Tuscaloosa Mayor Proposes FY26 Budget Totaling Nearly $240M

TUSCALOOSA, AL — Tuscaloosa Mayor Walt Maddox on Tuesday presented his proposed budget for fiscal year 2026, which includes a $208.4 million general fund budget and underscores what he believes is a continued investment in public safety and other long-standing initiatives.

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The total proposed budget comes in at around $240 million when factoring in the Elevate Tuscaloosa Fund, with the mayor pushing for the city to support public safety, education, infrastructure, employee investments, artificial intelligence (AI) innovation investments and more.

“Public safety remains our top priority, as evidenced by the fact that 40% of this proposed budget is dedicated to protecting our community,” Maddox said. “I’m also very proud of the work we’ve done to avoid budget cuts while navigating the challenges posed by the limited growth of our sales tax revenue due to the Simplified Sellers Use Tax (SSUT). Thanks to our AAA credit rating, conservative budgeting practices and strong reserve levels, we are able to continue moving Tuscaloosa forward.”

The general fund budget, if approved by the City Council, will also include more than $82 million committed for public safety and a two-step 5% raise for police and fire employees, while non-public safety staff will receive a 4.5% raise consisting of a 1.5% step raise and a 3% cost-of-living raise.

"We really had three goals going into this budget," Maddox said on Tuesday. "First, was to navigate the impacts of SSUT. The second was to try to, in navigating those impacts, mitigate the impact to our departments and to the agencies that we fund. And lastly, is to invest into RSA [Retirement Systems of Alabama]."

The mayor is also proposing that the city invest $4.9 million in converting public safety retirement benefits to the RSA.

"This time next year ... the budget we'll be adopting will include our police officers and our firefighters into the Retirement Systems of Alabama," he said. "My budget is putting $4.9 million into the public safety fund to help us transition into the Retirement Systems of Alabama. This is probably one of the more difficult things we've had to achieve in this budget because of many of the anemic revenue line items that you'll see a little bit later on."

Education initiatives funded through Elevate Tuscaloosa — budgeted at $31.4 million total — will remain a key priority for the mayor, who pointed out that more than 500 children are enrolled in pre-K, while 1,700 students are participating in summer learning programs, and more than 10,000 dual-enrollment credit hours have been earned since the program began.

"[Elevate] gives us near universal pre-K that otherwise people in Tuscaloosa would not have," Maddox said. "For your constituents, that is a $5,811 savings that if they were to enroll their child into a pre-K program, they would have had to pay out that. Not only are we getting an education benefit, we're giving families a financial benefit."

Infrastructure spending totals more than $60 million in the proposed budget, including major projects supported by Elevate grants and partnerships worth more than $116 million, such as the Western Riverwalk, Tuscaloosa National Airport upgrades and the Saban Center.

"We're nearly at a dollar per dollar match of Elevate dollars collected and the matches that have come to it," Maddox pointed out. "This city council and the city council in 2019, if we did not pass Elevate, we would not be in the position to do the many things that we talk about, such as the Saban Center, but also [improvements to the Tuscaloosa National Airport.]"

Maddox said the city will also save residential customers nearly $300 annually on environmental services fees despite a $1 monthly increase, thanks to restructuring.

He then reiterated Tuscaloosa’s relatively low 3% city sales tax rate, one of the lowest among Alabama’s largest cities, before mentioning that sales tax collections in Tuscaloosa are projected to show "anemic" growth through the next couple of fiscal years unless something can be done to address SSUT.

As Patch reported last week, the City of Tuscaloosa and Tuscaloosa City Schools (TCS) filed a highly anticipated joint lawsuit that accuses the Alabama Department of Revenue (ADOR) of unconstitutionally allowing major online and national retailers to avoid paying traditional local sales taxes through the state’s SSUT program.

Amid the mayor's push for the state to reform its internet sales tax distribution model, the city reported $47.2 million in sales tax revenue in 2023 and $47.3 million in 2024. That number is expected to climb slightly to $47.5 million in 2025 and $47.6 million in 2026.

City officials said the average annual growth rate for sales tax collections between 2023 and 2025 is about 1%, as sales taxes remain Tuscaloosa’s single largest source of general fund revenue, making up roughly 44% of the city’s overall budget.

"Sales and use taxes are anemic, and I think there's no doubt that is a direct impact of SSUT," Maddox said. "Less than 1% growth in a city that's growing as fast as the city of Tuscaloosa, and also when you think about the inflationary impact, as well. So that is, again, another cause for concern, certainly a validation that we're on the right track [with the push to reform Alabama's internet sales tax]."

Another potential concern will be what the mayor referred to as a "significant health insurance increase," before suggesting there is a "partial silver lining" to the rising costs.

Maddox explained that at the beginning of the summer, the city was notified by Blue Cross/Blue Shield that the city was facing a potential 11% rate increase, which is partially based on the claims from last year.

"We had a couple of very significant health insurance claims," he said. "We're self-insured, so that was one reason. Two is the uncertainty of tariffs on prescription drug prices and the impact of that. So, the overall health insurance impact is 8.3%. We were able to negotiate down to about 8.3%. So, what does that mean for our employees? If you're an employee under Option 1 and you're only taking your own health insurance, it would be $11.43 per pay period, $9.56 if you're under Option 2. If you're an employee with family, it's $23.08 every two weeks. It's actually 24 times a year. There's two weeks where it's not taken from city employee paychecks. If you have Option 2, it would be $19.18."

Agency funding was also briefly mentioned Tuesday, with Maddox saying the only reduction in financial support will be to the Tuscaloosa County Park & Recreation Authority (PARA).

Maddox went on to say that the current issue with the Arts Council is one reason, due to the fact that the city had previously funded PARA through the Arts Council. However, Maddox said the city will now be providing funds directly to the Arts Council.

What's more, he said that the city has taken over Snow Hinton Park, Kaulton Park, Burrell Odom Park, Queen City Park, Jaycee Park, and Springbrook Park.

"So we deducted the cost of taking over those parks," Maddox said. "PARA's cost, what PARA said it cost them to take over those parks, is PARA's actual cost estimate. Our costs are more because our standard for those parks being maintained are higher [than PARA's]."

The budget will now move to the Tuscaloosa City Council for consideration and more information will be provided during future budget hearings before it is approved.

Click here to view the mayor's full budget presentation.

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