Fayetteville City Council Budget Workshop - November 6, 2025

This meeting served as a budget workshop for the proposed 2026 fiscal year, focusing on the overall financial outlook, departmental breakdowns, and council-member questions. Budget Director Steven presented a proposed total budget of approximately $273.8 million, representing a 7.7% increase over 2025. The administration emphasized that this year was a "reset" to address a prior budgetary deficit and achieve a balanced budget, prioritizing fiscal stability over new personnel additions while maintaining essential services and addressing significant cost escalations in purchasing and capital maintenance.

Consent Calendar

• No formal consensus actions were taken, as this session is designated as a work meeting to discuss budget details rather than a formal legislative session for voting on ordinances or resolutions.

Public Comments & Testimony

• Councilmember Turk: Expressed appreciation for the comprehensive budget document but inquired about the methodology for historical budget comparisons (2022-2025) to contextualize growth. She noted the department heads' cooperation in balancing the budget without layoffs and commended the effort to involve staff more in the process, while asking for future discussions on participatory budgeting.
• Councilmember Moore: Highlighted the need to accelerate the Unified Development Code (UDC) rewrite and land use efficiency. She praised the department's performance regarding the ACIC audit and questioned the double-counting of investigative cases in the police metrics. She also asked about the feasibility of reducing police headcount to fund other safety initiatives, which Chief Reynolds declined, citing understaffing ratios compared to surrounding cities.
• Councilmember Whitaker: Questioned the significant increase in district court fines revenue projections and inquired about the inclusion of "court reminder" software in the courts budget to address failure-to-appear rates. She also asked if the police department would offset the cost of new School Resource Officers (SROs) by reducing other staff, which the Chief clarified was not possible due to current understaffing levels.
• Councilmember Berna: Asked about the location of the "Pick Me Up" program and the Green Space Fund within the budget. She also requested clarification on the expansion of the Pick Me Up program and the specific cost allocation for the Stormwater fund.
• Councilmember Sarah (Turk/Whitaker/other): Asked about the decrease in projected building permits despite city growth, clarifying that permit fees have increased and multifamily units are now captured under fewer, broader permits. She also inquired about the decrease in contracted tree plantings and the return on investment for the Gully Park concert series.

Discussion Items

• General Fund Overview: Director Steven outlined a balanced budget with $80.9 million in revenues and expenses. He noted a projected $4.7 million deficit at the end of 2025 due to mid-year reappropriations, pay plan studies, and the Fayetteville Housing Authority donation, leaving an estimated ending fund balance of $32 million (with $13 million reserved). Key revenue increases include $1.9 million in sales tax, $1.1 million in property tax, and $1.4 million in licenses and permits. A transfer of $867,000 from the sales tax capital fund to the general fund was discussed to support operations.
• Personnel and FTEs: The total workforce (FTE) is proposed to decrease slightly from 968.3 in 2025 to 968.1 in 2026. This includes adding 2 SROs (covered by grants), 0.5 FTEs in media services, and 0.2 FTEs in animal services to convert part-time roles to full-time. No new personnel were added generally due to the prior deficit. Director Steven noted a significant staff increase over the last five years compared to the previous five years.
• Street and Transit Fund: A major increase of 40% ($1.77 million) was budgeted for transit agencies ORT and Razorback Transit, aiming to double Fayetteville's investment in transit services relative to other Northwest Arkansas cities. This includes a projected operational loss of $504,000.
• Water and Sewer Fund: Director Steven highlighted that increased costs for purchased water from the Beaver Water District, which are not yet reflected in current rates, are the primary driver for the need of a 2026 sales tax bond issue. Without this bond, water and sewer rates are projected to double over the next five years. The Nolan plant costs are also a factor in this discussion.
• Stormwater Fund: This new fund is projected to operate without a loss, with minimal borrowing required from the general fund ($60,000). Costs are allocated from the general fund for shared services like billing and GIS, which the stormwater fund reimburses.
• Departmental Budgets and Performance:
  • Police: Chief Reynolds defended the addition of SROs and new patrol shifts, citing understaffing (1.31 officers per 1,000 residents vs. an FBI recommendation of 2.0 and a regional average of 2.26). He noted the need for leadership training due to a less experienced incoming workforce.
  • Parks and Recreation: The projected number of contracted tree plantings is down, excluding community giveaways. The Gully Park concert attendance is projected to increase for its 30th anniversary.
  • Development Services: Officials discussed the transition to a new long-range planning communications role and the potential acceleration of the UDC rewrite. Building permit numbers are projected down due to higher fees and multifamily permit consolidation.
  • Solid Waste/Recycling: Budgeted for a flat operation with a $1.1 million budgeted gain before capital, matching capital expenditures. The "Pick Me Up" program was moved to the miscellaneous account but remains intact.
  • Airport Fund: Projected a loss of $116,000 due to capital expenditures outpacing gains, though the fund is expected to remain solvent.
  • Shop Fund: Projected a gain of $3.4 million despite rising costs for vehicles and equipment due to tariffs and long lead times.

Key Outcomes

• Budget Presentation: The proposed 2026 budget of $273.8 million (a 7.7% increase) was presented as a balanced plan designed to address a 2025 deficit while maintaining service levels. No final votes were taken as this was a workshop.
• Data Corrections: The Police Department acknowledged a clerical error where the "investigative cases assigned" metric was double-entered for the Drug Task Force; this number (498 for 2025, 513 for 2026) will be corrected.
• Follow-Up Actions:
  • Staff will provide historical budget comparison data (2022-2025) and the specific breakdown of costs for the 13 current SROs fully funded by the city.
  • Staff will provide a detailed breakdown of licensed business types by sector (retail, office, restaurant) to Councilmember Moore.
  • Staff will follow up on the district court fines revenue spike and the inclusion of court reminder software.
  • The Parks Department will provide the annual work plan detailing all tree planting sources.
  • A slide summarizing year-over-year revenue projection methodologies will be prepared for Councilmember Turk.
• Strategic Directives: The administration reaffirmed the intent to fund the Nolan plant via a 2026 sales tax bond to avoid a rate doubling and committed to continuing the SRO program expansion while addressing long-term staffing ratios and cost escalations.