Mayor Recommends Largest Budget in Tuscaloosa History, Employee Raises Offset by Cuts for Every Department

Tuscaloosa Mayor Walt Maddox has recommended a $356 million budget for fiscal year 2027, the largest spending plan in city history.

That eye-popping figure covers the $234 million general fund, an $88 million water and sewer budget, and a $31 million Elevate Tuscaloosa budget. The process is becoming old hat for Maddox, who was first elected mayor in 2005.

"It's the largest budget in the city's history, and it certainly reflects a growing community," Maddox said. "This is my 20th budget to the city council, so certainly for me it was a time of reflection. There are 30,000-plus more people today in Tuscaloosa than when I took office more than 20 years ago."

Presented to the city council Tuesday afternoon and explained to reporters Wednesday, the General Fund budget raises pay for nearly every city employee and directs more than $100 million to public safety while cutting the operating budget of every city department by 5%.

Citizens can review it online here.

A record budget in a shrinking revenue year

The record-setting expenses recommended arrive alongside a revenue picture the mayor described bluntly. Maddox said Tuscaloosa has seen sales tax collections fall for at least the first eight months of the current fiscal year, including a roughly $750,000 drop in taxes collected from "big box" stores like Walmart and Target.

(City of Tuscaloosa)

(City of Tuscaloosa)

Maddox attributed the declines partly to a slowing economy and partly to Alabama's simplified sellers use tax, or SSUT, which routes tax revenue from online purchases away from the cities where buyers live.

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Closing a $28 million gap

Maddox said legislation passed by the Alabama Legislature put a $2 million burden on the city budget, health insurance costs increased by more than $1 million, the city "lost" more than $11 million to SSUT, and moving public safety employees to the Retirement Systems of Alabama will cost another $12 million this fiscal year.

That creates a $28 million gap that Maddox said he aimed to close without stalling city projects by asking every department to cut 5%.

"It's not optimal. It's not something you want to propose as mayor," he said. "But at the same time, it's about responsibility and accountability. We have to make certain that we spend every dime wisely."

The budget also shrinks the city payroll while boosting the salaries of every municipal employee.

"This budget also includes 14 fewer general fund employees," Maddox said. "So not only are we reducing department budgets by 5%, we're actually reducing our FTEs within our general fund operations. We know the businesses out here are having to do the same, so we want to reflect that, but we also have a responsibility to keep this community growing. We're balancing that."

Raises for every city employee

Despite the cuts, the budget recommends raises for all employees, including police and firefighters. Maddox recommended a 2.2% cost of living adjustment along with step movement on the city's pay schedules for employees who receive a positive performance review, an increase he said is funded largely by the 5% departmental reductions.

"We're in competition for employees, and we live in a market that is influenced by the University of Alabama, Mercedes-Benz and others," Maddox said. "That is who we're competing against, whether it's for engineers, crew workers, or police officers. We have to maintain our pay levels to stay competitive, because at the end of the day, we can have the best technology, the best software, the best facilities, and the best equipment. But if we don't have the people who operate it, we are not going to provide our services to our standard."

Health insurance costs are climbing 10%, and Maddox said he has directed the city's human resources department to shop for alternatives in the coming year, with an eye toward offering employees a wider range of plan options.

"By the way, we're not alone. There's not an entity in the United States that's not looking at dramatic costs in prescriptions and in providing care," he said. "It is getting more and more difficult to navigate."

Asked whether employee COLAs and step raises will offset higher health care costs, Maddox said all city workers should see larger paychecks in 2027 if his budget passes.

A new retirement system for police and firefighters

The budget also carries a $12.7 million line item for the long-anticipated move of Tuscaloosa firefighters and police officers out of an old private pension fund and into the coveted Retirement Systems of Alabama, a shift Maddox said will amount to a quarter-billion-dollar investment over the next 20 years and took five years of planning and saving.

"For the men and women who are out there every day protecting us, I'm glad we're going to be able to provide them a retirement they can count on, and a retirement their spouses and beneficiaries can count on as well," he said.

Public safety accounts for more than $100 million of the total. Maddox said violent crime in Tuscaloosa is down 51% since he took office in 2005, a decline he partially credited to the council's ongoing investments in the Tuscaloosa Police Department and Tuscaloosa Fire and Rescue.

One new recommendation for 2027 he singled out is an expansion of TPD's behavioral intervention unit, adding three social workers and a cyber intelligence analyst while continuing the department's partnerships with Indian Rivers and DCH.

"Mental health is not the city's responsibility. It is a responsibility of the state of Alabama," Maddox said. "But at the same time, the fact that it's not getting taken care of doesn't mean we shouldn't do anything."

$16 million for education

Although Tuscaloosa City Schools are funded by their own tax revenues, Maddox has long invested city funds into education, and the 2027 budget dedicates more than $16 million to that cause.

Those initiatives include near-universal pre-K, the city's summer learning program, and dual-enrollment scholarships at Shelton State and the University of Alabama.

The internet sales tax fight

Maddox has advocated for years to reform SSUT - the state's internet sales tax structure - and even sued the state over the matter, but the city and 18 other plaintiffs dismissed the lawsuit amid assurances that the legislature would find a way to improve the system.

Still, Maddox said he doesn't expect it to happen before the end of this year, and he told reporters that lawmakers must find a way for more of the internet sales tax spent in Tuscaloosa to stay here.

"We can do this for another three, four or five years. The city is financially strong. We have built ourselves strong. But ultimately, we have got to solve certain financial issues," Maddox said. "I'm pretty simple about this. The taxes generated in Tuscaloosa - I'm not asking for anyone else's taxes - I just think the taxes you work hard to pay should stay in Tuscaloosa and continue to be invested in Tuscaloosa."

The budget recommendations now go before the Tuscaloosa City Council for consideration. They will discuss their various proposals over the next month and, ideally, adopt a budget before Fiscal Year 2027 begins on October 1st.

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