Arlington Council Reviews Proposed $750.7 Million Budget for FY 2026

The City is proposing $7.7 million in budget cuts, which includes eliminating 42 vacant positions. Arlington is no longer considering closing any public library locations or parks and recreation facilities, which were among previous cost-savings proposals discussed with the City Council.

The 42 vacant positions being considered range from deputy city manager to administrative aides and include roles in Parks & Recreation, the Arlington Public Library, Animal Services, Police, Planning and Development Services, Document Services, Real Estate, IT, Municipal Court and Finance. This proposal follows $5.8 million in spending cuts, which included eliminating 22 vacant positions, made to balance the FY25 budget.

Arlington is also considering other cost-saving measures, such as eliminating Saturday hours of operation for the City’s Action Center hotline, closing the animal shelter for an additional day of the week, eliminating the employee annual picnic, and reducing the City’s fleet by 84 vehicles. Arlington is also proposing to restructure some operations, which could mean the elimination of 22 additional employee positions in FY27.

The City has additionally identified $2.3 million in financial restructuring opportunities and $5.7 million in new fees and fee adjustments to help balance the FY26 budget.

The City has faced a variety of unique situational and economic factors that have impacted this year’s budget and are expected to continue through FY26. These factors include the growing impact of the City’s senior tax freeze on property tax revenue, the absorption of federal grants, slower property value growth overall, lower-than-expected sales tax receipts, and Tarrant County’s modified appraisal district processes.

Over the past 10 months, property tax revenue and sales tax collections have come in millions of dollars lower than budgeted for Fiscal Year 2025, which ends Sept. 30.  For example, the City’s property tax revenue is $11 million less from the $230.3 million that was projected for this fiscal year because of commercial property litigation losses. With a softening economy, sales tax collections are currently $4.2 million under the $97.2 million projected for the fiscal year and could be as much as $7 million lower by the time final sales tax data for the fiscal year is available to the City in November.

From FY09 to FY24, Arlington had seen an average annual 5.3% growth in sales tax collections. Other than the pandemic in FY20, the City has not experienced a year-over-year decline in sales taxes since FY09. Arlington is projecting that FY26 sales tax collections will be modestly higher than this year, in part because of tourism attracted by the new INDYCAR Grand Prix of Arlington and the nine FIFA World Cup games that will also be played here.

A three-cent property tax rate increase, if approved by Council, would return Arlington’s property tax rate to what it was in 2019. The increase would generate $11.1 million in revenue for the City’s General Fund, which pays for essential city services such as police and fire protection, public works, parks and recreation, and libraries.

• Two cents of the tax increase would help the City close a $7.4 million funding gap that would remain after the $7.7 million in proposed cost savings measures and the $8 million in financial restructuring, new fees and fee adjustments that are proposed.
• The third cent in the proposed property tax rate increase would help the City pay for $3.7 million in one-time investments in technology, facility maintenance and fleet needs. The increase would also help better position the City to manage property tax revenue losses expected in 2027 because of the new Business Personal Property Exemption and revenue loss associated with traveling Housing Finance Corporations, which can remove apartment complexes from the City’s tax roll.

Returning the rate to $0.6298 per $100 of assessed value, which was the rate in Fiscal Year 2022, would allow the City to fulfill commitments approved by voters and continue services that have strong resident demand, such as public safety and community cleanliness. State law would allow Arlington to increase its property tax rate up to $0.6603 per $100 of assessed value.

The City will fully fund all of its allowed property tax exemptions, such as the senior tax freeze, homestead exemption, as well as senior and disabled exemptions. 

Arlington strives to provide quality services and amenities to its residents, visitors and business community at the lowest possible cost. The City proposes fee increases for commercial and residential water and sanitary sewer fees to help pay for $13.9 million in additional costs to produce and deliver clean drinking water and to treat wastewater - largely pass-through costs from Tarrant Regional Water District and the Trinity River Authority. Even with these increases, Arlington’s water and sewer rates would remain among the lowest in the North Texas region. 

Water and Sanitary Sewer Fees:

For the minimum residential user: a 6.54% increase to their monthly bill, resulting in an increase from $33.34 to $35.52

For the average residential user: a 7.94% increase to their monthly bill, resulting in an increase from $74.21 to $80.10.

Garbage Collection Fee: The residential garbage collection rate would increase 4.55%, or 99 cents per month.

Stormwater Fee: The City will complete its final scheduled stormwater rate increase of 50 cents per month. The stormwater fee generates approximately $27 million a year to help Arlington reduce the existing potential for stormwater damage to public health, safety, life, property and the environment through mitigation projects as well as to preserve, protect and enhance the city’s waterways.