Georgetown City Council members will decide on ways to generate revenue and reduce expenses as the budget season begins for fiscal year 2025-26. (Anna Maness/Community Impact)
In a three-year budget model, Georgetown officials are evaluating ways to increase revenue and lower expenses as forecasts show the city’s operating expenses are outpacing revenue sources.
At a May 13 City Council workshop, City Manger David Morgan said Georgetown could be facing an $80 million negative balance in the general fund by fiscal year 2027-28 if no action is taken.
“This is not what we will propose, this is not what will happen,” Morgan said during his presentation. “This is ... us making sure that we're doing our due diligence to manage our budget.”
What they’re saying
To address possible budget gaps, staff will explore short and long-term strategies including implementing new fees, calling an election for a higher tax rate, reducing city staff benefits and more.
“I think we need to look at some creative strategies in order to make sure that we're able to find the largest priorities and where the largest pressure points are,” Morgan said.
The budget model Morgan discussed at the workshop is not a proposal and has not gone through a full budget review process.
The big picture
In FY 2022-23, the city of Georgetown's general fund had $1.56 million more in expenses than revenue.
Heading into the FY 2025-26 budget season, Morgan said staff is facing slowing revenue growth and inflation. FY 2025-26 budget projections show expenses could be over $120 million, while revenue is just under $120 million.
A multiyear budget model for the city of Georgetown's anticipated revenues and expenses shows expenses outpacing revenue sources in the next three fiscal year cycles. (Courtesy city of Georgetown)
Morgan said the city currently has significant reserves in its general fund for emergencies and higher bond ratings. However, forecasts show the city “seriously” dipping into reserves in FY 2025-26, with reserves depleted by FY 2026-27, he said.
According to the fund balance forecast, the city is expected to reach nearly $20 million in net negative revenue to expenses in the FY 2025-26 general fund. Morgan said that number could grow over time, with a $40 million and $80 million negative general fund balance possible by FY 2026-27 and FY 2027-28, respectively.
In a fund balance forecast, Georgetown's budget model shows the city's general fund could reach an $80 million negative balance in the general fund by fiscal year 2027-28 if staff takes no action to reduce expenses and generate revenue. (Courtesy city of Georgetown)
The approach
Revenue generating ideas Morgan said staff are considering include:
Increasing nonresident fees or out-of-city rates
Evaluating the cost recovery of existing fees
Evaluating new fees, including library fees or credit card utility billing fees
“We obviously want to continue to be a very strong employer because we are a service organization,” Morgan said. “But it's how do we get as much value, and how are we looking at the return on investment for some of those expenses.”
How we got here
The three-year budget model helps city staff anticipate funding levels, plan for future needs and identify potential budget shortfalls, according to the presentation.
City staff has identified the largest expense drivers in the general fund over the next three years to go toward public safety, park improvements, and road and signal maintenance.
At a Jan. 23 Georgetown Chamber of Commerce event, Mayor Josh Schroeder said public safety is an "expensive luxury” the city is committed to funding, emphasizing how the city’s No. 1 budget item every year is either police or fire.
Keep in mind
Morgan said the finance department will submit a balanced budget later this year. A FY 2025-26 budget preview meeting is planned for July 8.
The city of Georgetown’s FY 2024-25 budget was $879.15 million, Community Impactpreviously reported.
Onion Creek bridge, downtown Liberty Hill, Sunbird Ranch: Check out trending Austin-area stories
