate for the proposed budget would require a TRE.
Over the next couple of weeks, we will have conversations about how to navigate best the current financial situation the city is facing. I believe we must consider going to the voters with a TRE.
But I know you all join me in thinking we can’t take this decision lightly. I appreciate the thoughtful and methodical work done by the Audit & Finance Committee, as well as the whole Council, to create a process for approving a potential TRE.
Unless there is an objection, it is my intent during the July 15th presentation to request that the City Manager provide alternative budgets for our consideration. Our request would be that he provide alternative budget proposals that increase the budget in $0.01 increments above the base budget (up to $0.08).
There will then be a presentation during the special-called Audit & Finance Committee on Tuesday, July 22nd. In other words, we can use (and refer to) today’s proposed budget as “The Manager’s Proposed Base Budget” and he will provide multiple alternatives: “Manager’s Alternative 1” will have a 1-cent increase, “Manager’s Alternative 2” will have a 2-cent increase, “Manager’s Alternative 3” will have a 3-cent increase, and so on.
This is only the beginning of the conversation, and I will likely post updates regarding the amendment process, Q&A link, and any additional information that will be helpful for the council and the community.
I look forward to a productive dialogue and to engaging in quality conversations on the dais.
Thanks to all of you.
Kirk
On Behalf of Mayor Watson
Before I get into budget stuff, I want to recognize that the past week has been difficult for our community and the surrounding areas in the Hill Country. It’s impossible to express fully the grief and sadness we are all experiencing. The destruction and pain seen across our region last weekend is heartbreaking. The loss of life, including children’s lives, is awful. I know you join me in thanking all of those who have helped with rescue and recovery, and you stand with all Austinites in praying for the families and friends who are mourning the losses.
Late last night, the City Manager has shared his proposed budget for fiscal year 2026 (FY26). This kicks off the process for how the city will go about funding our essential city services. http://assets.austintexas.gov/austincou ... 073215.pdf
I wanted to share a budget timeline for FY 26. You’ll recall that I set this out initially in a Message Board post back on May 7th.
Tuesday, July 15th, 2025, 9:00am:
While the City Manager has released the proposed budget yesterday, next Tuesday we will meet as a full Council. The Manager and his staff will present the proposed FY26 budget. The meeting will start with a staff presentation followed by a Council discussion. Please note that the meeting next Tuesday starts at 9:00am.
Tuesday, July 22nd, 2025, Audit & Finance Committee, 3:00pm:
As we all know, there has been discussion by the Council and the Austin community generally about whether a base budget proposal, even one that uses the full 3.5% tax rate increase is sufficient to meet our growing city’s needs and help us maintain our success, especially considering things like the end of ARPA money, increased cost of living, loss of federal grants, and other factors.
We all know that the state has placed limits on how much property tax revenue a city can collect without asking the voters to speak on the matter through a Tax Rate Election (TRE) This Council has been very thoughtful about this, even going so far as to adopt a new policy and approach for considering a TRE. It’s the first policy the city has had regarding TREs. This policy was adopted by the full Council based on a recommendation from the Audit & Finance Committee.
As part of the ongoing discussions of meeting the city’s needs, and in compliance with the new TRE policy, there will be a special called Audit & Finance Committee meeting to discuss potential budget scenarios for a TRE. I will discuss this further down below.
Please note that there will be a regular Council work session on this date also since we have a regular Council Meeting on Thursday, July 24th. The work session will relate to the regular meeting. The Council work session, as it typically does, will begin at 9:00am. The Audit & Finance Committee special meeting begins at 3:00pm.
Wednesday, July 23rd, 2025, 9:00am:
We will hold a Council budget work session focused on the City’s General Fund. The meeting will begin with public comment at 9:00 am. Public comment is not limited to the General Fund; it can be about any aspect of the budget
Following the public comment, we will have a staff presentation and Council discussion of the General Fund. Again, this is meant to be a session to allow staff briefings (and Council questions) on topics of specific interest to members to get complete discussion and understanding.
Thursday, July 24th, 2025, 10:00am:
This will be our regularly scheduled Council meeting.
Tuesday, July 29th, 2025, 9:00am:
We will hold a budget work session focused on Enterprise Funds and CIP. Again, we will have a staff presentation followed by Council discussion, including any briefings and Council questions that are desired. There will also be public comment at the beginning of the work session.
Thursday, July 31st, 2025:
We will conduct a work session beginning at 9:00am and then hold a public hearing on the budget to hear public comment on the maximum tax rate starting at 3:00pm.
Please note: Setting the maximum tax rate is a requirement of the state’s Truth in Taxation process, in which the city’s governing body publicly declares what maximum property tax rate it will consider for the upcoming budget process. The state law requires this potential tax rate be declared by a vote of the governing body. Historically, the city has set this maximum tax rate at the voter-approval rate—the highest property tax rate the city may adopt without triggering an election.
Importantly, the declaration of a maximum property tax rate is not necessarily the tax rate we will ultimately adopt. As noted, this will be a declaration of the maximum rate that can be considered. The Council may actually set the rate lower.
Because our community has raised important issues and questions about Austin’s needs--and the potential need for a tax rate election to meet those needs--it is likely that the maximum tax rate we declare on July 31st, will be a tax rate that, if ultimately adopted, would trigger an election. This is because, if we don’t declare the possibility of such a rate, then we preclude a TRE. I believe we will want to keep our options open as we go through the budget process. It is possible (more likely, probable) that the maximum rate we declare on July 31st is higher than what we will finally adopt when we pass a budget.
Monday, August 4th, 2025:
I’m requesting that we set a goal of filing all proposed Budget Amendments and Budget IFCs by Monday, August 4th, at 6:00 pm.
The goal is to allow for us to all have a feel for potential amendments and IFCs so that there’s more transparency for us and the public and sufficient time to allow staff to prepare fiscal notes for our proposals so that we will be able to determine budget impacts and increase efficiency. Please see the post about August 7th below. I’m suggesting the filing of proposed amendments and IFCs on the 4th so that we can walk through them on the 7th.
Proposed budget amendments can be filed with Katie Stewart in the Office of Budget and Organizational Excellence at katie.stewart@austintexas.gov
Proposed budget IFCs can be filed with Catie Powers in the Agenda Office at catie.powers@austintexas.gov.
“Budget Amendments” are items where a Council Member seeks to amend an appropriation in the budget. This could be by increasing it, reducing it, or eliminating it. The amendment will need to be drafted like we do amendments in the ordinary course so that it will flow into the body of the main motion (the Budget Ordinance).
“Budget IFCs” are items from a Council Member that address policy that a member wishes to be made as part of the budget process. That includes direction to the City Manager and our professional staff. The procedures we use for IFCs generally will apply. For example, an IFC will need four sponsors.
To assure transparency and openness, Budget Amendments and Budget IFCs need to be in writing. This process will allow each of us to have a good idea of what to expect and not be surprised. It will also be good for the public and staff to know what is being contemplated.
The FY26 Budget Amendment form will be sent to Mayor and Council by the Office of Budget and Organization Excellence with instructions in the coming weeks.
Tuesday, August 5th, 2025, 9:00am:
We may not need this date. But we’ll leave it for now. It might allow Council Members and staff to review proposed Budget Amendments and IFCs in anticipation of the August 7th Work Session. However, canceling it will allow staff time to prepare fiscal analysis of the proposals.
Thursday, August 7th, 2025, 9:00am:
We will have a work session. The purpose is to have each Council Member publicly lay out any proposed Budget Amendments and/or Budget IFCs. This will allow members to ask questions, provide comments and, in some cases, determine if we have redundant proposals or proposals that could be consolidated. The plan is to also have as many fiscal notes as possible from staff to assist in our analysis and discussion.
Wednesday, August 13th, 2025, to Friday, August 15th, 2025, 10:00am:
We consider and adopt the budget for FY26.
I thank City Manager Broadnax, the Director of Budget & Organizational Excellence Kerri Lang, and their staff for all the hard work so far in presenting the Council with a proposed budget. I anticipate the headlines will be that this budget is over $6 billion.
That, of course, is true. For clarity, however, it should be noted that the General Fund budget that is paid primarily out of property and sales taxes and pays for public safety, public health, parks, libraries and more is $1.5 billion. The larger number includes the Enterprise Funds such as Austin Aviation (the airport), Austin Energy (our electric utility), Austin Water (our water utility), Austin Resource Recovery (our solid waste services), Transportation & Public Works and our Watershed Department.
I specifically want to highlight the following line items that I believe will help our city move forward:
- 4% cost-of-living adjustment for our city employees, with a living wage for hourly employees at $22.01; no increase in employee health premiums
- $1million for Street Outreach Coordinators within the Homeless Strategy Office and $11.5 million in funding for the 8th Street Shelter and the Marshalling Yard shelter
- $375 thousand for improved maintenance of the Parks & Recreation Department athletic fields at recreation centers
- $4.0 million for the emergency rental assistance program
- $2.5 million for the Austin Infrastructure Academy
- Funding to meet contractual requirements for public safety and cover pension needs, including the new legislatively created pension needs of our retired firefighters
As noted, the Manager’s proposed budget utilizes the maximum tax rate of 3.5%. By “maximum”, I mean that any increase to the tax rate for the proposed budget would require a TRE.
Over the next couple of weeks, we will have conversations about how to navigate best the current financial situation the city is facing. I believe we must consider going to the voters with a TRE.
But I know you all join me in thinking we can’t take this decision lightly. I appreciate the thoughtful and methodical work done by the Audit & Finance Committee, as well as the whole Council, to create a process for approving a potential TRE.
Unless there is an objection, it is my intent during the July 15th presentation to request that the City Manager provide alternative budgets for our consideration. Our request would be that he provide alternative budget proposals that increase the budget in $0.01 increments above the base budget (up to $0.08).
There will then be a presentation during the special-called Audit & Finance Committee on Tuesday, July 22nd. In other words, we can use (and refer to) today’s proposed budget as “The Manager’s Proposed Base Budget” and he will provide multiple alternatives: “Manager’s Alternative 1” will have a 1-cent increase, “Manager’s Alternative 2” will have a 2-cent increase, “Manager’s Alternative 3” will have a 3-cent increase, and so on.
This is only the beginning of the conversation, and I will likely post updates regarding the amendment process, Q&A link, and any additional information that will be helpful for the council and the community.
I look forward to a productive dialogue and to engaging in quality conversations on the dais.
Thanks to all of you.
Kirk
On Behalf of Mayor Watson