The Fiscal Year 2026 Operating Budget was originally adopted by City Council on September 16, 2025. Since the adoption of the budget, there have been changes within various accounts that require a change in the appropriation of funds in the budget. This budget amendment includes increases and decreases in revenues and expenditures in various accounts for all City Funds based on estimates through the end of the 2026 fiscal year, as identified in Exhibit A.

This amendment represents the third adjustment to the Fiscal Year 2026 Budget. City Council approved the first budget amendment on January 20, 2026, and the second on April 21, 2026.

Each end of the fiscal year, the City Council is asked to amend the current year operating budget to project current year line item amounts as shown in the proposed next year budget. As part of the Fiscal Year 2027 proposed budget development, the City Manager and staff conducted a review of the Fiscal Year 2026 budget. This review included an analysis of projected revenues and expenditures for all City funds through the end of the current fiscal year. The purpose of this process is to estimate ending fund balances, which become the beginning fund balances for the new fiscal year, and to ensure compliance with the City’s adopted fund balance policies. The proposed Fiscal Year 2027 Budget, filed with the City Clerk on August 7, 2026, and delivered to City Council for review, incorporated updated Fiscal Year 2026 projections. Since the proposed budget was filed, staff have revised the projections to reflect updated financial activity. The amendment presented incorporates the most current changes to the Fiscal Year 2026 projections.

A budget amendment is needed to align the current year’s budget with updated projections and to prepare for the City’s year-end financial audit. This adjustment will also provide staff with the necessary authority to monitor and manage departmental budgets for the remainder of the fiscal year, which concludes on September 30, 2026.

Details of the proposed amendment are included in Exhibit A.

General Fund

Revenues are projected to increase by $1,081,119 (6%) over the amended budget. Permits and licenses account for the largest share of the increase at $925,624 (45%) above budget, driven by residential inspection activity. Tax revenue is projected $176,400 (1%) higher on sales tax collections, fee revenue is $84,167 (19%) higher from parks pavilion and athletic field rentals, and the administrative reimbursement transfer increases $35,697 (3%) in step with higher water revenue. These increases are partially offset by a $140,769 (9%) decrease in miscellaneous revenue, as development reimbursements are lower than expected.

Expenditures are projected to increase by $336,993 (1%). The largest increases are in Non-Departmental, up $227,608 (11%) for litigation-related legal fees and net of the discontinued CIP M04 Garlic Creek Parkway and the SH 45/Bailey East-West Corridor planning study; Capital Projects, up $181,311 for additional WSB staff augmentation support; Community Relations, up $71,290 (12%) for interim public information officer services; and Facilities Maintenance, up $45,876 (9%) for work order software, fire elevator and security monitoring services. These increases are partially offset by savings in Development Services ($95,688), Parks and Recreation ($46,208), Streets and Drainage ($34,037), Fleet Maintenance ($24,146), Police ($21,947), and reduced election costs in the City Clerk’s office ($7,602).

Debt Service Fund

Revenues are projected to decrease by $758,808 (9%), reflecting collections estimated at 98.8% of the tax levy due to an increase in protested values. Expenditures are projected to decrease by $660,379 (8%) as a result of interest savings produced by the refunding of the Series 2016 and Series 2021 certificates of obligation.

Water Fund

Revenues are projected to increase by $85,168 (1%) on water sales slightly above budget. Expenditures are projected to increase by $334,755 (4%), consisting primarily of a one-time $208,000 RRWDS contribution for the variable frequency drive project and a $129,000 increase in ARWA groundwater costs.

Wastewater Fund

Revenues are projected to decrease by $83,017 (1%) on wastewater sales slightly below budget. Expenditures are projected to increase by $212,650 (3%), primarily for the anticipated write-off of uncollectible wastewater accounts.

Other Noteworthy Adjustments

The Purple Pipe Fund reflects decreases of $1,707,500 (96%) in revenues and $1,700,000 (77%) in expenditures. CIP RW02, Reuse Water System Expansion, and the related Series 2026 certificate of obligation proceeds and project budget were moved to the Wastewater Capital Improvement Bond Fund. The project itself is unchanged; the amendment reflects the fund in which it is budgeted.

Hotel Occupancy Tax revenues are projected to decline $143,573 (13%) on reduced travel activity, while expenditures increase $20,060 (1%) due to higher-than-anticipated Budafest overtime. The Local Government Corporation reflects the same activity, with revenues down $50,600 (6%) and expenditures down $40,601 (5%).

Special Revenue Fund revenues are projected to decrease by $1,664,641 (28%), driven by tree mitigation revenue $1,777,250 (72%) below budget on lower development fee activity and park land fee in lieu revenue $96,500 (97%) below budget. These decreases are partially offset by sidewalk fee in lieu revenue $299,000 above budget from Discount Tire, Leif Johnson, and similar projects, and by $39,437 in grants not anticipated at adoption, including a Hays County grant for senior transportation. Special Revenue Fund expenditures increase $620,225 (14%), almost entirely from a $668,919 increase in the Sidewalk Fund as funding for CIP M40 (RM 967 sidewalk from FM 1626 to the city limits), CIP M34 (Cabela’s Drive sidewalk connection), and CIP P16 (Main Street/S. Loop 4 sidewalk to Norris Skate Park) shifted from the Proposition A bond fund.

Capital Fund revenues are projected to increase by $6,480,305 (17%) and expenditures by $2,688,493 (3%). Water and wastewater impact fee revenues are $712,041 and $770,485 above budget, respectively, on development activity including Persimmon. The Parks and Recreation Bond Fund increases $2,210,164 in revenue, reflecting the $1.5 million EDC contribution for CIP P04, Buda Championship Park, and interest earnings on unspent bond proceeds. The Wastewater Capital Improvement Bond Fund increases $2,724,358 with the transfer of CIP RW02 described above. Proposition A Transportation revenue decreases $370,000 (38%) as interest income was overestimated and funds were moved to a SLGS account, with expenditures down $524,373 net of the discontinued CIP M04, a $3.4 million reduction to CIP M09 Old Black Colony Road Reconstruction, and increased funding for CIP M29, CIP M42, and CIP M47. Proposition B Parks expenditures decrease $959,829 (6%) as funding shifts from CIP P06 Eastside Community Park Land to CIP P03 Garison Memorial Park.

Tax Increment Reinvestment Zone Number Three reflects $835 of incremental value captured in Travis County (Subzone B) for Fiscal Year 2026, to be remitted as a TIRZ credit to the trustee for the Persimmon Public Improvement District.

Overall, this amendment aligns the City’s budget with updated financial activity, provides staff with the authority to manage operations effectively through year-end, and positions the City for compliance with fund balance policies and year-end financial audit requirements.

The proposed amendment increases total City revenues by $3,498,371 (4%) and expenditures by $1,886,935 (1%) compared to the previously amended Fiscal Year 2026 Budget. The net impact reflects timing adjustments for major capital projects, recognition of grant and reimbursement revenues, and adjustments for departmental operating expenditures. These changes provide a more accurate year-end projection of fund balances, which in turn serve as the beginning balances for Fiscal Year 2027. The amendment ensures compliance with the City’s adopted financial management and fund balance policies while supporting transparency and accountability ahead of the annual financial audit. Fund 150 is excluded from this amendment because changes to the Economic Development Corporation budget require approval by the Buda EDC Board. See the attached Exhibit A.

Exhibit A-1 provides a high-level summary by fund of the proposed changes. 

Exhibit A-2 provides a detailed look by fund at the proposed revenue changes.

Exhibit A-3 provides a detailed look by fund at the proposed expense changes.

Pro: Align budget with updated projections.

Con: None.

Do not approve amendment.