Fredericksburg council adopts $75 million FY2025 budget and a 0.227427 tax rate, prompting concerns over new fees

The Fredericksburg City Council adopted the city's annual budget for fiscal year 2025 and separately approved a total property tax rate of 0.227427 per $100 of assessed valuation, a measure the council said equates to a roughly 13.7% effective increase in the tax rate.

City staff presented updated budget figures showing revenues rising from a previously published $73.5 million to $75.0 million and expenses falling from $81.1 million to $79.2 million. The city's general fund revenues were presented at $26.8 million, up from the earlier $25.2 million estimate; personnel costs make up about 52% of the general fund. City staff said the budget as adopted includes five new hires and built-in pay changes (a 1% cost-of-living adjustment and a merit component, plus a separate step plan). The budget ordinance is listed as Ordinance 2025-27.

The council voted separately on the tax components required by state law. Staff advised the council of the statutory calculation options (no-new-revenue rate 0.200022, voter-approval rate 0.227427, de minimis 0.217681, current 0.205326). The council first approved the maintenance-and-operations component and the interest-and-sinking (debt) component, then adopted the combined total rate of 0.227427 for the 2025 tax year.

Discussion and concerns
Council members and residents pressed staff on several resident-facing fees included in the city's revenue plan. Staff confirmed the council previously gave direction to pursue a new leaves/brush pickup fee; the budget currently models that fee at $10 per month beginning Jan. 1, with staff estimating roughly $708,000 in annual revenue if implemented as shown. Several council members said they were concerned about the combined impact on homeowners of higher property taxes and new or increased service fees, particularly for fixed-income and senior households. Staff said the $10 fee is not yet final and that the council will retain the opportunity to deliberate the amount and billing logistics before a January start date.

Other fiscal notes
- Staff said the city reduced capital spending by about $2.0 million and cut hotel-tax distributions by $300,000 in the revised budget. - The budget relies in part on available reserves for one-time capital or nonrecurring expenditures; staff said approximately $4.0 million would be drawn from enterprise fund reserves under the plan. - Staff referenced changes required by Texas law: inclusion of a taxpayer-impact statement in the packet and the use of statutory tax-rate components when adopting a rate.

What the council acted on
- Adoption of Ordinance 2025-27, the annual budget for fiscal year beginning Oct. 1 (approved). - Separate motions to ratify the property-tax revenue increase reflected in the fiscal-year budget (approved). - Separate votes adopting the maintenance-and-operations rate, the interest-and-sinking (debt) rate, and the combined total tax rate of 0.227427 per $100 (each approved in separate roll-call votes). Transcript recording shows members voting both for and against in the roll calls; the adopted ordinances and rates were approved by the council during the meeting.

What remains
Staff and council members said some components (notably the planned leaves/brush fee) will return for further deliberation before implementation. The city also continues to await final county allocations and other partner figures that could require small adjustments to certain shared services allocation lines.