Coppell staff presents proposed FY26 balanced budget with targeted transfers, modest operating growth

The City of Coppell on Monday received a presentation of the proposed fiscal year 2026 general fund and debt-service budgets, which staff described as balanced and designed to maintain current service levels while using one-time fund balance for council-directed projects.

Finance staff member Kim said, “The proposed budget is a balanced budget,” and explained the presentation will first cover expenditures, then revenues and property valuations. The proposed general fund operating expenditures total about $76.1 million, up 2.33% from the adopted FY25 operating level after excluding one-time transfers, while total proposed expenditures (including one-time uses) are $83.8 million compared with $105.5 million in FY25.

Staff emphasized key drivers and policy choices. The proposed budget assumes property tax revenue will increase by 3.499% (the limit created by recent state law) and assumes the city must continue budgeting sales tax as if the local rule 3.334 remains in effect while litigation continues. The plan also includes a council-directed one-time transfer of $5.5 million from the general fund to the municipal drainage utility district (DUD) and $2.2 million in Vision 2040 one-time initiatives. Kim noted some staff reductions are proposed but said all are vacant positions.

Budget highlights presented department by department: public safety budgets (fire and police) were mostly flat, with targeted reclassifications and a net one-position reduction across departments after moving a systems analyst into Enterprise Solutions; public works showed reductions related to moving three street positions into the water-sewer fund and a planned $220,000 transfer to the infrastructure maintenance fund (IMF) for facilities; Community Experiences projects include software replacements and increased part-time hours for growing tennis and pickleball programs; and community development reduced some contracted event spending and eliminated one vacant building-inspector position while adding $75,000 for temporary contractual inspection services.

Kim described the so-called “Austin Gap” — state-imposed revenue limits that cap property-tax growth well below recent inflation and public-safety pay growth — and said departments used strategies including reorganization, vendor reassessment and limited one-time transfers to close the gap. She said salary adjustments are included to keep employees in the top third of comparison cities per a recent compensation study.

On revenues, staff projected total general fund revenues at about $76.6 million, with property taxes representing roughly 61% and sales taxes about 22%. Sales-tax budgeting continues to assume the local rule is in effect and uses a 5% growth assumption over FY25 adopted; Kim warned that sales-tax projections and interest earnings remain uncertain. For interest income, staff budgeted conservatively at FY25 levels and proposed placing any excess interest earnings into fund balance for one-time uses rather than ongoing costs.

Staff reviewed fund balance and transfers: the FY26 projections show total fund balance declining by about $7.2 million, primarily for planned one-time uses (Vision 2040 items and the $5.5 million DUD transfer). Kim said the proposed operating budget (excluding one-time transfers) would have revenues of $76.6 million against operating expenditures of $76.1 million.

On assessed values and the tax rate, staff said preliminary, uncertified values had increased substantially in early reports; the presentation used example scenarios. Kim cautioned the appraisal district was still processing protests and that certified values may change. Using a sample 7% value increase, staff showed the no-new-revenue tax rate and illustrated an example tax bill: the average Coppell homeowner would pay about $2,549 annually to the city under the scenarios shown, roughly $212 per month for city services and infrastructure investments combined.

Debt-service information given to council showed tax-supported principal and interest due for FY26 of roughly $8.5 million (tax-supported P&I) and a broader P&I total near $12 million when COs paid from other funds are included. Staff said about 56% of outstanding tax-supported CO debt is scheduled to be retired by 2040.

Staff requested direction on a small number of budget items and said it will return to council later in the month and again on Aug. 5 to file the budget with the city secretary. Kim also said she will bring a technical amendment to the fund-balance policy — a consultant-backed change to the self-funded health fund reserve calculation — as an agenda item for council action.

Council members asked detailed questions about FTE changes, specific departmental transfers, the impact of a vendor fee increase for street lights, and the sensitivity of the budget to certified appraisal values and sales-tax assumptions. Several councilmembers and staff noted the long-term risk created by current state revenue limits should values decline in future years.

The presentation closed with staff confirming next steps: remove a proposed $250,000 transfer from Rolling Oaks cemetery to the general fund for this year’s budget (council direction reached during discussion), finalize adjustments for the street-light fee notice from Encore before the next workshop, and return Oct. 20? (staff indicated more meetings ahead) with final budget materials ahead of the August filing deadline.

Evening workshop follow-ups include scheduled updates to the public packet and a June 23 action referenced repeatedly in staff remarks (council direction to transfer $5.5 million to the DUD earlier this year). The next formal budget hearing and action steps were set for the end-of-month workshop and the Aug. 5 filing deadline.