After months of deliberation, the Durham City Council unanimously passed its budget for the upcoming 2026-27 fiscal year.
The budget comes in at $767 million and holds the city’s tax rate at 43.71 cents per $100 of assessed value. Numerous financial constraints, including uncertain state and federal support, an unstable national economy, and lower-than-expected property tax revenues put the city manager and his staff in a bind when constructing the final proposal, but Mayor Leonardo Williams said the council was able to overcome disagreements about how to move forward with more limited resources.
“We were probably on seven different pages, and yet, we somehow came to a consensus,” said Williams, capping his fifth budget cycle—third as mayor.
Before the budget hearing could begin, a handful of demonstrators interrupted the meeting in protest of the treatment of incarcerated residents and the city’s recent sweeps of homeless encampments, holding up signs and pacing around the dais before being removed by Durham police officers. One protestor, who declined to speak to the press, was handcuffed in front of the dais before being escorted from the meeting along with three other protestors and released, sidetracking the meeting for almost 10 minutes before discussion resumed.
But throughout discussion of the budget, it was the revenue shortfall that took center stage.
Both the city and county budget were hampered by an unexpected, and unprecedented, budget shortfall due to large property tax reductions. Over 10,000 commercial and residential property tax appeals were submitted this cycle—significantly more than average—leading to a staggering $4.4 billion decline in assessed value, from which Durham governments generate a majority of revenue. That reduction translated to an unexpected, $9 million loss in revenue for the city. Commercial properties in particular accounted for 93% of the reduction in assessed value countywide despite making up just 12% of appeals, an INDY investigation revealed.
Residents and members of city council honed in on the issue as a major point of concern for the city’s financial outlook, now and in the future.
“This doesn’t just affect the budget we’re about to vote on this evening,” city councilor Nate Baker said. “It affects every budget until there is another revaluation.”
Council members and residents alike also noted wins in the budget, including raising the minimum livable wage for city employees to $25.09 per hour, and an additional 2% cost-of-living raise for all city staff. GoDurham buses also remain fare-free for another year, supported by a one-time $8.2 million contribution from GoTriangle and Durham County. The budget also made investments in legal defense for people navigating eviction and immigration cases.
“When we imagine what we want our community to look like in five weeks, five months, five years, this is an investment in workers, small businesses, and for our children and our schools,” said Taylor Reynolds, senior staff attorney at Justice Matters, one of the organizations that administers legal aid for immigrants in Durham. “We are grateful this work that protects the lives of our immigrant neighbors will continue for the preservation of our beloved community and our beloved neighbors.”
Although the budget passed unanimously, city council members spoke openly about how difficult the process was, and how no one got everything they wanted.
“This is my first budget cycle, and I will say, zero out of five stars,” freshman councilor Shanetta Burris said jokingly after the budget vote.
The budget doesn’t fund merit raises for city staff, and while the budget does keep buses fare-free for a year, officials have warned the long-term viability of fare-free buses will be revisited next budget cycle.
To account for the shortfall, city budget staff had considered eliminating roughly $1 million in funds supporting local organizations and nonprofits like the Durham Expunction and Restoration Program (DEAR) and the West End Community Foundation (WECF) in Lyon Park. Community members came out in droves to the June 1 budget public hearing, expressing concerns over the impact cutting those supportive funds would have.
Ferguson and city staff told the INDY they intend to dip into the fund balance—the city’s savings account—to replenish the gap, but only as a one-time fix this budget cycle. Still, residents were effusive during the public hearing, expressing gratitude for restoring funding to important public initiatives like the DEAR program and WECF). The Durham DA’s Office was the only organization on the list that will have partial, instead of full, funding restored; the office stands to lose city grant-funded staff.
Even though 80% of the original funding was restored for these organizations, residents still pressed the city council on tackling the issue on everyone’s mind this week: getting corporate landlords to pay up.
“I hear that you’re mad about what has happened,” Leslie St. Dre said to the City Council at Monday night’s meeting, “but it is your responsibility to use your leverage to get that money back.”
Mayor Williams said that measures would be taken to ensure equity in the tax revaluation process moving forward while lamenting the city’s limited control over taxing structures. No specifics were given, but Williams and mayor pro tem Javiera Caballero said the city would work closely with its county partners on the issue.
“They followed the law,” Williams said regarding the corporate landlords who successfully appealed their property tax bills. “That doesn’t mean the law works for our best interest. Those are just realities, and I’m not going to pit the community against one another, because we’re better off working as partners than enemies or adversaries. …We need to get together and take our energies to Raleigh and change the way this government works, so we can actually have the power we need here at the local level.”
City staff have forecast that the funding challenges facing this year’s budget are temporary. Durham expects to see growing sales tax revenue, and more predictable modeling for property tax revenues moving forward. No matter how much money the city has to operate with, the city council, staff, and residents will need to bring a collaborative spirit to the table to ensure the most desirable outcomes for everyone involved.
“We’re living in interesting times right now, but I do appreciate the fact that this budget cycle was not contentious amongst me and my colleagues,” Burris said. “We can get a lot further together if we have these hard conversations together, we hear each other out, and we figure out a pathway forward, because we all have our different lived experiences that make us great, but we’re not going to get anywhere far if we do not get together.”
Comment on this story at [email protected].
