Fort Worth is currently navigating a significant financial challenge as city staff confront a projected budget deficit for fiscal year 2026, marking a particularly arduous period for local government. Typically, summers involve rigorous budget crunching, but this year’s economic climate presents unprecedented hurdles in balancing the city’s financial books, with initial forecasts anticipating expenses reaching $1.1 billion.
At the heart of this fiscal strain is a projected $16.7 million revenue deficit, primarily stemming from lower-than-anticipated property tax revenue. This shortfall necessitates diligent and strategic decision-making to maintain essential city services while adhering to the state-mandated balanced budget requirement, a complex exercise even in less challenging economic times.
A major contributing factor to the reduced revenue projections is the Tarrant Appraisal District’s 2024 approval of a reappraisal plan that froze residential property values for 2025. While Fort Worth experienced an 8.6% growth in property values over the last year, this figure falls short of prior years’ growth of approximately 12%, significantly impacting property tax collections which form the majority of the city’s general operating fund.
To mitigate the burgeoning deficit, budget planners have initiated comprehensive cost-cutting measures across various departments. All 22 city departments were initially asked to trim at least 1% from their respective budgets, which collectively would generate nearly $7.6 million in savings. The city manager has further requested proposals for an additional 3% in potential cuts from most departments, though police and fire departments face smaller target reductions.
The city employs a “priority-based” budgeting practice to guide these reductions, advising departments to prioritize programs that support health and safety, comply with legal mandates, ensure service continuity, and align with City Council’s strategic objectives. This approach aims to prevent arbitrary cuts, ensuring that vital functions, particularly public safety, are minimally impacted, a crucial aspect of responsible municipal finance.
Beyond direct budget cuts, other strategies include limiting discretionary spending and implementing a hiring freeze, with exemptions for vital public safety and hard-to-fill positions. While these measures offer immediate relief for the Fort Worth budget, experts caution against the long-term consequences of deferring maintenance or capital spending, which can lead to more costly problems in the future requiring significant bond packages.
In an effort to diversify its financial portfolio, Fort Worth is actively exploring new revenue streams to offset expenses. Discussions have included the potential creation of a new street maintenance fee, along with reassessments of city compensation, benefits, and utility fees. These considerations reflect a proactive approach to enhancing the city’s financial stability amidst ongoing challenges.
Looking ahead, city officials anticipate that balancing the Fort Worth budget will become increasingly difficult in future years. Recently passed state legislation, if approved by voters, is projected to significantly increase business personal property exemptions, potentially leading to an $8 million revenue loss in fiscal year 2027. Combined with other state restrictions, this could create a projected $36.4 million deficit in the fiscal year 2027 budget, underscoring persistent municipal challenges.
Despite the daunting fiscal outlook, the current budget balancing act presents opportunities for innovation and improved efficiency in city service delivery. This period forces city leaders to make difficult but necessary choices among competing priorities, fostering creative solutions to ensure Fort Worth’s continued prosperity and effective fiscal management.
