The Amarillo City Council took an early step into the next fiscal year’s budget planning process Tuesday morning, holding a pre-budget workshop to discuss financial pressures facing the city and possible ways to balance the books. While no votes were taken, the discussion signaled that residents could eventually face a combination of property tax increase, new fees, or higher service charges as city leaders search for ways to fund essential services.
The workshop focused on several key issues: the upcoming arrival of the city’s new chief financial officer, a proposed overhaul of the city’s budget calendar, the possibility of a voter-approved tax rate election, and a long list of potential cost recovery measures across city departments.
City Manager Grayson Path led the presentation and outlined the financial challenges Amarillo faces as costs rise faster than the city’s limited revenue growth.
Property Tax Limits and the Possibility of a VATRE
One of the biggest issues discussed during the workshop was Amarillo’s ability to fund city services under Texas property tax limits.
State law restricts how much cities can increase property tax rates each year without voter approval. Municipalities can raise the maintenance and operations portion of the tax rate by only 3.5 percent annually unless voters approve a higher rate.
Path said the city’s expenses typically grow faster than that cap.
Because of this limitation, city staff is considering the possibility of asking voters to approve a higher rate through a Voter Approved Tax Rate Election, commonly referred to as a VATRE.
According to Path, the proposed VATRE would primarily support public safety services, including the Amarillo Police Department, the Amarillo Fire Department, and other emergency response programs. If approved by both the council and voters, the additional revenue could reduce pressure on the city’s general fund.
Path said the city has struggled to fully fund department needs in recent budget cycles.
According to him, the police department’s overtime budget is routinely underfunded due to revenue limitations, forcing other departments to cut spending to help balance the budget.
In addition, the city has been unable to fund all department requests or implement some proposed salary increases.
“We’ve had to close facilities—whether it’s park restrooms, whether it’s pools—because we’ve been unable to maintain those services with our revenue stream,” Path said.
He also noted that the city’s capital improvement projects often rely on uncertain funding sources.
“Our [capital improvement projects] mostly depend on the fact that we have interest each year. We are unable to even plan on there being revenue streams to fund CIPs; we have to rely on the hope and prayer that interest rates will allow us to have CIPs,” Path said.
Council Raises Questions About Debt and Transparency
While council members showed interest in exploring a VATRE, some also expressed caution.
Mayor Cole Stanley raised concerns about asking voters to approve a higher tax rate while the city might also consider issuing additional debt for infrastructure projects.
“If we did [a VATRE], would we restrict council’s use of COs?” Stanley asked during the discussion, referring to certificates of obligation, a type of municipal debt used to finance projects.
Stanley said the city must be careful not to give voters an incomplete picture of its financial needs.
“If we’re gonna go to the voter, we’re gonna say, ‘Look we need 5%, because we’ve done a good job of making sure we’ve mapped out all the year,’ are we gonna turn around six months later and then have council look at an option of, ‘Well we also need to borrow $12 million here for that, we also need to borrow $10 million for that.’ Because then what we’ve done is we’ve misrepresented to our voter what our actual need was,” Stanley said.
Council members requested additional financial reports before deciding whether to move forward with a VATRE proposal.
They asked city staff to provide updated data showing which departments are spending above or below budget and to include projections for future growth.
Deputy City Manager Andrew Freeman said the city’s new financial software system should make it easier to provide more current numbers during budget discussions.
Exploring “Cost Recovery” Through Fees
In addition to potential tax changes, city staff presented a wide range of possible fee adjustments intended to help offset costs.
The strategy, known as cost recovery, shifts more of the cost of certain services from general taxpayers to the people who directly use those services.
Path said many city fees have not been updated in years and no longer cover the cost of providing the service.
Staff has been asked to identify programs currently supported by the general fund and evaluate whether some of those costs could be recovered through user fees.
Some services cannot fully recover their costs. Others may be able to cover a larger share of their expenses with adjustments.
Animal Services and City Marshal Fees
Several proposed changes involve Amarillo Animal Management and Welfare.
City staff suggested increasing the daily shelter care fee from $5 to $15 per day after the first day. The fee has not been updated in more than a decade.
Another proposal would raise the adult animal surrender fee from $25 to $50, while keeping the fee for puppies and kittens at $10.
Staff also recommended returning adoption fees to the rates listed in city ordinances. Under that structure, adoption would cost $50 for dogs and $30 for cats.
Additional changes include higher impoundment fees for repeat offenses and a requirement that animals be spayed or neutered before being released.
The City Marshal’s office also has a proposed fee adjustment. Staff recommended increasing the abatement administrative fee from $75 to $125 in the 2026–2027 fiscal year and to $150 the following year. That fee has not been adjusted since 2012.
Public Health and Environmental Programs
The Environmental Health Department currently receives about $500,000 in support from the city’s general fund.
According to Path’s presentation, the department could potentially move toward full cost recovery.
One option would shift revenue from the city’s grease trap program into the general fund, since Environmental Health already administers the program.
Another proposal would add a small fee—around 50 cents per month—to utility bills to fund mosquito control efforts.
Other potential changes include higher permit fees for recreational water facilities and modest increases to inspection fees for daycare and foster care programs.
Parks, Recreation, and Library Fees
The Parks and Recreation Department has already made progress toward recovering more of its operating costs.
Golf operations, for example, have significantly reduced their reliance on the general fund over the past several years. The subsidy dropped from $1.9 million in the 2018–2019 fiscal year to about $370,000 in the current fiscal year.
That improvement came through a combination of incremental fee increases, new programming, and operational changes.
Other proposals include expanding facility rentals for sports fields and adjusting certain program fees.
The Amarillo Public Library system is also reviewing some of its charges.
Proposed changes include updating the default replacement cost for lost or damaged books, which has not been revised since 2005, and increasing nonresident library card fees.
Under the proposal, the nonresident individual fee would rise from $18 to $25, while the family rate would increase from $33 to $45.
Other Departments Reviewing Fee Options
Several other city departments are also exploring potential cost recovery strategies.
The Fire Department is considering tiered inspection fees, charges for repeated false alarms, and billing insurance companies for extraordinary emergency response costs.
Public Works may examine landfill tipping fee increases to offset rising operational costs.
Transit services, which recently lost about $2.18 million in federal funding after Amarillo was reclassified as a large urbanized area, could explore advertising on buses or modest fare adjustments.
Other smaller proposals include postage fees for Vital Statistics record searches and updated permit structures in various departments.
New Chief Financial Officer and Budget Timeline Changes
The city is preparing for a leadership transition in its finance department. Path said the city’s incoming Chief Financial Officer, Dr. Omolola Ogunremi, is expected to begin work on April 6.
Her first responsibilities will include helping lead development of the upcoming budget and finishing the city’s transition to a new financial software system. Beyond the immediate tasks, Path said he hopes Ogunremi will help reshape the city’s entire budget planning process in the coming years.
“My goal for the CFO is to look at developing a new calendar for the budget process, starting in the 27/28 cycle – so not this summer, but the next summer,” Path said.
Currently, Amarillo’s budget planning happens largely during a compressed summer timeline. Path said city leaders would like to move toward a longer planning process that begins earlier in the year.
Under the proposed change, the budget process would run from January through September. City officials say this extended schedule would allow the council to become involved earlier in the planning process and give the public more opportunities to review and discuss the city’s financial priorities.
Path described the coming year as a “bridge year,” during which Ogunremi would observe the current system and develop recommendations for a redesigned process beginning with the 2027–2028 fiscal year.
No Decisions Yet
Despite the lengthy discussion and numerous proposals, no action was taken during Tuesday’s pre-budget workshop.
Instead, the meeting served as an early stage in what will likely be months of financial discussions as the city prepares its next fiscal year budget.
Council members asked staff to gather more financial data and refine proposals before presenting them during the formal summer budget process.
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