Revised Budget Struggles in Fort Worth due to Reduced Income Sources
Fort Worth, Texas, is navigating the challenges of a projected $16.7 million deficit in its fiscal year 2026 budget, primarily due to lower property tax revenue projections. The city is employing a "priority-based" budgeting approach to manage its finances effectively.
This method directs city departments to focus financial resources on programs that support critical health and safety priorities, ensure compliance with legal mandates, maintain essential services, and protect city assets, while scaling back or cutting less essential services to manage reduced revenues.
In addition to this approach, Fort Worth may leverage economic development strategies evident in the broader Dallas-Fort Worth area. These strategies include encouraging tenant-focused industrial development and pursuing build-to-suit projects to stimulate economic growth and diversify the tax base. This approach helps stabilize revenues despite fluctuations in property tax income by fostering new commercial investments and industrial leasing, including large projects like Amazon’s 1.7 million SF facility in South Fort Worth.
The city manager is scheduled to present the proposed budget to the council on Aug. 12. In the adopted fiscal year 2025 budget, salary and benefits represented 35.6%. On June 2, departments were directed to limit discretionary spending, and a hiring pause was implemented, with exceptions for vital public safety positions, "hard-to-fill" positions, and urgent roles.
The deficit is due to a reappraisal plan that froze residential property values for 2025, approved by the Tarrant Appraisal District in 2024. Another potential revenue loss of $8 million is anticipated in fiscal year 2027 due to legislation that will significantly increase business personal property exemptions if approved by voters in November.
Community engagement events will take place in each council district during August and early September before a final council vote on Sept. 16. While direct strategies specific to Fort Worth’s budget balancing in light of property tax decreases are not extensively detailed, the adoption of priority-based budgeting combined with regional economic development efforts forms the core response to revenue challenges at this time.
It's worth noting that eliminating employees or reducing their raises and benefits can have long-term ramifications for employee retention and morale. Jiseul Kim, an assistant professor of public affairs and planning at the University of Texas at Arlington, stated that targeted cost-cutting is standard in city planning.
Another cost-cutting approach is to defer maintenance and capital spending, which can lead to long-term consequences such as the need to fund deferred projects through bond packages. This year, Fort Worth discussed creating a new street maintenance fee and changes to city compensation and benefits and utility fees.
In the past, Fort Worth has also offset expenses with new revenue streams, such as selling unused assets, creating new fees, or raising the property tax rate. However, no explicit mention of these tactics or detailed expenditure cuts was found in the current data.
- To manage the projected deficit in Fort Worth's fiscal year 2026 budget, the city is adopting a priority-based budgeting approach, focusing on essential health and safety services, while scaling back on less critical services.
- In addition to this, the city is considering economic development strategies like encouraging tenant-focused industrial development and pursuing build-to-suit projects, to stimulate economic growth and diversify the tax base, helping stabilize revenues.
- The university professor, Jiseul Kim, highlighted that targeted cost-cutting, such as deferring maintenance and capital spending or selling unused assets, are standard strategies in city planning, but specific details on their implementation in Fort Worth's current budget management are not extensively detailed.
