The City of Broken Arrow’s fiscal health is very stable due to a conservative approach to governing despite a slowdown in sales and use tax receipts.
City Manager Michael Spurgeon presented the City of Broken Arrow’s proposed Fiscal Year 2026 Annual Budget and 2027 Financial Plan for review and public comment at the June 2 City Council meeting. The City Council will vote on the budget's final adoption on June 16.
Watch a short video by clicking the image below on how the City's budget is created.
The projections for sales tax revenue are up slightly at 1.5 percent higher than FY-2025.
“The bottom line is, with the type of revenue sources that we have, we need to be conservative and make sure that whatever we put in place today is sustainable for the future,” Spurgeon said. “Sales tax is our largest revenue source, and it fluctuates. We have to ensure we can pay for and sustain what we establish.”
Oklahoma is one of the last states in the U.S. that uses sales tax as the primary revenue source to fund General Fund operational expenses for municipalities.
The city manager says estimating revenues precisely in such an unpredictable system is enormously challenging.
“Because our state continues to use this antiquated business model, we spend an excessive amount of time chasing sales tax type businesses to give our citizens more opportunities to shop local, therefore maintaining and growing our tax base,” he said.
The City of Broken Arrow is spread out over two counties. It receives 3.55 percent of the 8.417 percent sales tax revenue collected from sales in Tulsa County and 3.55 percent of the 9.6 percent (July 2025) sales tax from goods and services sold in Wagoner County.
Of the 3.55 percent sales tax the City receives, the General Fund receives 1.5 percent, the Broken Arrow Municipal Authority1 receives 1.0 percent, the Sales Tax Capital Improvement fund2 0.5 percent, Police/Fire 0.3 percent, and Streets 0.25 percent.
Spurgeon points out that property taxes do not pay for City operations, but they do pay for voter-approved General Obligation Bonds. His administration’s top priority is building a municipal budget that meets the community’s expectations and is financially sustainable.
The FY-2026 Proposed Municipal Budget totals $455,957,612, a 3.44 percent decrease from FY-2025’s budget of $472,198,240.
The breakdown of the FY-2026 expenditures is as follows:
- Operational—$181,303,023 (up 9.58 percent over FY-2025).
- Capital Outlay—$232,561,333 (down 12.95 percent over FY-2025). The capital outlay number is down due to the number of projects completed this fiscal year.
- Debt Service—$42,093,256 (up 6.31 percent over FY-2025).
The FY-2026 General Fund, which includes expenditures, transfers out, and the proposed ending fund balance, totals $153,662,215, compared to $151,142,668 in FY-2025, an overall increase of 1.67 percent.
Adopting the proposed budget on June 16 does not imply that the utility rate increase has also been adopted. The budget that the City Council will consider on June 16 does not include the proposed utility rate increase. These rate increases are recommendations from a five-year rate study and will be discussed later this summer as part of the annual review and adoption process for the city’s Manual of Fees.
The City of Broken Arrow’s annual fiscal budget cycle is from July 1 through June 30. Copies of the Budget Book are available for review at City Hall, 220 S. 1st Street, or on the City’s website at brokenarrowok.gov/finance.
The Budget Book includes the City Manager’s Executive Summary, which outlines the work plan for the upcoming fiscal year. It also contains information about proposed revenue and expenses for each fund, proposed department budgets, the Street Maintenance Plan, the proposed FY-2026 General Obligation Bond sale, a utility rate study, and more.
[1] The Broken Arrow Municipal Authority oversees the City’s business-type activities, such as providing water, sewer, sanitation, and stormwater services.
[2] The Sales Tax Capital Improvement Fund is a pay-as-you-go capital improvement fund used to pay for smaller projects such as roof replacements, HVAC systems, and vehicles.
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