What Fate’s Proposed Budget Says About Growth, Spending and What Residents May Pay Tomorrow.
Civic Insights with David Billings
It’s August in Texas, which means three things are certain: it’s going to be hot, cities are working on their budgets, and Cowboys fans are once again dreaming about the Super Bowl. The Rangers? We’re not quite sure yet.
While we will have to wait a few months to see whether the Cowboys’ dreams survive, Fate’s budget numbers are already here, and they may tell us something important about what residents could pay tomorrow.
For any mayor or city council, the budget is arguably the most important policy document of the year. It tells citizens not only what the city plans to spend today, but also where its finances may be headed in the future.
Let’s focus on the City of Fate.
After reviewing the proposed budget, four major themes emerge. More importantly, the numbers raise a larger question: Is Fate changing its growth model faster than it is changing its financial model?
First, what is NIMBYism?
In local-government and land-use discussions, Not In My Backyard, or NIMBYism, generally refers to opposition to new housing, commercial development, roads, utilities, schools, and other projects. Citizens can have legitimate concerns about traffic, drainage, water, sewer, public safety, infrastructure capacity, and whether a development financially benefits the community.
The financial question is what happens when residential growth slows over a sustained period.
A few numbers from the proposed 2027 Fate budget provide useful context:
- Appraised values increase approximately 1.9%.
- The Police Department budget decreases approximately 3%.
- The Fire Department budget increases approximately 14%.
- IT spending decreases approximately 1%.
- Economic Development spending increases approximately 1%.
1. Expenditure Growth Is Outpacing Revenue Growth
The clearest long-term trend is that General Fund expenditures are growing faster than General Fund revenue.
From 2023 through 2027, General Fund revenue increases approximately 40%, while expenditures increase nearly 60%. That represents roughly an 8.8% compound annual growth rate for revenue compared with approximately 12.4% for expenditures.
Public safety is a major contributor. Police and Fire account for roughly 55% of expenditure growth as Fate continues funding separate Police and Fire departments and expands public-safety services.
There is nothing inherently wrong with spending more on essential services. Roads, police, fire, water, sewer, and infrastructure cost money.
The financial issue is sustainability.
If expenditures continue growing faster than recurring revenues, the city eventually must close that gap through stronger revenues, slower expenditure growth, service changes, tax or fee adjustments, or some combination of those choices.
That is not politics. It is math.
2. Fate’s Traditional Growth Model Is Changing
For years, residential development and rapidly rising property values generated substantial municipal revenue through building permits, inspections, utility connections, new taxable property, and increasing appraised values.
That high-growth period is changing.
Permit revenue has fallen approximately 38% from its 2024 peak, while inspection revenue has declined approximately 44%. Assessed-value growth has also slowed dramatically—from increases of roughly 25%, 12%, and 11% in earlier years to approximately 2% projected for 2027.
The decline in permit and inspection revenue reflects significantly less development activity moving through those city processes.
What requires additional analysis is why that development activity has slowed.
Broader housing-market conditions, higher interest rates, the normal maturation of Fate, developer decisions, and local development policy may all contribute. The budget itself does not tell us how much weight to assign to each factor.
But it does tell us the financial result: Fate is receiving less growth-related revenue than it did during its rapid-growth years.
For several years, rapidly increasing property values allowed Fate to substantially reduce its tax rate while still generating additional property-tax revenue. That made the tax rate an easy political measure of financial success.
That dynamic is changing.
The proposed tax rate is approximately 29.08 cents per $100 valuation following the increase associated with the DPS facility bond. More revealing is the movement of the No-New-Revenue Rate, which increased significantly between 2025 and 2026.
The increasing NNR rate reflects a changing revenue environment. Fate’s tax base is no longer producing the same level of revenue growth experienced during the city’s rapid-growth years.
In simple terms, Fate should no longer assume that rapid residential growth and rapidly rising home values will continue generating the same revenue increases experienced in previous years.
A low tax rate alone therefore does not tell us whether the city is financially healthy. We also need to ask whether recurring revenues are keeping pace with recurring expenses, whether the tax base is expanding, whether sales-tax revenue is growing, and whether the city can maintain services and infrastructure without continually increasing the burden on existing residents.
3. Fate Is Becoming More Dependent on Commercial Development
The previous City Council deliberately planned for sales tax to become a more important part of Fate’s financial model.
That strategy is now becoming reality.
Sales-tax revenue increases approximately 78% from 2023 through 2027, and the proposed 2027 budget assumes approximately 23.9% sales-tax growth in a single year.
That assumption deserves scrutiny.
Lafayette Crossing and Fate Yards should support additional sales-tax growth as they develop, but much of their impact will occur in later years. In the near term, Fate will depend heavily on existing businesses and newer commercial developments performing strongly enough to meet budget expectations.
This is where residential and commercial policy intersect.
Retailers, restaurants, grocery stores, medical providers, and service businesses do not evaluate communities based only on available commercial land. They also consider population, rooftops, household income, traffic counts, and future trade-area growth. Fate’s own planning discussions have previously recognized the importance of additional rooftops in supporting commercial development.
This creates a potential tension in Fate’s financial model: the city is becoming increasingly dependent on commercial and sales-tax growth at the same time residential growth is slowing.
Slower residential growth does not automatically prevent commercial development. But, among other factors, it can make attracting and supporting additional commercial investment more difficult.
4. Slower Residential Growth Has Financial Tradeoffs
Fate’s financial model has historically benefited from residential growth.
New homes add taxable value, generate permit and inspection revenue, create water and sewer customers, and provide additional households to support local businesses.
When residential growth slows, fewer new homes enter the tax base, fewer customers help share utility-system costs, and fewer households contribute to local commercial demand.
At the same time, many city costs continue to grow.
If those costs are not offset through stronger commercial revenues, spending reductions, or other sources, existing residents could face increased pressure through taxes, fees, or utility rates.
Consider utilities.
Fewer new households mean fewer water and sewer customers available to share infrastructure and operating costs. The proposed 2027 budget projects a 15% sewer-rate increase and a 3% water-rate increase, with additional increases possible in future years.
Slower growth also does not eliminate infrastructure needs.
Roads still require maintenance. Water systems still require upgrades. Sewer systems still require capacity. Police and fire services still must be provided.
Development can also help leverage private and outside funding for infrastructure. In one example, Crenshaw Preserve, roughly $2.5 million in net city participation could help produce approximately $20 million in roadway improvements. If Fate later requires those same improvements without comparable developer or outside participation, taxpayers could be responsible for a substantially larger share of the cost.
None of this means Fate should approve every development.
Bad development can create long-term costs. Infrastructure capacity matters. Traffic matters. Drainage matters. Development quality matters.
The answer is not unlimited growth.
The question is whether Fate can manage residential growth in a way that helps strengthen the tax base, support commercial development, expand the utility customer base, and leverage infrastructure investment while protecting the community’s quality of life.
Final Thoughts
Fate’s proposed budget raises questions that extend well beyond one fiscal year.
Can the city continue increasing expenditures faster than revenues?
Can sales-tax growth meet increasingly aggressive expectations?
Can Fate continue funding its infrastructure and core services as residential growth slows?
And can the city become increasingly dependent on commercial development while limiting one of the factors population and rooftop growth that helps support commercial investment?
The debate should not be reduced to growth versus no growth.
It should be about financially sustainable growth.
Restricting residential growth may reduce immediate development pressures, but it can also slow tax-base growth, utility-customer growth, and future commercial demand. If those revenues are not replaced through commercial growth, spending restraint, or other sources, a greater share of future costs could fall on existing residents.
Fate does not need unlimited growth.
It needs managed growth that helps pay for the services and infrastructure the community will need anyway.
That is the long-term financial risk Fate should consider when it says no to growth.
🎙️ Continue the Conversation
Listen to my podcast, “As Fate Would Have It.” My co-host Dave Martin, host of The Good Government Show, joins me as we talk with government and local leaders about what’s happening in Fate and across Rockwall County.
New episodes drop monthly. Give it a listen and let me know what topics you’d like us to cover.
About the Author
David Billings, former Mayor of Fate, has served the community for over a decade. A longtime business leader in the telecommunication industry, Navy veteran, and resident of Rockwall County, he brings both professional and civic experience to his writing on government, budgeting, and local economics. He is a graduate of Leadership Rockwall, North Texas Commission Leadership Program, active in several Rockwall County non-profits boards, and the American Legion.
He is passionate about civic involvement in local government, maintaining transparent governance and thoughtful strategic planning to preserve a bright future for the regions.
