Raleigh City Council met for a short retreat to discuss the upcoming 2027 fiscal year budget which begins on July 1, 2026. With current expenses, we are expected to have a budget shortfall just under $20 million and will have to make some hard choices about services and tax rates. I want to hear from you as we move forward in budget discussions. What are your priorities?
Budget revenues come from three sources: property tax (52%), sales tax (20%), and other City revenues (28%).
Property taxes have increased for most residents in recent years due to increases in property values. But reductions in and exemptions of some residential and commercial property taxes have led to a discrepancy in expected City revenues. Raleigh’s sales tax data are strong, as are recovery of fees for development, utilities and other City services.
Efforts to increase staffing ($5-10 million), implement the City’s fire master plan ($5-10 million), and add new employee salary increases ($2.1-$6.3 million) are some of the additional costs under consideration in this budget cycle. Other potential new expenses are deferred maintenance on the City’s downtown parking garages ($3 million), information technology infrastructure investments ($2.5 million), and operational expenses for Dix Park ($2 million).
We also discussed options for a bond referendum which could be on the November 2026 ballot. We have several bonds ending this year which frees up $203 million for a new four-year bond. This bond amount would not alter tax rates. The primary bond option considered so far is splitting the monies between affordable housing and transportation projects.
The 2020 affordable housing bond ends this year which means a new bond is required to keep up with the pace of need. For a new bond, we are considering investments in (1) income restricted housing development and preservation; (2) homebuyer assistance and preservation; (3) homelessness response; and (4) mixed-income developments. The first two items were the focus of the 2020 bond. Adding homelessness response to the bond mix is critical this time around given the increase in the unsheltered population and need for rapid rehousing to ensure stability of all residents.
The final item is a one-time capitalization partnering with the Raleigh Housing Authority to ensure residents of future public housing projects have a wider income mix. Housing is often segregated by rent levels, causing developments and neighborhoods to be only accessible to certain income earners and forcing isolation of lower income residents. This item would be the City’s first investment in a revolving loan fund for mixed-income developments with the additional goal of attracting private and mission-driven capital.
Transportation bond projects would be limited to smaller investments that already have designs complete in order to avoid cost escalation. There are several long-planned improvements like Marsh Creek Rd, Trawick Rd-West, Ebenezer Church Rd, and Southern route bus rapid transit general purpose lanes. We could also make significant investments to fill sidewalk gaps across the City, construct new greenways, and install neighborhood traffic management tools like speed bumps and road diets to reduce speeds.
City Council’s first budget work session will be on Monday, February 16 at 4 pm. Be sure to stay tuned and provide input as we move forward. Youtube links and agendas for upcoming meetings can be found HERE.