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McLennan County commissioners debate tax-rate increases, agree on 1.5¢ proposal with 30% reserve goal
Summary
After hours of debate about fund balance targets and borrowing risk, a 3–2 consensus emerged to propose a 1.5-cent tax-rate increase and to target an unassigned fund balance near 30 percent while monitoring next-year pressures.
McLennan County commissioners on Tuesday debated whether to raise the county portion of the property tax rate and how large an unassigned fund balance the county should maintain, ultimately coalescing around a proposal for a 1.5-cent increase and a working reserve target of about 30 percent of operating expenditures. The court directed staff to prepare final budget documents reflecting that approach for formal adoption at later hearings. Why it matters: Commissioners said the move balances near-term revenue needs — to cover personnel and service-cost increases already built into the proposed FY2026 budget — against long-standing credit-policy concerns about maintaining a multi-month operating reserve. The court opened a lengthy discussion of the county's general fund and fund-balance policy after Frances (County Auditor) walked the court through updated revenue and expenditure scenarios. Commissioners focused on two questions: whether to approve a tax-rate increase for FY2026, and whether to change or temporarily make an exception to the court’s existing unassigned fund-balance policy (historically 33 percent of operating expenditures). Judge Felton, Commissioner Perry, Commissioner Smith, Commissioner Jones and Commissioner Wilson all participated in the discussion and votes that followed. Most of the debate centered on tradeoffs between keeping a higher reserve to protect the county's credit standing and limiting any immediate tax burden on property owners. Judge Felton and others noted the county's long track record of conservative budgeting and argued for preserving credit quality; Commissioner Jones and others pushed for smaller increases to keep taxpayer cost down. Frances presented scenario worksheets showing the effect of three alternative tax-rate choices (1 cent, 1.5 cents, and 2 cents) on projected ending fund balance through FY2029 assuming a 5 percent taxable-value increase and 3 percent annual expenditure growth. The court agreed to a mid-range option. "If we do the right thing, you're gonna get reelected," Judge Felton said during the exchange, urging the court to balance fiscal prudence and responsiveness. The court coalesced on a working plan to publish the proposed FY2026 budget and tax-rate notice reflecting a 1.5-cent increase and to treat the 30-percent unassigned fund-balance target as the working policy for this cycle, while directing staff to produce the three scenarios shown to the court (1¢, 1.5¢, and 2¢) for further review before adoption. Commissioners flagged several next-year drivers — personnel step plans for Sheriff’s personnel, potential state-mandated costs, and capital projects — as items that could require revisiting the tax rate in future budgets. The court also reaffirmed that any use of contingency funds must be approved by formal budget amendment. Looking ahead: The court set a public property-tax hearing for the evening and planned a final budget-and-tax vote per statutory timelines. Commissioners asked staff to publish the scenario workpapers for public review and to bring back any material legislative or mandate changes that could change the next-year forecast.
