Highland Village staff previews FY26 budget, tax-rate proposal and $7.08 million certificates of obligation

City staff on Aug. 26 summarized adjustments to the fiscal 2025 year-end estimate and the proposed fiscal 2026 budget and said the City Council will be asked at upcoming meetings to adopt a general fund budget, set the property tax rate and authorize certificates of obligation to fund road projects.

At an early work session presentation, a staff member identified as Heather reviewed a handful of line-item changes to the proposed budget and the city’s year-end projections. Heather said, “we will we're estimating to finish at a, fund balance of $11,000,000, which would be 47 percent of our current year expenditures.” She added that incorporating the council’s recommended supplementals would produce a projected fiscal 2026 ending fund balance of $8,400,000, or about 32 percent of next year’s expenditures, and a $2,600,000 deficit in the budget for FY26.

Why it matters: The staff numbers set the context for votes the council will take in public hearings and on second reading in September; they also frame how much the city can finance for capital projects without exceeding debt and tax-rate policies.

Key budget changes and clarifications presented by staff included: a $100,000 delay of concrete panel work in the Streets Department to fiscal 2026; a two‑year wayside horn replacement program pushed out a year (a $60,000 shift); a $64,500 net increase in building, fleet and maintenance largely attributable to a $30,000 repair on fire engine 482 and $34,500 to replace a Verix Lightning system; a $157,000 line for tree‑related items (of which $100,000 reflected the moved concrete panels), $32,700 for a Highland Shores Boulevard traffic study update, and $25,000 to bring a Willow Creek/ Hahnavaleater Road crosswalk lighting/controls into ADA compliance so pedestrians can reach the crossing push buttons.

On taxes, staff reported the city’s taxable value at roughly $3.375 billion and the current adopted rate at 0.500273. The no‑new‑revenue rate was calculated at 0.480268; using a 3.5 percent voter‑approved revenue multiplier produced a proposed voter‑approved rate of 0.5009. Staff said that difference would be “an additional $4.19, you know, for the average, homestead.” The presentation said staff plans to recommend the voter‑approved rate unless directed otherwise.

Certificates of obligation: Staff said the council will be asked to authorize issuing $7,075,000 in certificates of obligation tied to two projects identified for this issuance: Highland Shores Boulevard and Highland Village Road. The total estimated cost of the projects is $13.5 million, with Denton County having identified $6.4 million in its 2022 bond program toward that work. Staff said the city seeks to keep debt service between 12 and 16 percent of the total tax rate (with a ceiling of 20 percent under the city’s debt policy).

Timing and next steps: Staff said the council will hold a public hearing and consider adoption of the budget and tax rate on Sept. 9, with a special meeting scheduled for Sept. 16 at 8 a.m. to adopt the budget and tax rate on second reading if needed.

Questions raised during the presentation included why concrete panel work was delayed; staff answered that an interlocal partner (the City of Lewisville) did not renew its vendor contract, requiring a new procurement. Council members also discussed the legislature’s special session and the potential effect of a proposed change to the 3.5 percent voter‑approved revenue cap, which staff said could affect future budgets.

Staff said the FY26 budget proposals and the certificates of obligation authorization will be brought forward for formal votes at the council’s September meetings.