The Amarillo City Council spent Thursday digging into the numbers behind a proposed multi-million dollar city budget, weighing everything from property taxes and employee raises to police cars, street reconstruction and higher utility fees.

Thursday’s budget workshop was the second of three scheduled this week. The council will return Friday at 8 a.m. to continue reviewing department requests and begin narrowing down which projects will make the cut.

City Manager Grayson Path said Thursday’s goal was to put the city’s supplemental spending requests and proposed one-time capital improvement projects, or CIPs, in front of the council and get direction on how to spend the money available.

Councilmembers Don Tipps and David Prescott, who represent Places Two and Three, left before the council’s lunch break. Prescott later rejoined by video while traveling.

How much money does Amarillo actually have?

Before getting into individual projects, Finance Director Katrina Owens explained how the city determines how much cash is actually available to spend.

The starting point is Amarillo’s annual comprehensive financial report, or ACFR, which is essentially an independently audited snapshot of the city’s finances at the end of a fiscal year. The latest report covers fiscal year 2024-25.

Staff then adjusts those figures to account for more recent revenues and expenses, money the city has already committed, required reserves, restricted funds and upcoming debt payments.

That process recently uncovered a significant reporting problem.

Reports produced through the city’s new financial software resulted in cash-flow figures that need to be corrected. The ACFR lists approximately $288 million as committed, while Owens said the actual figure is closer to $207 million. The independent auditing firm is working to correct the report.

Mayor Cole Stanley said the city’s planned forensic audit could also examine CIP commitments and help verify the numbers. The city issued a request for quotations for that audit Tuesday.

Owens boiled the issue down to the question councilmembers ultimately have to answer: “What cash can we responsibly commit after reserve calculations are determined?”

The numbers presented Thursday also differed substantially from the proposed budget document posted earlier in the week. Chief Financial Officer Lola Ogunremi presented a total proposed budget of $616,218,412, up 10.6% from last year. The introductory letter in the proposed budget posted Tuesday listed the total at $493.7 million.

Council considers lower property tax rate

Councilmember Les Simpson asked staff to explore what the budget would look like using the no-new-revenue property tax rate.

The city staff proposal currently uses the voter-approved tax rate of $0.44728. The no-new-revenue rate is $0.42170, which is also below the 2025 rate of $0.43070.

In simple terms, the no-new-revenue rate is calculated to bring the city roughly the same amount of property tax revenue from properties taxed in both years, despite changes in property values. That does not mean every individual homeowner’s tax bill stays the same.

According to the city’s taxpayer impact statement, the no-new-revenue rate could save the average Randall County homeowner about $5 on the 2026 city tax bill. Using the higher voter-approved rate could increase that bill by nearly $60.

Potter County homeowners would see a different result because property values increased more there. The average Potter County homeowner could pay about $45 more even under the no-new-revenue rate, while the voter-approved rate could increase the average bill by approximately $85.

Texas cities generally have room to increase property tax revenue for maintenance and operations by 3.5% annually without triggering an election, with unused portions of that growth allowance potentially carried forward for up to three years.

Path said moving to the no-new-revenue rate would reduce the proposed budget by roughly $700,000.

Stanley asked whether staff could begin approaching the budget with that lower rate in mind. Path then asked department heads to identify recurring requests that could instead be handled as one-time expenses.

Property taxes account for about 20% of Amarillo’s revenue. Sales taxes provide approximately 33%, while fees and other sources make up most of the remainder.

Utility and service fees could rise

Property taxes are only one way residents could pay more under the proposed budget.

Staff is proposing a 3% increase in residential and commercial solid waste collection fees and a 24% increase in landfill tipping fees, equal to roughly another $10 per ton.

Water and sewer operating fees would each increase 8%, while water and sewer debt-service fees would increase 3%. Drainage operating fees would rise 3%, with another 5% increase proposed for drainage debt service.

The budget also proposes cost-recovery fee increases in departments including the City Marshal, Animal Management, Environmental Health, Athletics, Fire and Fire Marshal. Many of those charges apply to specific services or less-common situations rather than monthly household bills.

About $45 million available for projects

Staff presented two broad pots of money Thursday: recurring money that could pay for supplemental budget requests, and one-time cash that could be used for capital projects.

The general fund has approximately $6.2 million available for recurring supplemental requests. Path said strong recent sales tax collections could allow the council to increase that to $7.2 million, although he cautioned that sales tax revenue can fluctuate.

Water and sewer has $2.5 million available, the airport has $620,000 and drainage has $200,000. The IT fund has another $135,000. The airport and IT amounts are intended for cost-of-living or other personnel increases.

For one-time CIPs, the city has $11.9 million available in the general fund, $13 million in water and sewer, $5.7 million at the airport, $800,000 for drainage, $3 million for solid waste and $1.9 million in the Civic Center fund.

Altogether, councilmembers have roughly $45 million in one-time cash to allocate. Last year, they allocated about $30 million.

The decisions come as Amarillo carries approximately $566.8 million in total debt, with nearly half tied to water and sewer. Annual debt service represents 10.8% of the proposed budget. About $7.3 million in debt is scheduled to roll off at the end of the coming fiscal year.

Employee raises compete with other requests

Path recommended that the council first decide what it wants to do about employee compensation because personnel accounts for nearly half of city expenses.

His recommendation is to provide a cost-of-living adjustment and fund portions of a previous pay study that identified city positions being paid below the market.

A 3% COLA would cost approximately $4.6 million. A 2% adjustment would cost $3.1 million, while 1% would cost about $1.5 million.

Tipps said he would rather continue emphasizing merit raises approved last year so stronger performers receive greater rewards.

Path said employees with poor evaluations are placed on performance improvement plans and can ultimately be terminated if they fail to improve. But he argued the city also has a retention problem because some employees leave for better-paying private-sector jobs before the city has time to fully train and develop them.

Stanley asked Path to return with figures showing what a 3% COLA combined with partial implementation of the pay study would cost — and how much money that would leave for other recurring requests.

Police seek $27 million for take-home vehicles

The Amarillo Police Department brought forward nearly $30 million in capital requests.

By far the largest is approximately $27 million to begin a take-home vehicle program, purchasing and equipping 175 police vehicles.

Police Chief Thomas Hover said assigning a vehicle to one officer instead of having multiple officers use it across different shifts can reduce mileage and maintenance costs over time. It would also distribute police vehicles throughout Amarillo, potentially helping during emergencies while increasing the department’s visible presence in neighborhoods.

APD also requested $688,000 to encrypt its police radio channel.

Hover described encryption as an officer-safety issue because people can currently monitor police traffic and potentially learn when officers are approaching. He also raised concerns about people using artificial intelligence to automatically transcribe scanner traffic. Incorrect AI transcriptions, he said, could spread false information about vehicles or suspects and lead members of the public to act on bad information.

Staffing remains another challenge.

Hover said APD recorded approximately 29,000 overtime hours during a six-month period — roughly equivalent to the working time of 14 officers. He said Amarillo officers spend about 75% of their day responding to calls and other dispatched activity, compared with an average of about 50% at other departments.

That leaves less time for proactive policing and community engagement.

Hover’s recent staffing study recommended 175 officers. APD currently has fewer than 150.

He is also seeking grant funding to bring two mental health physicians into programs serving first responders. Hover and Fire Chief Jason Mays have separately budgeted money for a physical therapist.

Fire department faces staffing and facility needs

The Amarillo Fire Department presented approximately $13.5 million in supplemental requests, ranging from cardiac monitors to repairs and improvements at buildings, driveways and other facilities.

Mays also highlighted a new fire training classroom that is included in the city’s five-year plan but was not among Thursday’s listed requests. He said additional training capacity will become increasingly important as Amarillo grows and needs to move more cadets through the fire academy.

The department expects approximately $1.3 million in unscheduled overtime next year.

Mays said AFD technically hires more cadets than the number of vacant firefighter positions at the beginning of an academy. The problem is the training process takes long enough that additional firefighters retire or leave before those cadets are ready for active duty.

Streets bring some of the biggest requests

The street department presented $2.5 million in cash-funded projects and another $42.5 million that would require debt.

That includes $30 million for annual arterial street reconstruction and $12.5 million for street resurfacing. Another $2.5 million would cover other street maintenance during the year.

Those requests, along with the police department’s proposed vehicle program and employee compensation decisions, illustrate the challenge facing councilmembers: Amarillo has tens of millions of dollars available, but considerably more in requests competing for it.

Deputy City Manager Andrew Freeman said staff would spend Thursday afternoon incorporating the direction councilmembers provided.

The council returns Friday morning to review the remaining departments and continue deciding which expenses should become part of Amarillo’s next budget — and how much taxpayers and ratepayers will ultimately be asked to cover.