Highland Village staff outline lean FY26 general fund budget, warn of near‑term deficits

Highland Village finance staff on July 8 told the City Council the city is facing a tightening general fund as revenues plateau and key income streams underperformed, producing a projected base fiscal‑year 2026 deficit of about $1.9 million.

Heather (finance staff) told council members the total projected revenues used for closing FY2025 were about $7,675,000 and that the city expects to come in under budget on both property and sales tax receipts. Heather said, "We're gonna be under budget in sales tax also," and explained lower interest income contributed to the shortfall.

The warning came during the council's early work session as staff reviewed year‑end estimates for FY2025 and the base budget proposed for FY2026. Heather presented a combination of revenue changes and expenditure movements that reduce the forecasted FY2025 deficit from a budgeted $1,000,138 to an expected $736,000 and raised the citywide fund‑balance ratio from an audited 51 percent to an estimated 46 percent at year end. Looking forward, staff projected a base FY2026 shortfall of roughly $1.9 million; if council…