Conroe Council adopts FY 2026 operating budget, sets tax rate at 0.4272 and OKs utility and solid-waste rate changes

Conroe City Council approved the city's FY 2026 operating budget and set the 2025 ad valorem tax rate at 0.4272 per $100 of taxable value during a Sept. 11 meeting at Conroe City Hall.

The council adopted an operating budget that staff said includes a 6 percent cost-of-living increase for all employees and a required 3 percent contingency. Finance staff summarized total revenues for all funds at $361,900,000 and total expenditures at $381,900,000; the 3 percent contingency was described in the meeting as $11,100,000.

The budget vote was 4 in favor and 1 opposed. Council members then held a separate, statutorily required vote to ratify that the adopted budget would collect more property tax revenue than the prior-year budget; that motion carried. Council also adopted the FY 2026 capital improvement program (first year of the five-year CIP), and later approved the 2025 ad valorem tax rate and its two components: a maintenance and operations (M&O) rate of 0.3022 and an interest and sinking (I&S) debt-service rate of 0.125.

Why it matters: the budget and tax-rate votes set the city's spending plan and the portion of property tax bills that go to Conroe for the coming fiscal year, and the CIP adoption establishes capital spending priorities that affect infrastructure, public safety and utilities.

City finance staff said the adopted operating budget includes a citywide 6 percent cost-of-living adjustment for employees and that staff posted budget documents online as required. The finance presentation noted the tax rate adopted (0.4272) is the same numeric rate the council has used for four consecutive years but that the motion to adopt must follow special statutory language because the adopted rate is above the "no-new-revenue" rate.

On water and sewer rates, the council adopted changes based on a 2025 rate study by NewGen Strategies and Solutions. Staff described the major adjustments as a 3.5 percent increase for residential customers, a 7.25 percent increase for nonresidential customers, and a slight decrease in the San Jacinto River Authority (SJRA) pass-through charge from $3.19 to $3.12 per 1,000 gallons. The ordinance amending city code for those rates was approved by motion.

The council also approved new garbage and recycling rates under a contract with Frontier Waste Solution that begins Oct. 1, 2025. Staff said the resident monthly refuse charge for FY 2026 will be $24.56; the commercial hand-collection unit will be $27.50 per month. Staff described a 10 percent fee added to the contractor's rate (5 percent franchise fee and 5 percent administration fee).

Council approved a $35,000 transportation-services amendment with Meals on Wheels Montgomery County to continue senior transportation services (staff said the provider delivers about 21,000 rides annually). The consent agenda (items 13'27) passed as a block.

On questions about a roughly $11.1 million account referenced during public comment, staff said any decision about applying those funds would be for council to make at a later date and that there is no current allocation of that money in the adopted budget. A member of the public had characterized the funds as monies the city held in escrow related to litigation with the San Jacinto River Authority; staff confirmed council would decide future use if it chooses to do so.

What the council voted on (selected items):

Votes at a glance

- Adopt FY 2026 operating budget (motion to adopt): Outcome: approved. Roll call recorded as: Mayor Pro Tem Wood ' Nay; Councilman Harrell ' Yes; Councilman Hardman ' Aye; Councilwoman Porter ' Yes; Councilwoman Arthur ' Yes. (Yes 4, No 1)

- Ratify property tax revenue increase for FY 2026 (statutory separate vote when budget collects more property-tax revenue than prior year): Outcome: approved (voice vote; roll-call names not recorded in transcript).

- Adopt FY 2026 capital improvement program (CIP): Outcome: approved (motion passed; roll-call not read in transcript).

- Adopt 2025 ad valorem tax rate of 0.4272 per $100 (required statutory language read): Outcome: approved. Roll call recorded as unanimous among members voting: Mayor Pro Tem Wood ' Aye; Councilman Harrell ' Aye; Councilman Hardman ' Aye; Councilwoman Porter ' Aye; Councilwoman Arthur ' Aye.

- Adopt maintenance and operations rate (0.3022) and interest & sinking rate (0.125) separately as required by state law: Outcome: both approved (roll-call recorded as unanimous in each item).

- Amend ordinance for water and sewer rates (based on NewGen study; 3.5% residential; 7.25% nonresidential; SJRA pass-through to $3.12/1,000 gal): Outcome: approved (motion passed).

- Approve new garbage and recycling rates under contract with Frontier Waste Solution (contract start 10/01/2025; example: residential monthly refuse $24.56): Outcome: approved (motion passed).

- Approve amendment to transportation services agreement with Meals on Wheels Montgomery County ($35,000 from transportation budget): Outcome: approved (motion passed).

Council direction and next steps

Staff noted the budget adoption is final for the council to meet its ordinance deadline; if the council later wants to change priorities, staff said the adopted budget can be amended during the fiscal year. Staff also told the council there is currently no allocation in the adopted budget for the $11.1 million account mentioned in public comment and that any use of those funds would be a separate council decision at a later date.

Ending: After completing the action agenda and consent items, the council recessed to an executive session, then reconvened and closed the meeting after additional public comments and council queries about putting certain citizen concerns on a future agenda.