City staff on Tuesday presented a proposed fiscal year 2025–26 budget that would keep the city’s property tax rate at the voter-approval rate of $0.5717 per $100 in assessed value and maintain the general fund’s reserve above the city target, while warning of increases in utility bills tied to water and wastewater debt and projects.

The presentation, given by city staff during the council’s Sept. 2 meeting, said the general fund’s proposed fund balance is 30.9 percent (about 111 days) compared with 28.8 percent (about 104 days) at an August review. The water and sewer fund’s projected fund balance rose to 26.8 percent from 17.8 percent, the staff presentation said.

Those improvements follow staffing reductions and other adjustments staff said together saved roughly $384,280, plus additional savings from frozen hires of about $224,000. Staff also identified about $331,000 in payroll-related adjustments for reorganized positions, and indicated net “decision package” spending of roughly $3 million from the prior fiscal cycle that reduced available reserves.

Why it matters: the council must adopt a budget and ratify a property tax rate at a public hearing scheduled for Sept. 16; changes made after that hearing would require an additional public hearing under the city charter, staff said.

On utilities, staff said an earlier consultant recommendation would have raised the average monthly bill for a typical household (5,000 gallons water; 4,800 gallons wastewater) by about $56.56 — a 29.8 percent increase from the current baseline used in the study. After reworking funding for capital projects and moving $8 million in cash funding to the water fund, staff reported it lowered that projected increase to $46.45, a 24.5 percent increase compared with the earlier consultant figure. The presentation did not specify the new total monthly bill amount; staff provided the percentage and dollar-change estimates and said they would return with final rate ordinances and required documentation.

Staff said the $8 million cash movement was intended to strengthen the fund’s starting cash position to support an application to the Texas Water Development Board (TWDB) and to meet debt-service coverage requirements tied to the TWDB loan process. Staff also noted debt service and loan proceeds previously assumed in projections had been adjusted — for example, a planned loan-proceeds line item was removed and replaced by cash funding for several projects.

Council and staff discussion also covered the city’s long-range outlook. City staff presented five-year projections showing the general fund position improving under present personnel changes; staff said the current plan would keep the fund balance above the 25 percent (90-day) policy requirement next fiscal year and project a positive position in year five. Similarly, staff said the water fund projections become less constrained when the $8 million cash transfer is included.

Several council members asked staff to revisit employee compensation options in December or January if revenues and year-end estimates track as projected. Staff said no salary adjustments were included in the current budget but indicated there may be options later in the fiscal year dependent on revenue performance.

Decisions and next steps: staff scheduled the public hearing and budget adoption for Sept. 16, when the council will also consider the tax rate, the Chamber of Commerce tourism budget, the Economic Development Corporation budget and other associated budgets. Staff advised council members that if they request changes after the Sept. 16 public hearing another hearing will be required under the charter.

Clarifying details from staff remarks: the city reported an approximate 4.47 percent increase in total assessed value year over year; median home assessment used in staff examples rose from $174,000 to $178,000. Using that $178,000 example, staff estimated the city portion of the tax bill alone would increase by $21.53 annually compared with last year based on the current rate; staff also gave a $43.06 annual example for a $357,000 assessment. Staff also said some revenue lines (for example, swimming-pool receipts and certain franchise fees) had historically been overstated compared with actuals and that contributed to prior underestimation of reserve erosion.

Speakers quoted in this story are identified in the meeting transcript. Where numbers or programmatic outcomes were not specified in the transcript (for example a final monthly utility bill total reflecting the adjusted proposal), this article reports the figures staff stated verbatim (percentage changes and dollar-change amounts) rather than inferring totals.

Ending: The council did not vote on the overall budget at the Sept. 2 meeting; the council will hold the public hearing and is scheduled to adopt the budget and ratify the tax rate on Sept. 16.