La Marque council advances proposed 0.452161 tax rate after audit finds $2.1M general-fund shortfall; emergency loan, union deals approved

The La Marque City Council on Thursday accepted a completed independent audit for fiscal 2023–24, held a public hearing on the proposed 2025–26 budget and proposed tax rate, and approved several short-term financial steps and labor contracts to keep city services running while staff works to reconcile accounting and cash shortfalls.

The independent auditor, Mike Brooks of Brooks Watson & Company, told the council the firm issued an unmodified (clean) opinion but reported large adjustments and a net drawdown in fund balances: governmental funds’ combined ending fund balance fell to about $6.26 million (a decrease of roughly $4.2 million year over year) and the city’s general fund used about $2.1 million of fund balance in 2023–24. Brooks said the city’s unassigned general-fund balance ended the year at a deficit of $273,098.

Those figures framed hours of public comment and council discussion about whether to increase the city tax rate and how to restore reserves. City Manager Holly and Finance staff said the proposed ordinances would adopt the 2025–26 budget and levy a proposed tax rate of 0.452161 per $100 of assessed value (maintenance & operations 0.336908; interest & sinking 0.115253). City staff and bond counsel also briefed the council on financing options and an emergency loan to cover near-term cash needs.

Why it matters: The audit showed the city spent well above budget in public-safety lines in 2023–24 and identified accounting and reconciliation problems that made cash-management and month-to-month planning difficult. Council members and residents framed the choices in stark terms: without interim funding and changes, staff warned the city could face severe service limitations before property-tax receipts arrive in early 2026.

Most visible among public speakers were repeated calls both for and against an increase. Several residents blamed past spending and asked for a forensic or external audit before approving higher taxes; others said the alternative—service reductions or annexation by a neighboring jurisdiction—would harm public safety, fire protection and insurance rates. "A vote against raising taxes is a vote to bankrupt our community," said one resident during the public-hearing period. Another: "You're killing us. You're putting the biggest burden on it," urged a homeowner who said the levy would hit retirees and small businesses hard.

Auditor Mike Brooks summarized his firm’s findings directly to council: "We did issue a clean, unmodified audit opinion," he said, and then described the larger items behind the decrease in fund balance, including higher public-safety expenses and transfers related to debt service and grants. Brooks also noted the audit required an unusually high number of adjusting journal entries and recommended stronger month-to-month reporting and reconciliations going forward.

Council action and near-term steps: After discussion the council voted to accept the final audit, 4–1. On first reading the council adopted the annual budget ordinance and also adopted the ordinance setting the proposed tax rate for public notice, each by 3–2 votes. Council also approved a package of measures the city manager presented to secure short-term liquidity and reduce near-term costs: a $1.5 million loan from the Economic Development Corporation on generous terms; amendments to the hiring freeze to allow an additional finance position; and collective-bargaining agreements with the fire and police unions that postpone most pay increases until January 2026 while granting other operational changes intended to reduce overtime spending.

Key quotes

"We did issue a clean, unmodified audit opinion," auditor Mike Brooks said, adding that the city had a notable negative budget variance and several required audit adjustments. "The actual results had a decrease of 2,100,000 in fund balance," he told the council.

"A vote against raising taxes is a vote to bankrupt our community," public commenter Hailey said during the budget hearing.

"You're killing us. You're putting the biggest burden on it," resident Elizabeth Turner told council while urging more transparency and an external audit before a rate increase.

What the votes mean and next steps: The budget and tax-rate votes on Thursday were first readings; the council may lower the proposed rate before final adoption at the second reading. Staff said they will deliver more detailed, line-item monthly reports and a prioritized plan for cuts and revenue options before the council’s special meeting later in the week. The manager also said staff is implementing a new financial system (go-live in October) to add internal controls (purchase-order approvals, check sign-off workflows and separate bank accounts for restricted funds) and will work to reconcile outstanding journal entries and unpaid invoices identified during the audit.

Ending: Council members and staff said they will continue work this week on budget changes and potential revenue/restructuring options ahead of the second reading. In the short term the city will pursue the approved EDC loan and the other interim measures to maintain operations while the new financial systems and reporting procedures are implemented.