Fort Worth city staff are used to spending their summers crunching the city’s budget numbers, but this year, they braced for significant challenges to balancing the fiscal year 2026 budget.
Current and former Fort Worth officials detailed how the city goes about cutting costs and maximizing revenues to balance its budget, which was forecasted in May to see $1.1 billion in expenses.
City staff is working to shrink a projected $16.7 million deficit caused largely by lower property tax revenue projections, according to forecasts presented to City Council in May.
“It’s not unusual for city governments, at first blush, to find that projected expenditures exceed anticipated revenues,” said Fernando Costa, a former Fort Worth assistant city manager who worked for the city 26 years.
The state requires cities to adopt a balanced budget.
“It’s a challenging exercise, but it happens commonly,” Costa said. “Some years are harder than others and, for a variety of reasons, Fort Worth faces a challenging budget year this year.”
The city manager is slated to present the proposed budget to council Aug. 12, followed by work sessions to address their questions. Community engagement events will take place in each council district during August and early September before a final council vote Sept. 16.
Fort Worth faces increasing expenditures, decreasing revenue
This year’s revenue cuts primarily stem from the Tarrant Appraisal District’s 2024 approval of a reappraisal plan that froze residential property values for 2025. Property tax collections account for the majority of the general fund, the city’s primary operating budget.
In May, preliminary estimates projected that Fort Worth saw an 8.6% growth in property values over the last year. This growth is lower than in prior years, which saw property values grow by about 12%, said Brady Kirk, assistant director of the FWLab, in a May 13 work session presentation.
State law allows the city to capture only 3.5% of the growth in existing values. Fort Worth in May forecasted $622 million in property tax revenue over fiscal year 2026.
“Those percentages can look huge, but the actual income that actually comes to the city” isn’t, City Manager Jay Chapa said at the meeting. He noted 3.5% “doesn’t even keep up with inflation.”
Fort Worth received final property values July 25, but this information cannot be shared publicly until the Aug. 12 meeting, said city spokesperson Preethi Thomas.
How Fort Worth navigates cutting costs
Budget planning is a year-round effort, said city spokesperson Valerie Colapret in an email. Starting in April and through the summer, the city manager briefs council members about the budget so they know what’s shaping the spending plan.
Budget planners asked all departments to cut at least 1% from their respective budgets. Combined reductions across 22 departments would generate nearly $7.6 million in savings, according to city estimates from April.
The city manager asked most departments to submit proposals for another 3% in potential cuts, assigning police and fire departments smaller target reductions.
The city’s “priority-based” budgeting practice advises departments to financially prioritize programs that support health and safety, comply with legal mandates, ensure continuation of services and align with the City Council’s strategic priorities, Colapret said.
Costa, the former city manager, said it’s best to avoid blanket cutting every department’s budget.
“Most folks would agree that not every city function is equally important,” he said, listing public safety departments as priorities. “We should think carefully about how we make cuts, rather than doing so in an arbitrary manner.”
Targeted cost-cutting like Fort Worth’s is standard practice in city planning, said Jiseul Kim, an assistant professor of public affairs and planning at the University of Texas at Arlington.
Eliminating employees or reducing their raises and benefits suggest easy targets, Kim said. However, those have long-term ramifications for employee retention and morale.
Salary and benefits represented 35.6% of the city’s adopted fiscal year 2025 budget. On June 2, Chapa directed departments to limit discretionary spending and placed a hiring pause. Vital public safety positions are exempt, as are other “hard-to-fill” positions and roles the city deems as urgent, Thomas said.
Another cost-cutting approach is to defer maintenance and capital spending, Kim said, effectively kicking the can of preventive infrastructure care down an ever-deteriorating road.
While this temporarily balances budgets, it can have long-term consequences such as creating the need to fund deferred projects through bond packages.
Costa shared Kim’s sentiment, calling it “penny-wise and pound-foolish” to cut maintenance.
“Before long, (maintenance) becomes a big problem, and it becomes much more expensive to reconstruct or replace the facilities than it would have been to have maintained them,” he said.
City looks to create new revenue sources
Cities will offset expenses with new revenue streams, Kim said. This could include selling unused assets, creating new fees or raising the property tax rate.
In 2024, council members unanimously approved a flat tax rate after then-City Manager David Cooke proposed raising it for the first time since 1995. To keep a balanced budget, the city cut funding to the city’s popular Neighborhood Improvement Program, eliminated several vacant staff positions, reduced funding for vehicle and equipment replacements and increased salary savings.
This year, Fort Worth discussed creating a new street maintenance fee, as well as what changes to city compensation and benefits and utility fees, Colapret said.
City anticipates budget balancing to continue getting harder in future years
Officials are braced for budget balancing to become harder in future years due to recently passed legislation that will significantly increase business personal property exemptions if approved by voters in November. At the May meeting, Kirk estimated it would lead to an $8 million revenue loss in fiscal year 2027.
This creates a projected $36.4 million deficit in the fiscal year 2027 budget when combined with recently passed state restrictions on how cities can regulate the food service industry.
Costa said budget balancing, while more challenging in some years than others, has the positive effect of forcing city leaders to make hard choices among competing priorities and force leaders to think creatively about how to deliver services more efficiently.
“It’s not necessarily a reason to despair,” Costa said. “It’s a crisis that often presents opportunities for innovation and improvement.”
Drew Shaw is a government accountability reporter for the Fort Worth Report. Contact him at drew.shaw@fortworthreport.org or @shawlings601.
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