Preparing Your Community's 2027 Budget

As budget season approaches, now is the ideal time for Boards to begin planning for 2027. While inflation has moderated from recent highs, many of the costs that impact community associations continue to rise. Labor, insurance, utilities, vendor contracts, and reserve funding are all expected to require careful consideration during this year's budget process.

Working proactively with your General or Community Manager can help your Board anticipate these increases, minimize surprises, and ensure your community remains financially prepared for the year ahead.

Key Budget Considerations for 2027

Payroll & Onsite Staffing

Labor costs continue to rise across all markets due to wage pressures, benefits, payroll taxes, insurance, workers’ compensation, and other employment-related expenses. In California, anticipated state and local minimum-wage increases may create additional pressure, while the competitive labor market in Texas continues to influence compensation expectations.

Planning Tip: Review onsite staffing plans and payroll budgets early. Work closely with your Action management team to evaluate appropriate wage adjustments and related employer costs that support employee retention, operational stability, and continued service quality. Your manager will have access to region-specific comparative wage information to assist in budget planning.

Insurance

Insurance continues to be an important consideration when developing association budgets, although the outlook is becoming more nuanced. As we shared in last month’s article, “What Boards Should Know About the 2026–2027 Insurance Market,” some well-maintained communities with favorable loss histories and strong risk management are beginning to see more competitive renewal options. At the same time, wildfire exposure in California and wind, hail, and other catastrophe risks in Texas can still significantly impact premiums, deductibles, and available coverage.

Planning Tip: Don’t assume last year’s increase will automatically repeat. Begin renewal conversations early and work with your insurance advisor to understand your community’s specific risk profile and current market conditions before finalizing the budget.

Utilities

Electricity, water, gas, and trash costs continue to trend upward. California communities continue to experience increased utility costs related to wildfire mitigation and infrastructure improvements, while Texas is seeing growing energy demand place pressure on electricity pricing.

Planning Tip: Evaluate opportunities for energy efficiency improvements that can help offset future increases.

Reserve Funding

Construction costs remain elevated, making it increasingly important that reserve contributions keep pace with replacement costs for major components such as roofs, pavement, painting, elevators, and mechanical equipment.

Planning Tip: Ensure your reserve study reflects current replacement costs and that annual contributions support your long-term funding goals.

Third-Party Vendor Contracts

Many service providers continue to experience increased labor, fuel, insurance, and material costs, which may be reflected in upcoming contract renewals and annual pricing adjustments.

Planning Tip: Work with your management team to review upcoming third-party vendor renewals, understand any contractual price adjustments, and confirm that the scope of services remains aligned with the community’s needs. For significant contracts, competitive proposals may also be considered when appropriate.

Regional Outlook

Dallas / Fort Worth

Wage increases remain market-driven rather than mandated.

Utilities continue to be the largest area of concern due to increasing energy demand.

Insurance costs remain firm but are generally more stable than California.

Southern California

State and local minimum wage increases will continue to impact labor costs.

Electricity and water costs remain under upward pressure.

Insurance continues to be heavily influenced by wildfire risk.

Bay Area

The Bay Area continues to experience the highest labor costs across our markets.

PG&E and local utility increases continue to affect operating budgets.

Insurance remains challenging, particularly for communities located in higher wildfire-risk areas.

Suggested Planning Ranges

While every community is unique, the following ranges provide a reasonable starting point when preparing your initial 2027 operating budget.

Budget Category	Dallas/Fort Worth	Southern California	Bay Area
Payroll & Onsite Labor	3-5%	4-7%	5-8%
Property Insurance	8-12%	10-20%+	10-20%+
Electricity	Moderate Increase	10-15%+	10-15%+
Water & Sewer	4-8%	5-10%	5-10%
Vendor Contracts	3-6%	4-7%	4-7%

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These planning ranges are intended as budgeting guidelines only. Actual costs will vary based on your community's location, contracts, insurance renewals, utility providers, reserve study recommendations, and operational needs.

Planning Ahead 

Developing a thoughtful budget is one of the Board’s most important responsibilities. By planning early and working closely with your Community Manager, your Board can proactively address rising costs, maintain appropriate reserve funding, and continue providing the level of service your community expects.

Your Action Property Management team is available to help evaluate operating expenses, review third-party vendor contracts, and develop a budget that supports your community’s immediate priorities, long-term goals, and overall financial health.

Why Keeping Resident Contact Information Current Matters

As budget season approaches, you may notice an annual request asking homeowners to review and update their contact information. While this is a legal requirement for California associations, it's also one of the simplest and most effective ways to improve communication and engagement within every community we manage including Texas communities.

California Civil Code Section 4041 requires homeowners associations to annually request updated contact information from homeowners before distributing the Association's Annual Budget Report and Annual Policy Statement. The law requires associations to solicit this information at least 30 days before the annual disclosures are distributed, helping ensure important notices are delivered using each homeowner's preferred mailing or email address.

To make this process easier, Action Property Management has incorporated this annual contact information request directly into the SnapHOA Resident Portal, allowing homeowners to quickly review and update their preferred communication preferences online.

While the legal requirement only applies to California associations, the underlying purpose is valuable for every community, including those in Texas.

Effective communication starts with accurate contact information. Whether sharing annual budgets, community updates, emergency notifications, maintenance projects, election information, or upcoming events, Boards can only engage homeowners if they have current contact information.

Maintaining accurate email addresses also allows associations to:

Increase homeowner participation and engagement.

Improve communication regarding budgets and important community initiatives.

Deliver notices more efficiently.

Reduce returned mail and mailing costs.

Help ensure homeowners stay informed about decisions affecting their community.

One of the most common themes we hear from both Boards and residents is the desire for better communication. Annual contact information updates are a simple but important step toward strengthening that connection.

Strong communities begin with strong communication. Keeping homeowner contact information current gives your Board the ability to communicate effectively, encourage participation, and make better-informed decisions for the benefit of the entire community.