City of Austin Proposed Budget Highlights FY 2025/2026

Late Friday evening, the City of Austin posted the FY2025-26 Proposed Budget Document. City Manager T.C. Broadnax will present the proposed budget to the Mayor and City Council on July 15 at 9:00 am. Information about the city’s budget process, including budget documents is available at https://publicinput.com/b66067

Bingham Group will be following the budget process, including the City Manager and department presentations to City Council, through its approval in August.

The following is a high-level summary of the FY2025-26 Proposed Budget.

BUDGET HIGHLIGHTS

Fiscal Emergency

The budget document mentions that the city faces a “fiscal emergency” in FY 2026. In the city’s FY 2026 – FY 2030 Financial Forecast, which was presented to City Council back in April, budget analysts project a $33 million General Fund shortfall. Despite generating $20 million in ongoing annual savings across General Fund and Support Services departments, the General Fund faces a significant structural imbalance.

Since the implementation of the State-mandated cap on tax revenue growth, the Budget Office projected that the city would face a revenue shortfall, and that time is now. This shortfall is projected to grow to $77.9 million by FY 2030. In addition to this loss of revenue flexibility, the city is facing ongoing sales tax contraction, with a projected 1.0% decline over FY 2025 estimated collections. Hotel Occupancy Tax revenue is also forecasted to be 1.5% below the FY 2025 budgeted level.

The FY 2026 General Fund budget reflects significant adjustments (operational cost savings, Budget Stabilization Reserve Fund transfer) to cover rising base costs as well as funding $3.8 million in targeted investments.

By the Numbers

  • FY 2026 General Fund budget: $2,478.5 million, $52.1 million (3.7%) increase from FY 2025. The increase reflects:

    • $40.5M in additional ongoing operating expenses.

    • $14.1M in one-time expenditures funded from the Budget Stabilization Reserve Fund (with partial offset of $1.5 million).

  • All Budgeted Funds: $6.3 billion, $305.9 million (5.1%) increase from FY 2025. 70% of this increase falls within three departments: 

    • Austin Energy: Employee compensation adjustments, higher debt service, transmission, and operating costs.

    • Austin Water: Address growth in base cost drivers and fund expansion of its capital improvement program.

    • Aviation: Pursuit of major airport expansion efforts.

Organizational Changes

The FY 2026 Proposed Budget includes significant departmental reorganizations and consolidations involving the transfer of 268 positions, including:

  • Creation of a new Arts, Culture, Music, and Entertainment department.

  • Merging the Information Security Office with Austin Technology Services.

  • Reorganization of the City’s Project Connect Office from Management Services to Transportation and Public Works.

  • Creation of an office of Budget and Organizational Excellence.

  • Consolidation of code enforcement functions into Austin Development Services.

  • Relocation of Communications and Public Information Office and Capital Delivery Services communications unit under Management Services.

  • Reallocation of vacant positions to implement the Downtown Strategy Initiative, advance strategic partnerships, and provide executive support.

Budget Stabilization

To stabilize the budget, it includes the following one-time transfers from the Budget Stabilization Reserve Fund:

  • $14.1 million to provide transitional funding for social services contracts.

  • $875,000 to cover the remaining cost of a Fire cadet class scheduled to begin before the end of FY 2025.

  • Re-appropriation of unspent funds to support development of the City’s next bond program.

  • $550,000 for replacement self-contained breathing apparatuses for firefighters.

Capital Improvement Program

The Five-Year Capital Improvement Program (CIP) Plan outlines the various major City facilities and infrastructure improvement and expansion projects. For FY 2026, CIP appropriations total $4.4 billion while the total CIP spending plan for FY 2026 is $2.9 billion. These appropriations reflect major investments in airport terminal expansion, water and wastewater infrastructure, and grid reliability upgrades.

Upcoming City Budget Meetings & Key Dates

To follow along with the FY 2025-26 budget development, here are the budget meeting and key milestones to watch:

  • Tuesday, July 15th, 2025, 9:00am: The City. Manager will present the proposed FY 2025026 budget at the City Council Budget Meeting.

  • Tuesday, July 22nd, 2025, Audit & Finance Committee, 3:00pm: Discuss potential budget scenarios for a Tax Rate Election (TRE).

  • Wednesday, July 23rd, 2025, 9:00am: Council Work Session: Staff presentation and discussion of General Fund.

  • Tuesday, July 29th, 2025, 9:00am: Budget work session on Enterprise Funds and Capital Improvement Program (CIP).

  • Thursday, July 31st, 2025: Budget work session on the maximum tax rate.

  • Monday, August 4th, 2025: Proposed deadline for filing all proposed budget amendments and IFCs.

  • Thursday, August 7th, 2025, 9:00am: Budget work session on Council Member budget amendments and IFCs.

  • Wednesday, August 13th, 2025, to Friday, August 15th, 2025, 10:00am: Consider and adopt the budget.

For questions contact us at: infor@binghamgp.com

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City of Austin Public Meetings (Week of July 14, 2025)