Budget in Brief Fiscal Year 2026

City Manager’s Message

Dear Waco Residents,

I am pleased to present this "Budget in Brief," a summary of the formal budget for the 2026 fiscal year which begins on October 1, 2025. The City's "business" or fiscal year runs from October 1st to September 30th each year.

I want to thank the City Council for their continued support and leadership. Your City Council remains unwavering in their commitment to providing excellent municipal services. In a time of economic uncertainty and continued inflationary pressures, Council and staff have worked together to formulate a budget that delivers on key City services and capital projects while maintaining fiscal responsibility and limiting impacts to Waco resident City tax and utility bills.

Of course, none of these services could have been provided without the amazing work and excellent services City staff work hard to provide. It is important to highlight that, without our City employees, the development of this budget and the operations of this City would not be possible. Their tireless efforts allow our City to thrive. I want to thank every employee for all their hard work and their willingness to operate as a team. It is their commitment that makes Waco a great place to live and do business.

The City Council has established seven strategic goals for the City of Waco to help guide the City into the future. The 2026 fiscal year budget is built upon these strategic goals:

• Facilitate Economic Development
• Create a Culture of Fairness and Respect
• Provide a Safe and Resilient City
• Improve Infrastructure
• Build a High Performing Government
• Enhance Quality of Life
• Support Sustainability

These goals illuminate paths forward toward realization of the City Council's vision for Waco: Our home, where everyone belongs and thrives while moving forward together.

The City Council and staff worked together to include in the Fiscal Year 2026 budget several specific program enhancements to propel the City forward toward realization of the City's strategic goals.

Enhancements include:

• Provide a Safe & Resilient City
  • $9.6 million investment in Fire and Police services, honoring year three of our collective bargaining agreements with 8.2% combined salary increases for civil service employees.
  • Pre-construction funding of $1.07 million for Fire Station 8 to enhance emergency response capabilities.
  • Facility planning for the Police Crime Lab and Property Room, ensuring modern infrastructure for public safety operations.
  • Emergency management infrastructure improvements and technology upgrades to support public safety operations across the city.
• Facilitate Economic Development
  • $4 million for Economic Development Incentives through the Waco/McLennan County Economic Development Corporation (WMCEDC).
  • $6.9 million for downtown redevelopment site preparation to enable future economic development.
  • Continued support of $1.4 million for economic development support organizations.
• Create a Culture of Fairness & Respect
  • Kept employee health premiums at a 6% increase while the City absorbed a 14% increase, continuing our investment in employee wellbeing.
  • A 3.5% general salary increase for all non-civil service employees, maintaining competitive compensation.
  • Maintained the 30% repeating COLA for retired former city employees.
  • Enhanced bilingual pay options for employees serving our diverse community.
• Enhance Quality of Life
  $134.2 million Capital Improvement Program addressing critical infrastructure and community enhancements:
  • $15 million for parks and recreation facility upgrades to enhance amenities and access for the community.
  • $768,000 for Cameron Park Zoo improvements, including the highly anticipated Jaguar Exhibit expansion.
  • $2.9 million for comprehensive renovations at Cottonwood Creek Golf Course.
  • $12 million for airport runway rehabilitation to maintain commercial and general aviation services (95% grant funded).
• Build a High Performing Government
  • Strategic efficiency initiatives achieving $32.1 million in operational savings ($27.1 million recurring) while preserving core services.
  • Investment of $20.3 million in personnel compensation and benefits to recruit and retain quality employees.
  • Comprehensive review of workforce optimization, expenditure management, and partnership commitments.
  • Reduction of base General Fund expenditures by $14.2 million, eliminating reliance on surplus transfers.
• Improve Infrastructure
  $134.2 million Capital Improvement Program focusing on infrastructure modernization:
  • Over $50 million dedicated to comprehensive street maintenance, preservation, reconstruction, and rehabilitation.
  • $7.8 million for modernizing water treatment plants and expanding capacity.
  • $10.4 million for upgrading and expanding wastewater systems.
  • $3.1 million for enhancing drainage infrastructure, including the Lake Brazos dredging project.
  • Bridge improvements and ADA compliance enhancements throughout the transportation system.

These initiatives represent staff's continued effort to make the City Council's vision and strategic goals for Waco a reality. I am excited to implement these new initiatives on the City Council's behalf, and I share their commitment to fiscal responsibility. The City's property tax rate remains at $0.755000 per $100 of assessed valuation—the lowest rate of the past 17 years. This marks the fourth consecutive year we have maintained or reduced the tax rate, demonstrating our commitment to responsible fiscal management.

The fiscal year 2026 budget includes modest fee adjustments to ensure long-term sustainability of essential services. Water and wastewater rates will see small increases to support critical infrastructure investments and system reliability improvements. Solid Waste residential rates increase from $20.52 to $21.93. The street maintenance fee increased from $2.00 to $4.00. However, the municipal drainage fee decreases from $6.55 to $5.55 per equivalent residential unit (ERU). A comprehensive list of all changes is provided in the Fee Schedule, an appendix to the budget.

Based on the priorities addressed, identified, and discussed above, the FY26 budget totals $649.8 million, representing a modest 0.1% increase over the prior year. The General Fund is balanced at $210.3 million, reflecting a 6.3% reduction through strategic rightsizing and operational efficiencies. The FY26 adopted budget has been developed in keeping with the Council's priorities for Waco and positions our city for continued growth while maintaining fiscal sustainability.

I encourage you to read through this "Budget in Brief" to learn about the key elements of our FY26 Budget. Should you wish to view the entire budget, you may find it on our website. If you'd like additional information, please reach out to our Office of Management and Budget. On behalf of the employees at the City of Waco, thank you for the opportunity to serve the great residents of Waco.

Sincerely,
Bradley Ford
City Manager

About the Budget

The City of Waco’s Fiscal Year (FY) 2026 budget outlines how the City will fund essential services, maintain infrastructure, and invest in community priorities during the upcoming fiscal year. The budget reflects City Council direction, community needs, and a continued commitment to fiscal responsibility.

This Budget in Brief provides a high-level, visual-friendly summary of the adopted budget. It is designed to give residents a clear snapshot of how public funds are collected and used, without requiring a detailed review of the full budget book.

Budget at a Glance

Total City Budget: Approximately $784 million

• Operating Budget: ~$649.8 million
• Capital Improvement Program: ~$134.2 million

This total represents the City’s complete financial plan, combining daily operations with long-term infrastructure investments.

Where the Money Comes From

The City relies on a diverse mix of revenue sources to support services and reduce financial risk.

Primary revenue sources include:

• Property taxes
• Sales taxes
• Utility charges (water, wastewater, solid waste)
• Fees and charges for services
• Hotel occupancy taxes
• Investment earnings

Property Taxes

Property taxes include the current year’s levy, prior year levies/penalties, and interest collected on payment of delinquent taxes. The proposed tax rate of $0.755000 per hundred dollars of valuation includes $0.170500 for debt service.

Annexations and increased property values have contributed to the steady increase in property taxes over the past five years. Property tax revenue is typically one of the most reliable revenue streams for the City.

Tax Rate & Customer Impact

The City maintained its total property tax rate at:
$0.755 per $100 of assessed value

While the tax rate did not increase, individual tax bills may change due to higher property values.

Utility rate adjustments support infrastructure needs and service reliability. Overall, the average residential impact is approximately $10–12 per month.

Where the Money Goes

City funds are used to deliver services that residents rely on every day.

Major spending areas include:

• Public safety (police and fire)
• Utilities and infrastructure
• Streets and transportation
• Parks, libraries, and recreation
• Community services
• General government

Personnel costs make up the largest share of operating expenditures, reflecting the labor-intensive nature of municipal services.

Infrastructure & Capital Improvements

The FY 2026 Capital Improvement Program totals approximately $134.2 million and focuses on maintaining and upgrading critical infrastructure. The 2026 Capital Improvement Projects table below details what all the city intends to do in 2026. The major projects going on are the significant infrastructure improvements in Water, Wastewater and WMARSS. Finally, the largest cost this year is the ongoing Better Streets Waco programs.

Breakdown of Enterprise & Governmental CIP

In the City of Waco budget, CIP projects generally fall into two categories. These categories are Enterprise CIP and Governmental CIP. Governmental CIP projects support general public services that are primarily funded by taxes and other governmental revenues. Examples of these are street construction, public safety facilities, parks, and many more facilities.

Enterprise CIP projects support business-type operations that are funded primarily by user fees, not taxes. These enterprise systems include Water utilities, wastewater utilities, solid waste services, transit services, airport facilities, and the zoo. These projects are paid for by the customers who use the service, rather than by taxpayers. Below is a breakdown of both Governmental and Enterprise CIP revenues.