Tomball staff warns late audit penalty could force multimillion-dollar cuts; proposes accelerated budget schedule

TOMBALL, Texas — City staff told the Tomball City Council on Monday that a provision in a recently passed state bill could prevent the city from adopting a tax rate above its no-new-revenue rate if the city’s annual audit is finalized more than 180 days after the fiscal year ends.

The city’s staff member Jessica, addressing the council at a July 7 workshop, quoted the new language: “the municipality may not adopt an ad valorem tax rate ... if the city has adopted its financial audit more than 180 days beyond the end of its fiscal year.” She said Tomball’s fiscal year ends Sept. 30, and 180 days after that falls around March 27 or 28.

Why it matters: Jessica said the council’s proposed fiscal 2025 budget was built on the voter-approval (voter-approval) rate. Had the council been required to adopt the no-new-revenue rate instead of the voter-approval rate in FY25, the difference to the general fund would have been about $2,300,000; she estimated the exposure for the current budget process could be roughly $2.5 million to $3 million.

Staff presented the penalty’s…