The theme of Tuesday’s draft budget presentation was relief.
City staff handed off a proposed 2027 budget to Waco City Council members that maintains the existing tax rate and closes a $10 million funding gap without deep cuts to city services.
Street improvement projects and projects will continue, though no new ones will be added to the deck until they’re finished.
The draft budget calls for $733.3 million in spending, down $30 million or 3.9% from last year. Council must approve a budget by October.
“We escaped adding burdens (to Wacoans) this year,” City Council Member Andrea Barefield said during the meeting.
The budget would keep the property tax rate at 75 cents per $100 valuation for the fifth year running. With home appraisals down slightly this year, the flat property tax means an average homeowner will pay $74 less in property taxes, according to staff analyses.
But the average homeowner will pay $82 in increased city utility rates and service fees, about $8 more a year than they will save in property taxes, the staff presentation shows. Water, wastewater, solid waste, drainage and street maintenance rates are all increasing.
Those assumptions would not necessarily hold true for renters, who typically pay utility fees but do not directly pay property tax, which is figured into rents.
The flat tax did not come without internal sacrifices. On top of the proposed departmental cuts and hiring pauses The Waco Bridge reported on last month, capital spending on big-ticket projects could drop by 44% in 2027 to keep debt levels stable and debt payments manageable.
Capital improvements are long-term projects that are typically funded by debt over many years. Compared to peer cities in Texas, Waco remains below the average debt payment-to-operating budget ratio, staff documents show.
City staffers recommend $112.5 million in capital spending for essential infrastructure projects. Nearly $40 million of that total would fund various water and wastewater improvement projects, drainage projects and bridge repairs.
The city has stepped up street improvement projects in recent years, and it has an estimated $100 million committed to 90 street projects now in the works. Those include the $17.4 million Speegleville Road widening and bridge replacement now in its early stages near River Valley Middle School.
The capital spending reductions will not affect those projects, but the slate of street improvements won’t grow until they are finished, Assistant City Manager Blu Kostelich said Tuesday. “The strategy this year is to finish what we started, before we add more debt,” Kostelich said.
Revenue trends a concern
Both Barefield and Waco City Manager Ryan Holt warned of more painful cuts in the future if economic conditions, including inflation and stagnant property values, do not improve.
“If the economy stays in the challenging format that it is now … those cuts could become much more difficult as we move forward,” Holt said.
Flagging sales tax revenues along with the sluggish housing market are putting pressure on the city’s main revenue sources.
Overall tax base this year is $17.4 billion, up 4.8% from last year, with mixed results by sector compared to last year:
- Commercial value is down 5.9% and multifamily value is down 3.5%, representing a combined tax base loss of $400 million.
- The total value of single-family home values nudged up to $7.4 billion – about $100 million – with new construction offsetting appraisal losses for existing homes.
- Industrial property values have increased by $1.1 billion, keeping overall property tax revenue in the black.
As the city grapples with dropping sales tax revenue and modest property tax growth, inflation has more than doubled the cost of some goods and services it purchases.
General insurance has increased 246% over the last 5 years, consuming $2.7 million in city funding, according to staff analyses. IT software costs skyrocketed by 78% over the same period, for a total budget hit of $3.3 million.
Staff members did not address funding support for outside organizations, a point of tension last year when the city announced its plan to reduce nonprofit funding. Library hour service cuts were also not addressed on Tuesday.
Clarification, Aug. 6, 2026, 12:25 p.m. Central:
This story has been updated with a sentence explaining the impact of the budget on renters.
