Denton's adopted FY 2026-27 property tax rate is expected to reduce the average home's annual bill by about $203 after the city council unanimously approved a new rate of $0.548485 per $100 of valuation, the lowest the city has seen since 2004. The rate cut is part of a $2.22 billion fiscal year 2026-27 budget passed by the council on Sept. 22, amid growth in data-center development.
City officials say the drop is possible because Denton's overall property values climbed to $26.7 billion, with $3 billion of that increase tied directly to data center development, according to Aimee Kaslik, the city's chief strategic officer, as reported by Community Impact. Kaslik told the council that the increase in overall property values allowed Denton to lower its tax rate even as the city grows. Core Scientific, which operates in southwest Denton, and Qumulus, a facility in development and expected to be operational in 2028, are the two projects driving much of that valuation jump.
Despite the lower rate, the budget technically triggers what state law calls a tax rate increase — a 6.3% increase based on the no-new-revenue-rate calculation required under Texas law. Denton Mayor Chris Watts said the tax increase wording is simply legislative context, not a reflection of what residents will actually pay. That framing stems from Texas Tax Code Section 26.05, which requires local taxing units to officially record a tax rate increase vote whenever a proposed rate exceeds the state's no-new-revenue threshold, even if the rate itself is falling, according to FindLaw.
How the $2.22 Billion Budget Breaks Down
The city's own figures, released Sept. 23, show the $2.22 billion package allocates $233.4 million to the General Fund and $1.425 billion to the Capital Improvement Program, while funding 1,903 full-time equivalent employee positions, according to the City of Denton. Kaslik presented the budget as structured around five major pillars: day-to-day operations, self-sustaining public utilities, internal city operations, restricted-use accounts, and long-term capital investments. All city positions are fully funded for the fiscal year, she said.
Personnel costs make up 67.57% of the General Fund budget. General government employees may receive up to a 2.5% merit increase plus a one-time cost-of-living adjustment, while fire department personnel will see a 3% base increase after the council approved a 1% funding boost for the department. The General Fund also fully funds two new EMS lieutenant positions.
The budget process unfolded under new leadership. Interim City Manager Cassey Ogden said the FY 2026-27 budget prioritizes investing in employees and maintaining service levels, per Community Impact.
Electric Rate Hike Put on Hold
Denton Municipal Electric had proposed a 3% rate increase set to begin Jan. 1, but the council directed staff to suspend that plan until the beginning of 2027, pending an Oct. 27 work session that will review energy fund balances, pricing, and utility rates. In the meantime, the average homeowner's monthly utility adjustment was reduced from a projected $8.15 increase to $5.94, taking effect Oct. 1. The adopted FY 2026-27 budget document still reflects the original 3% electric rate increase on paper, even though its implementation has been paused.
Growth, Grid Strain, and a Push for a Pause
The city's finance staff cautioned during August budget work sessions that personal property tax revenue tied to data center equipment could fluctuate over time; data centers also receive significant sales-tax exemptions, according to KERA News. Earlier reporting described Core Scientific's 78.85-acre Denton facility, with completion expected in 2027, per Community Impact.
That financial windfall has come with pushback. At a public hearing that week, all 20 people who spoke supported a proposed temporary moratorium on new data center applications, Hoodline reported. The debate has included concerns about strain on city resources and grid capacity. The tension underscores a central trade-off facing Denton: the same industry cutting residents' tax bills is also straining the infrastructure meant to support them.
How Denton Compares Regionally
Denton County's budget was approximately $495 million, according to the Denton County government.
Denton County's population, which surpassed 1 million residents in June 2023, has continued to grow by an estimated 86 residents per day, fueling demand for city services and infrastructure across the region.
