Lower-than-expected tax revenue prompts Arlington to consider a three-cent tax rate hike.

ARLINGTON, Texas — Facing financial challenges, the city of Arlington proposed a property tax rate that would cause the average resident’s bill to go up.

The proposed budget included a three-cent tax rate hike, bringing the property tax rate to $0.6298 per $100 in valuation. The change will cost the average homeowner about $59 annually. The higher tax rate plus increased fees could cost the average homeowner about $147 more per year, the city said.

Arlington is grappling with a $25 million shortfall in the fiscal year 2026 budget. The city attributes the gap to lagging property values, lower-than-expected sales tax revenue and changes to Tarrant County’s appraisal process.

“You have a city that’s going through a financial challenge, really through no creation of our own, but through structural changes that are happening outside of us that we are now trying to manage,” Trey Yelverton, Arlington city manager, said in a presentation to city council.

Two cents will be used to close the fiscal year 2026 funding gap, and one cent will be levied in anticipation of the business personal property tax exemption, going into effect in 2027.

If the Arlington City Council approves the tax hike, the city expects to bring in an additional $11.1 million in revenue.

The city previously slightly increased its tax rate by one cent in fiscal year 2025. Before that, the city routinely lowered its tax rate, but revenue continued to rise along with property values.

To close the rest of the 2026 gap, the city is proposing eliminating 42 vacant positions and restructuring the budget to reduce department expenditures.

The city will reduce $7.7 million in expenses. Some of the cuts include reductions to lobbying, animal services, its annual employee picnic and its fleet of vehicles, according to the city.

The city also outlined a plan to restructure $2.3 million in short-term debt and tax increment refinancing zones. Plus, add $5.7 million in new fees and fee adjustments. For a full list of adjustments, go here.

Townhalls to hear feedback on the proposed budget will be held Aug. 14 and 21. They are scheduled to vote and approve a budget and tax rate Sept. 16.