Durham city manager Bo Ferguson shared his budget proposal for the 2025-26 fiscal year at Monday’s city council meeting.
The recommended total budget is $772 million, a $53.9 million, or 8 percent, increase from last year. Ferguson’s budget proposal centered on four priorities: community safety, infrastructure, employee support, and service delivery.
To meet the city’s growing service needs, Ferguson recommends adding 42 new full-time employees across several departments. Community Safety is expected to add 17 new positions, the most of any department. These positions include crisis responders, crisis clinicians, street outreach workers, and admin staff.
Expansion of the HEART program was a top priority for city council members and residents. Ryan Smith, director of the Community Safety Department, told the INDY that HEART teams are currently only able to respond to 50 to 55 percent of eligible calls. Before the first budget public hearing on March 17, a rally was held outside City Hall where folks advocated for the city to provide enough resources so HEART could operate 24 hours a day, 7 days a week.
Ferguson instead proposed focusing first on expanding HEART operations to reach more eligible calls during the day, when there is the greatest need, adding he believes “HEART will be a 24/7 operation in the not too distant future.”
Infrastructure is another major investment in the city manager’s budget. The proposal includes funding to keep GoDurham buses fare-free, $17.2 million from the Durham County Transit Plan for bus service expansion, and three new positions to develop a bus-rapid transit plan. It also sets aside $500,000 for Vision Zero initiatives to reduce traffic fatalities, and $1.2 million from the city’s Capital Improvement Plan (CIP) to continue moving forward on a possible two-way conversion of Roxboro and Mangum streets, a big ticket item for transit advocates.
The CIP allocates $537.6 million to over 70 projects in total, headlined by a $158.8 million investment in the Jordan Lake Water Treatment Plant, a much-needed facility to manage Durham’s rising water needs as the population continues to grow.
Employee pay has been a galvanizing issue dating back to the last mayoral election in 2023. City staff conducted a pay study to adjust salaries based on market competition, which the city implemented in 2024. Ferguson says the new pay plan has already helped reduce turnover and staff vacancies. His 2025-26 proposal includes additional raises to match the city’s new Minimum Livable Wage, which jumped from $19.58 to $21.90 per hour.
Like the county, property tax collection is the lifeblood of the city’s revenue. Due to the updated property valuations that went into effect in January, and the growing pool of taxpayers within city limits, the city is expected to bring in an additional $47 million in property tax revenue.
Ferguson is proposing to cut the property tax rate, just like county manager Claudia Hager, but because the revaluation resulted in higher property values, residents won’t see a proportionate cut in their property tax bills.
After the revaluation process, local municipalities are required to publish a “revenue-neutral” tax rate, the property tax rate that would be necessary to match the previous fiscal year’s budget. Ferguson’s proposed property tax rate is 43.71¢ per $100 of assessed value, a 15.91¢ decrease from the current rate of 59.62, but a 5.48 increase above the revenue-neutral rate.
For city residents, the new combined city-county tax rate would be 99.13¢ per $100, should the rates proposed by Ferguson and Hager remain unchanged through the budget development process.
Sales and occupancy tax revenue are trending downward, dropping 0.7 percent and 33 percent respectively. Residents have expressed concern with parking and safety, which has hurt local business sales and driven down visitation to downtown, one of Durham’s economic hubs.
Occupancy tax revenue, on the other hand, is being re-routed, not lost. Last year, local officials worked with state lawmakers to redirect the funds generated from fees on hotel stays and short-term rentals, to Discover Durham, the local tourism agency, to support the organization’s Durham Next initiative. Durham Next will steer the development of big capital improvement projects and other public amenities, attracting residents and visitors to spend locally, driving up sales and occupancy tax revenue.
With the new tax rates, a large share of Durham residents can expect a higher tax bill, but that additional revenue for the city is being invested in issues that residents have expressed the most interest in funding through their responses at public hearings and community surveys.
The budget may not seem different from recent years, but internally, city staff had to reconsider how funding is allocated across departments due to an organization-wide restructuring which the INDY reported in April. Starting July 1, the first day of the new budget cycle, certain departments will have new staff and new responsibilities. City staff had to work through this future reality when building this year’s budget proposal.
“Each Fall, we begin building our budget, and on the surface, it may seem like a fairly routine process to folks,” Ferguson said. “But this year, as council knows, was far from routine. Durham County recently completed a full property revaluation and that created a moment for us to pause and take a fresh look not just at our numbers but at how our city is structured to deliver the services that our community expects.”
Now that residents have seen the manager’s proposal, they will have a number of opportunities to express their enthusiasm or concerns about the budget. The city will host two budget work sessions on May 28 and 29 at 9 a.m., and a public hearing at their regular city council meeting on June 2 at 7 p.m.
The city council votes to adopt the final budget on June 16.
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