TO: Mayor and Members of City Council
THRU: Jeffrey Yates, Assistant City Manager
FROM: Michelle Brooks, CPA, Interim Budget and Evaluation Director
DATE: June 1, 2026
RE:Title
Discussion of the Fiscal Year 2026-2027 Budget Ordinance, and Attachments for the FY 2026-2027 Fee Schedule, and FY 2026-2027 Capital and Special Project Funding, Amendments, and Close-OutsTitle
end
end
COUNCIL DISTRICT(S):
Council District(s)
All
b
Relationship To Strategic Plan:
Goal 4: Financially sound City providing exemplary City services.
Objective 4.1: 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 2027 Recommended Operating Budget totals $325.8 million and $108 million in capital investments and $3.7 million for Special Revenue Fund for federal program funding. Developed through a transparent and data-informed process, the budget aligns with City Council’s strategic priorities: community safety, economic growth through the City, housing and neighborhood revitalization and refurbishment, and improve and transportation, transit and overall connectivity. Key investments include community safety expansion of 2 mental health response units, 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 continuing one of the lowest property tax rates in 30 years at $0.4795. A $10 increase for solid waste to cover increased fuel costs. No increases are proposed for stormwater 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 14, 21, and 28 including the “parking lot” review-allowed Council to refine priorities. A public hearing on May 26 ensured the opportunity for community input, and final adoption is scheduled for June 1. Supporting documents-including the operating budget book, capital plan, work session slides, 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 2027 Operating Budget totals $325.8 million and Capital Improvement Plan $108 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 $0.4795-remaining one of the lowest in 30 years-balances with the need to fund increasing costs of ongoing operations while making strategic capital investments.
The budget includes $325.8 million for operating expenses and $108 million in new capital investments, forming part of a six-year Capital Improvement Plan (CIP) totaling $694.6 million. These investments directly align with the City Council’s strategic priorities: community safety, economic growth through the City, housing and neighborhood revitalization and refurbishment, and improve and transportation, transit and overall connectivity. Projects include $40 million for stormwater improvements, $9.1 million for environmental protection projects, and $7.8 million for transportation upgrades. Public Safety Capital Improvements of $21 million is allocated for investments in public safety and public safety IT infrastructure, reinforcing Fayetteville’s commitment to innovation and safety.
Council also advanced $6.5 million in fire apparatus purchases in from FY 2027 into FY 2026 through installment financing, reducing funding pressure in the upcoming fiscal year while accelerating the delivery of critical public safety equipment.
The City is committing $4.9 million to enhance employee compensation, including a 4% merit-based salary increase and a 1% increase to 401(k) contributions.
To support affordability for residents, no increases are proposed for stormwater or FAST transit fares. A $10 increase solid waste service fees is included to cover increased fuel costs.
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 14, 21, 28, and June 1, followed by a public hearing on May 26. A final adoption vote is scheduled for June 8, 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 2027 Operating Budget of $325.8 million and Capital Plan of $108 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 budget documents, budget chronicles, work sessions, and other materials.
Options:
1. Receive the FY 2027 Budget Ordinance documents including FY 2027 Operating Budget, including Attachment A - Fiscal Year 2026-2027 Fee Schedule, Attachment B - Capital investment and Special Revenue budgets, as presented. Recommended Operating and Capital and Technology Improvement Plan Documents previously presented are included.
Recommended Action::Recommended Action
Staff recommends Council receive the FY 2027 Budget Ordinance documents including FY 2027 Operating Budget, including Attachment A - Fiscal Year 2026-2027 Fee Schedule, Attachment B - Capital investment and Special Revenue budgets, as presented. Recommended Operating and Capital and Technology Improvement Plan Documents previously presented are included.
end
Attachments:
FY 2027 Operating Budget Ordinance
Attachment A FY 2026 Fee Schedule
Attachment B Capital investment and Special Revenue budgets