Page 6 - FY 2025 Adopted Operating Budget and Business Plan

Manager’s Message Return to Table of Contents

Embracing Growth and Ensuring Financial Stability

The City of Arlington, Texas, is pleased to present the Fiscal Year 2025 Budget Document. This budget is a testament to
our commitment to the residents we serve and reflects a thoughtful approach to managing our resources, addressing
challenges, and seizing opportunities for sustainability and improvement. As we look back at our economic journey, we
see a history marked by resilience and steady progress, providing a strong financial foundation for the future.

Slowing Growth in Our Economy

Over the past few years, Arlington has witnessed significant economic growth, fueling strategic investments, innovative
initiatives, and an enhanced capacity to serve our community. This upward trajectory is not merely a reflection of favorable
conditions but is a result of prudent fiscal policies that have consistently guided us. Through careful planning and a
commitment to progress, we have laid a strong foundation that has propelled our city forward.

As we look ahead, however, we must acknowledge the changing economic landscape. While our city's revenues
rebounded significantly from the COVID-19 economic recession, the pace has moderated, bringing us back to pre-
pandemic levels. Property tax values, which are our most significant revenue, continue to increase, but the rate of growth
is notably slowing. Market values in Arlington have benefited from substantial growth year over year for the last decade,
except for 2020 due to COVID-19. However, as the housing market begins to slow across the region, our market value in
Arlington has only grown by 1.5 percent for 2025. Similarly, our sales tax revenue, which surged during the post-pandemic
recovery, is stabilizing to a more traditional growth rate of 3.4 percent annually. Overall revenue growth is forecasted to be
4.9 percent for FY 2025. This proposed budget must be more conservative than year’s past, but it reflects our intention to
continue making meaningful progress for our community.

Financial Sustainability and Stability

Financial sustainability and stability are the cornerstones of our fiscal strategy. We recognize the necessity for exercising
fiscal prudence and aligning our expenditures with our available revenues. Developing this budget has been a complex
and demanding process that has required many difficult decisions.

Our employees are our greatest asset, and while we face fiscal constraints this year, we are proposing a modest 2 percent
compensation adjustment for all employees to help cover the rising cost of living. Additionally, a further 2 percent increase
is necessary for the Police Department to ensure their salaries remain competitive with those of neighboring cities.

With lower anticipated revenue growth, we are focused on maintaining our essential services, keeping pace with necessary
increases for City contracts, and providing reasonable compensation adjustments for our workforce. Any additional funding
increases that were needed were funded through a blend of budgeting strategies. This includes reevaluating our priorities
and restructuring parts of our organization, resulting in the elimination of 22 positions. Departments have been asked to
identify budget reductions, leading to a $3.1 million cut for FY 2025, and we have deferred $23 million, or 52 percent, of
departmental budget requests. We are hopeful that, as our fiscal environment strengthens, we will be able to address
those deferred items in future budgets.

FY 2025 Adopted Budget and Business Plan iii City of Arlington, Texas