TO: Mayor and Members of City Council
THRU: Jeffrey Yates, Assistant City Manager
FROM: Kimberly H. Leonard, NCLGBO, NCLGFO, CPA, MPA, Budget and Evaluation Director
DATE: June 9, 2025
RE:
Title
Adoption of the Fiscal Year 2025-2026 Budget Ordinance, the FY 2025-2026 Fee Schedule, FY 2025-2026 Capital and Special Project Ordinances, Amendments, and Close-Outs
end
COUNCIL DISTRICT(S):
Council District(s)
All
b
Relationship To Strategic Plan:
Goal 5: Financially sound City providing exemplary City services.
Objective 5.1: To ensure strong financial management with fiduciary accountability, and plan for future resource sustainability by aligning resources with City priorities.
Executive Summary:
The City of Fayetteville’s FY 2026 Recommended Operating Budget totals $315.2 million and $92.3 million in capital investments. Developed through a transparent and data-informed process, the budget aligns with City Council’s strategic priorities: public safety, housing and neighborhood revitalization, youth engagement, economic growth, and transportation. Key investments include public safety technology upgrades, compensation enhancements for employees, and infrastructure improvements citywide. The budget reflects economic realities such as declining motor vehicle and sales tax revenues, while maintaining core services and offering the lowest property tax rate in 30 years at $0.4495. No increases are proposed for stormwater, solid waste, or transit fares.
The budget process spanned several months and incorporated input from Council, staff, and residents. It began with the February Strategic Planning Retreat and continued with formal presentations in April and May on the operating budget, capital improvement program, and tax rates. Work sessions on May 15, 22, and 29-along with the June 2 “parking lot” review-allowed Council to refine priorities and add $6.2 million in targeted initiatives. A public hearing on May 27 ensured the opportunity for community input, and final adoption is scheduled for June 9. Supporting documents-including the operating budget book, capital plan, work session slides, public safety presentation, and Budget Chronicles Q&A-provide detailed insight into funding sources, project priorities, and the City’s long-term financial strategy.
Background:
The City of Fayetteville’s FY 2026 Operating Budget totals $315.2 million and Capital Improvement Plan $91.8 million, representing a comprehensive financial plan that supports core municipal services while addressing key community priorities. Despite challenging economic conditions, including reductions in motor vehicle and sales tax revenue, the budget maintains essential services, preserves fiscal health, and makes targeted new investments. The proposed ad valorem tax rate of $0.4495-the lowest in 30 years-balances affordability with the need to fund ongoing operational and capital obligations. This rate remains above the revenue-neutral level to support the City’s strategic goals while limiting the tax burden for residents.
The budget includes $315.2 million for operating expenses and $92.3 million in new capital investments, forming part of a six-year Capital Improvement Plan (CIP) totaling $664.8 million. These investments directly align with the City Council’s strategic priorities: public safety, housing and revitalization, youth and recreation, economic development, and transportation connectivity. Projects include $30.7 million for stormwater improvements, $9.5 million for parks and recreation, and $11.7 million for transportation upgrades. Notably, $20.6 million is allocated for public safety and public safety IT infrastructure, reinforcing Fayetteville’s commitment to innovation and safety.
Council also advanced $6.2 million in new consensus investments during its May and June sessions, including expanded public safety camera systems, BriefCam video analytics, compensation adjustments to address Police and Fire pay compression, and neighborhood enhancements such as street signage, splash pad development, and right-of-way maintenance, economic development, and additional sidewalks.
The City is committing $4.6 million to enhance employee compensation, including a 4% merit-based salary increase and a 1% increase to 401(k) contributions. These investments are based on a projected 12.2% employee vacancy rate. Additionally, the City Council has allocated $1.5 million to address public safety salary compression, with $450,000 designated for immediate adjustments to Police Sergeant pay.
To support affordability for residents, no increases are proposed for stormwater or solid waste service fees. FAST transit fares will also remain unchanged.
The budget was shaped through a robust and transparent process that began with strategic planning in February and continued through May and early June. Council held workshops on the operating and capital budgets, tax rates, and personnel issues on May 15, 22, 29, and June 2, followed by a public hearing on May 27. A final adoption vote is scheduled for June 9, meeting the statutory deadline and ensuring continuity of services. This collaborative process enabled elected officials to address community input, respond to evolving conditions, and ensure accountability.
The FY 2026 Operating Budget of $315.2 million and Capital Plan of $92.3 million represent a balanced and strategic use of the City’s financial resources. This budget upholds the City’s fund balance policy while addressing current fiscal conditions, supporting targeted service enhancements, and advancing long-term community priorities.
Through responsible planning and transparent governance, the City remains well-positioned to deliver high-quality services, invest in future growth, and promote equity, safety, and prosperity for all Fayetteville residents.
Issues/Analysis:
See Background.
Budget Impact:
As included in the recommended documents, budget chronicles, work sessions, and other materials.
Options:
1. Adopt the FY 2026 Budget Ordinance documents including FY 2026 Budget Ordinance, Fiscal Year 2025-2026 Fee Schedule, FY26 Capital/Special Project Ordinances, Amendments, and Close-outs as presented.
2. Amend the FY 2026 Budget Ordinance documents including FY 2026 Budget Ordinance, Fiscal Year 2025-2026 Fee Schedule, FY26 Capital/Special Project Ordinances, Amendments, and Close-outs as presented and adopt with additional amendment.
3. Do not adopt the FY 2026 Budget Ordinance documents including FY 2026 Budget Ordinance, Fiscal Year 2025-2026 Fee Schedule, FY26 Capital/Special Project Ordinances, Amendments, and Close-outs as presented and provide further direction to staff.
Recommended Action:
Staff recommends Council adopt the FY 2026 Budget Ordinance documents including FY 2026 Budget Ordinance, Fiscal Year 2025-2026 Fee Schedule, FY26 Capital/Special Project Ordinances, Amendments, and Close-outs as presented.
Attachments:
FY 2026 Operating Budget Ordinance
Capital Project Ordinances (CPOs)
Special Revenue Ordinances (SROs)
Capital Project Ordinance Amendments (CPOAs)
Special Revenue Ordinance Amendments (SROAs)
FY 2026 Fee Schedule
Capital Project Closeouts