Fayetteville City Manager Doug Hewett proposed a $322 million budget for fiscal year 2027 on Thursday, telling council members the proposal “keeps the main thing the main thing” by protecting core services, finishing projects already underway, and making what he called “strategic investments that position Fayetteville for an even stronger future.”
The proposal includes a property tax rate of $0.4795 per $100 of assessed value, a 3-cent increase over last year. The owner of a home valued at $226,710—the average home value in the city in April, according to Zillow—would pay $68 more in property taxes. Hewett said even with the 3-cent increase, the tax rate is still among the lowest in the city’s history. The increase, he told council, will help Fayetteville keep services “strong and reliable.”
Alongside the tax rate increase, the budget recommends a $10 annual increase in the solid‑waste fee—about 83 cents per month—to offset higher fuel and operational costs. No other fee increases are proposed.
The only new service built into the budget is a mental-health response program in the Office of Community Safety—at a cost of $554,000—to help respond to people in crisis and meet growing community needs.
Employee compensation also drives much of the spending. The proposal includes step increases for public safety staff, a 4% pay raise for all non‑public‑safety employees, and a 1% increase in the city’s 401(k) contribution so all employees receive the same level of support.
The budget tension facing the city was unmistakable during the work session on Thursday. The cost of maintaining the same level of service is rising faster than the city’s revenue base, and staff said the 3‑cent property‑tax increase—and possibly more—is needed just to keep pace with inflation. Hewett’s proposed budget includes tens of millions of dollars in cuts and one‑time fixes just to balance it this year.
A Revenue Problem
Much of Thursday’s discussion focused on the city’s revenue challenge. Assistant City Manager Jeffrey Yates told council that Fayetteville’s two major revenue sources—property taxes and sales taxes—are not growing fast enough to keep up with 3% to 5% annual increases in operating costs.
He told council that if the city funded everything department heads requested to fully meet service demands, the general fund budget would reach about $240.3 million, compared with the $227.4 million staff said it would cost just to maintain the current level of service.
At the current tax rate, however, the city can generate only about $213 million in general fund revenue next year, leaving a gap staff has worked to close.
Staff first tried to close the gap between the current tax rate and general fund revenue by using vacancy savings of $8.9 million, fund balance for one‑time expenses of $1.2 million, early debt payoff of $1.2 million, and carryover of one‑time items, he told council.
Those steps closed most of the shortfall—but not all of it. A $2.5 million gap remained.
The proposed property tax increase is designed to close that gap and fund needs tied to council’s strategic priorities, including making Fayetteville safer ($1.3 million), strengthening the local economy ($554,000), making the city a desirable place to live, work and play ($456,000), maintaining high‑quality city services ($140,000), and improving community and business engagement ($26,000).
Yates said the math is unavoidable.
“We are heavily reliant on ad valorem and sales taxes,” he said. “We are growing as an organization, our revenue base [is growing] at a minimal level.”
The proposed tax rate includes one cent for the operating budget and two additional cents dedicated to the Capital Improvement Plan, which together account for the full 3‑cent increase.
Staff also outlined two optional scenarios for council to consider:
A fourth penny could fund the full expansion of the Office of Community Safety ($1.8 million) and add nine firefighter positions ($600,000) to stabilize staffing during vacancies.
A fifth penny could restore 28 frozen police positions ($2.25 million, not including vehicles) and add two firefighter “over‑hire” slots ($150,000).
Those options are not part of the proposed budget but remain available for council discussion as policy choices.
Staff framed this year’s budget as a small decrease compared to the revised fiscal year 2026 budget of $324 million.
In June 2026, council approved a budget of $315 million. It included a property tax rate of $0.4495 cents per $100 of assessed value, which was a 13-cent decrease from a year earlier. A steep rise in property values after a 2025 revaluation likely meant residential property owners still saw a higher tax bill last year. The city’s budget grew to $324 million as council approved a number of mid‑year budget ordinance amendments.
Some of those amendments added new outside money—like Arts Council grants for the Orange Street School Music Lab and the Independence Concert. Others filled gaps where the city had under‑budgeted using the city’s savings account.
For example, in March the council approved an election‑cost amendment, where the Board of Elections billed the city $315,367.82. Fayetteville had to pull $48,589 from its fund balance to cover the shortfall.
Debate Over Staff Raises, Transparency
A significant chunk of the discussion on Thursday centered on how much Fayetteville should spend on employee raises—and how those assumptions are buried in the “same service” calculations.
Hewett’s proposal includes 4% raises for non‑public‑safety employees, step increases for police and fire, and a 1% increase in the city’s 401(k) contribution, all of which are built into the $227.4 million figure staff said is needed just to maintain current service levels. The fiscal year 2026 budget included a 4% merit-based salary increase for employees and a 1% increase to 401(k) contributions.
Yates told council the total cost of those compensation moves in the fiscal year 2027 budget is about $4.9 million.
Several council members questioned whether those pay assumptions should be treated as non‑negotiable if they are driving a tax increase. Mayor Mitch Colvin argued he supports staff but wants the numbers fully spelled out.
“Just give us apples to apples,” Colvin said. “To do the same operation we did last year, to do it this year is going to cost more, because things cost more. And I’ve also factored in that you’re going to give a cost increase raise of X,” he said, adding “you put a number on and calculated it in there, but you didn’t disclose it.”
Yates responded that the raises are necessary to maintain staffing levels amid competition from other employers.
“We believe it takes the 4% and the 1% to maintain our staffing level,” he said. “You will not be able to maintain the same services.”
Councilmember Deno Hondros questioned whether pay alone explained staffing shortages, noting that despite prior pay and benefit improvements the past couple of budgets “we haven’t had one department, to my knowledge, that’s been fully staffed.” He said that pointed to broader issues of “morale, the vibe and the culture of the organization,” not just pay.
Hewett defended the compensation plan as part of a longer‑term “employer of choice” strategy the council previously endorsed, tying pay, benefits and facility upgrades to the city’s ability to deliver the services residents have asked for.
He also countered that vacancy numbers—including 99 open positions in the police department—are driven by broader workforce trends, not internal morale issues.
Towards the end of the discussion, Colvin reiterated his support for the city workforce.
“I want to be clear on this, because the council is asking for disclosure of how you got to the numbers, does not mean that staff is not supported,” he said.
Councilmember Derrick Thompson, first elected in 2022, added that “since I have been on council, there’s always been a priority for us to take care of our employees.”
A ‘Checkbook’ Look at City Priorities Sparks Questions
Yates urged council to judge the city’s priorities by where the money actually goes. He presented a “checkbook” view of the general fund that ranked departments by budget size, instead of by the traditional organizational chart.
“We wanted to really look at it this way because it helps clarify for you and residents where your heart is, where your dollars are,” Yates said, noting that police and fire sit at the very top of the spending list.
The proposed fiscal year 2027 budget devotes about $120 million to public safety when police, fire, and the Office of Community Safety are combined.
Most of that total goes to the Fayetteville Police Department, which would receive $76 million, a $2.54 million increase over the current year.
The Fayetteville Fire Department would receive $42 million, reflecting a $2.1 million increase. The Office of Community Safety is the only public‑safety division facing a reduction, with a proposed $2.18 million budget that is $287,000 lower than fiscal year 2026.
Other major slices of the “checkbook” include parks and recreation ($26 million), public services ($8 million) such as streets and sanitation, and transit, reflecting earlier council direction to improve neighborhood revitalization, transportation and quality‑of‑life amenities.
Yates said displaying the budget this way shows that, despite tight revenues and rising costs, the city’s biggest financial commitments still track closely with the council’s stated priorities around safety and core services.
“So the council has put its money where its mouth is and has supported the police and fire and community safety,” he said.
While council was reviewing the police budget, Hondros zeroed in on a deeper concern: whether the tax hikes approved in recent years—and publicly described as investments in first‑responder pay—ever showed up as actual increases in the police and fire budgets. He said the numbers on the slide didn’t match what residents had been told, and pressed staff to explain where the money went.
“We told taxpayers this was for first responders,” he said, adding that he couldn’t find the $8 million to $12 million jump that should have appeared after council restored the step plan and funded salary compression fixes.
That raised a basic question for him: “Did we take it out of another part of the first‑responders’ budget—vehicles, equipment, technology—to cover the raises?”
Yates said that is essentially what happened.
To afford the major police and fire pay packages within the city’s limited revenue growth, staff had to “whittle down” costs elsewhere by freezing 38 police positions, pausing fleet replacement, and making other internal reductions, he said. Those cuts freed up several million dollars, he said, which meant the raises were funded but the overall police and fire budgets didn’t visibly spike.
“You wouldn’t necessarily see it dollar for dollar,” Yates said, because staff were trying to “minimize the rate increase as much as we could.”
Hondros, clearly frustrated, responded by saying he would “stop short” because of how strongly he felt about the issue, adding that the internal shifts Yates described “were not the direction of council.”
To keep the budget balanced, the city declined a wide range of departmental requests. Unfunded items include internal audit support, strategic‑performance program travel, marketing and signage projects, and several police department requests such as Urban Search and Rescue needs, a domestic‑violence grant match, and nearly $3 million to unfreeze positions and purchase vehicles.
Development Services did not receive funding for public‑notice costs, radios, body cameras for code enforcement officers, or lobby speaker upgrades. Smaller requests across Human Relations, Finance, Economic Development, Human Resources, and Public Services—from equipment rentals to neighborhood improvements—were also deferred.
Council to Make Tough Choices as Budget Talks Continue
City leaders also weighed the impact of a proposed 3-cent property tax increase, framed by staff as a modest but necessary step to sustain services and capital projects.
Councilmember D.J. Haire voiced discomfort with raising taxes at all, citing conversations with residents struggling with everyday costs. Referring to constituent complaints about soaring gas bills, he said residents are “hurting” and “crying.”
“I know we need the services,” he said. “You know, residents always want more and more and more, but once again, I say it’s very hard for me to be able to support the increases,” even if they are considered minimal.
Hewett pointed to areas like sidewalks and transit as examples where council could adjust priorities, noting that staff can “deliver any budget at any tax rate you want” if given clear direction on what to scale back or delay.
Thompson closed the segment by underscoring that it is the council’s responsibility to “go through this budget, come back with recommendations.”
He reminded colleagues that a 1-cent increase equals roughly $2.4 million in revenue, and that recommendations for one or two additional cents ultimately reflect their policy choices on what to fund and what to cut.
“It’s all about your choice of what you want to see,” he said.
Council members asked staff to come back with clearer numbers before the next round of budget talks. They want to see exactly how the proposed raises and benefit increases are built into the “same service” estimate, how much money the city actually gains when the tax base grows by 1%, and how fast expenses and sales‑tax revenue are rising.
They also asked for a better explanation of how much the city is saving through vacancies, a full accounting of spending in the Office of Community Safety, a deeper look at the parking fund and its vendor contract, and options for scaling back the $6 million Stadium View project to ease pressure on the tax rate.
Council will continue budget work sessions on Thursday, May 28, and June 1 at 10 a.m., with a public hearing scheduled for May 26 during the regular city council meeting. Here’s how you can have a say in the city’s budget process.
The budget is expected to be adopted by June 8.
Government reporter Rachel Heimann Mercader can be reached at rheimann@cityviewnc.com or 910-988-8045.
Did you find this story useful or interesting? It was made possible by donations from readers like you to the News Foundation of Greater Fayetteville, a 501(c)(3) charitable organization committed to an informed democracy in Fayetteville and Cumberland County.
Please consider making a tax-deductible donation so CityView can bring you more news and information like this.
