The City of Orange City Council approved the fiscal year 2025-26 budget on Tuesday after extended debate over tax rates, reserves and legal constraints.

The measure before the council acknowledged the budget would raise $89,029 in property tax revenue—about a 0.93% increase from last year—according to the motion presented during the meeting. Council members discussed two competing approaches: adopting a tax rate sufficient to support the proposed expenditures or maintaining last year’s rate and using reserves to cover the shortfall.

Council members and staff pressed why the proposed tax rate supports the budget. The council was presented with a proposed total tax rate of 0.867, which staff said “supports the budget.” Some council members urged keeping the rate at last year’s 0.797 and drawing on the city’s projected cash balance, which staff estimated at $20,441,668, to avoid increasing homeowners’ bills.

City legal counsel advised the council on state and charter rules affecting that choice. The attorney said, “Texas law requires that municipalities adopt a balanced budget, meaning expenditures cannot exceed available revenues,” and referenced Section 102.007 and the city charter’s budget provisions, adding that “your charter provides that you have to levy according to the budget.” The attorney also noted a September 30 statutory deadline for adopting a tax rate and the effect of state open-meetings posting rules on scheduling additional meetings.

Council members expressed repeated concern for residents on fixed incomes and for how a higher tax rate could affect ongoing economic development negotiations. One council member urged using reserves to avoid a tax increase, saying, “I would like to take this balance and I would like to keep our tax rate the same as last year, 0.797.” Other council members said they feared making deep cuts on short notice and highlighted the compressed timeline after the county provided property valuations in August.

After discussion and a roll-call affirmation on the budget motion, the council approved the proposed budget. The transcript records multiple “Aye” votes during the roll call on the budget motion. The record shows vigorous public and council discussion about next steps: whether to ratify the proposed tax rate that supports the budget, or to adopt the budget and later ratify a different rate, options the city attorney said would be constrained by charter language and statutory deadlines.

The council also debated procedural limits on using reserves, with staff noting some reserve amounts are restricted (for example, bond funds). Staff and council members agreed to continue public education about property valuation and taxation; the mayor said the council will invite the appraisal district, county and school district to explain valuation and tax processes next year. The council adjourned to executive session on several personnel and property items after the vote.

Why it matters: The budget sets city spending and revenue policy for the coming year; the choice between higher property taxes and using reserves has direct impact on homeowners, local businesses and the city’s fiscal flexibility going forward.