Richardson city staff are proposing a $406 million budget with no tax rate increase for fiscal year 2026-27.
City Manager Don Magner presented the proposed budget to City Council over an Aug. 3-4 budget workshop and recommended that the city maintain the current property tax rate. The proposal includes compensation increases for city employees, a new water and wastewater rate plan, and added investments in public safety, infrastructure and economic development.
Magner is set to file the final budget Aug. 14, and after public hearings, council is expected to vote on adopting the budget Sept. 21.
The big picture
The proposed budget includes the general fund, which covers the city’s operating expenses and most city services, as well as budgets for water and sewer, solid waste services, golf, hotel/motel tax, and capital and debt planning.
Over two-thirds of the city’s proposed $190 million general fund budget will go to personnel expenses, which Magner said has been a priority for every budget he has developed in Richardson.
What you need to know
Magner recommended that the city maintain the current tax rate of $0.54218 per $100 of assessed valuation. This tax rate has been in place since fiscal year 2024-25.
The average homestead taxable value increased by 3.16%, so even though the tax rate is remaining the same, residents will see an average increase of $70 on their property tax bill.
The budget also includes a new rate plan for water and wastewater charges, which will increase customers’ monthly volume rate and base charge. In FY 2026-27, residents will see a 4% water rate increase and a 12% sewer rate increase.
The city will also implement a meter equivalency plan to adjust the monthly base charge, which has been set at $8 since 2012. Instead of one base charge across the board, base charges will be determined by each customer’s meter size, with larger, nonresidential meters having higher base charges than smaller residential meters.
Base charges for residents with a typical three-quarter-inch meter would increase from $8 to $9.60 in the first year and gradually increase to $20 by 2030.
Magner said the need for the increases is driven by critical water and wastewater infrastructure needs in the city as well as the rising cost of wholesale water from the North Texas Municipal Water District, which the city buys its water from.
“Our main goal here is maintaining our reliable system, and we need to do that through investing in the infrastructure to meet not only our current needs, but our future needs,” Magner said.
Residents can also expect to see a $1 increase in their monthly drainage fee due to increased expenses for drainage and erosion control projects, as well as an increase of $1 plus tax to the monthly solid waste rate. This increase is driven by compensation increases and rising disposal costs for the city, Magner said.
By the numbers
About 40% of the general fund budget supports public safety. For FY 2026-27, Magner proposed $79.7 million in public safety funding, an increase of $5.7 million compared to this fiscal year. This is part of a 40.3% increase in public safety funding since fiscal year 2021-22, Magner said.
The budget includes $19.9 million in proposed infrastructure and mobility funding, a $1.8 million deduction from this year. The deduction comes from a $2 million cut to the street and alley rehabilitation fund, which Magner said will be replaced with about $2.2 million that Richardson is set to receive from Dallas Area Rapid Transit under the agency’s new funding plan.
Along with bond funds for concrete replacement, Richardson’s street investment will total $12.5 million in FY 2026-27, an increase of $5 million from this year.
Most city program budgets will see 3%-7% increases, with some increases due to the move to the new City Hall and library campuses. Richardson’s recreation and leisure budget will see a 2% decrease due to reductions to the Wildflower! Arts and Music Festival.
The city’s information technology fund will see an increase of over $1 million due to rising costs of software and services.
The city will also see several larger expenses next year from the new library and City Hall, Magner said, including costs for the buildings’ reopenings and for returning Santa’s Village, the Public Safety Expo, and Dallas and Collin County voting locations to the library and City Hall campus.
The general fund will see $8.7 million in new revenues and $12.63 million in new expenses. The largest new expenses include compensation adjustments for city employees, support for city insurance, public safety overtime due to staffing shortages, and IT software and equipment costs.
Magner said reducing street rehabilitation in the general fund, cutting Wildflower! Festival costs and eliminating vacant city positions will balance the difference between the new revenues and expenses.
A closer look
The proposed budget includes $5.7 million in pay plan adjustments for all city employees.
Richardson currently has a 9.6% vacancy rate citywide, a rate that, apart from a dip in 2024, has remained relatively level for the last five years. On average, the city is short of 95 full-time employees, Magner said, due to retention challenges, unexpected retirements and competition for hiring.
“We’re running our operations and we’re doing everything that our community expects, but we’re doing it with about 100 less employees,” Magner said.
Staffing shortages are particularly impactful in public safety positions, Magner said, as the city has a 20% vacancy rate for police dispatchers and a 7.3% vacancy rate for police officers.
“This isn’t sustainable,” Magner said. “We have to make aggressive moves to fundamentally change how we’re viewed in North Texas so that we can get this number down.”
Magner credits compensation as one of the primary reasons that Richardson is not able to be as competitive in the North Texas market for public safety hiring. Despite public safety compensation increases over the last several years, Richardson currently ranks 10th in police officer pay and ninth in firefighter pay out of 13 North Texas cities.
In order to “fundamentally and permanently” shift Richardson’s place in the rankings, and the city’s ability to recruit employees, Magner recommended 5.5% merit-based pay increases for all sworn police and fire positions. The remaining civilian positions would be eligible for a 3.5% raise.
Magner recommended a 3.5% merit-based pay adjustment for all general city employees and permanent part-time employees, as well as a living wage adjustment for hourly employees from $21 an hour to $22.31.
Also of note
The city has also lost close to $8 million in its insurance plan for city employees, which Magner credited to medical inflation and an increase in large claims. He proposed increasing the city’s monthly insurance contributions while also increasing employee premiums by 7.5%.
As a cost-cutting measure, Magner recommended permanently eliminating 19 full-time positions from the city. These positions, which include a deputy court clerk, fire management technician, building inspection manager and custodial supervisor, are all positions that have been frozen for several years.
The city also plans to add five new positions under the general fund, including a custodial position at the new library and four fire positions as part of the department’s plan to expand services.
The approach
Magner said he approached the budget with a multiyear view, aiming for “long-term fiscal sustainability” for the city.
“Many of the factors that drive our revenues and our expenditures are very uncertain at this time, and yet many of the commitments that we have to make to the community, and that we make via these budgets, extend well beyond a single fiscal year," Magner said.
Inflation is increasing costs of fuel, contracts, utilities, equipment and compensation, Magner said, and construction cost increases are straining project budgets. Therefore, Magner said he planned for more conservative revenue forecasts than in past years.
The general fund budget also includes over half a million dollars in contingency funding for potential fuel and utilities cost volatility. Magner said city departments have been working to identify operational efficiencies, including staffing changes and different ways to deliver services while maintaining a “high level of service.”
Current situation
As fiscal year 2025-26 comes to a close, Magner said most revenue categories are meeting or exceeding projections.
Because of an overperformance in sales tax revenue and expenditures, Magner said the city could end the fiscal year with about $12 million available in the general fund for one-time projects or initiatives. Magner laid out a plan for this extra fund, which includes transfers to the economic development fund, emergency response reserve, general debt service, and facility and parks maintenance funds, as well as funding for the city’s unified development code project, capital projects and insurance for city employees.
Magner said council will consider and approve final recommendations for these additional projects in November.
A decline in water sales has led to a roughly $4.1 million shortfall in revenue in Richardson’s water and sewer fund.
“We all know it’s rained more and it’s been a little cooler than in past years, and so I think that has impacted the use of water for irrigation,” Magner said. “In addition, I think probably some people are recalibrating the way that they water because of the cost of water nowadays.”
Keep in mind
Potential legislative action during the 2027 Texas Legislative session could also change how municipal financing works, Magner said. State officials have proposed reducing the annual homestead appraisal cap, requiring voter approval for all local property tax increases, limiting local government spending growth and moving from annual to five-year property appraisals.
If any of these changes were to be approved by the Legislature, Magner said they would have a significant impact on city finances.
Magner noted that Richardson is not alone in facing budget challenges, as cities across the state are entering the seventh year of a statewide cap on property tax growth.
“It’s the compounding effect that the cap has had year after year,” Magner said. “It’s not going to change without substantial movement at the state level.”
What’s next
Despite concerns about budget constraints, Mayor Amir Omar said he was happy with this budget year.
“We’ve got [a budget that] is allowing us to be able to be near the top in compensation in a lot of different categories, and I think it’s a lot that we can be proud of,” Omar said. “We’ve got more revenue that we can work with this year, not as much as we’d like, but hopefully we’ll do an even better job next year based on all the great economic development work.”
Magner will file the final budget Aug. 14. Council called public hearings on the tax rate and budget for Sept. 14 and Sept. 21. Council will vote on adopting the budget and tax rate on Sept. 21.
