Fulshear council postpones FY2026 budget after tax-rate hearing; MUD rebate errors and police pay drive calls for workshop

The City of Fulshear City Council on Aug. 18 postponed formal adoption of the FY2026 operations and capital budget following a public hearing on a proposed tax-rate increase and wide-ranging public comment about city finances.

At the hearing the council read a proposed tax rate of $0.199901 per $100 valuation, the “no-new-revenue” rate of $0.154219 per $100 and the voter-approval rate of $0.189901 per $100. The city manager and finance staff presented budget details and said the proposed rate would raise more property tax revenue than the no-new-revenue rate. After public comment and council discussion, Councilmember Kanopy moved to postpone adoption of Ordinance No. 2025-15O7 (FY2026 operations and capital budget); the motion, seconded by Councilmember Powers, passed unanimously.

Why it matters: residents and several speakers told the council they want clearer, longer-term planning before approving higher taxes. Multiple speakers — including residents and a commercial broker — urged greater commercial development to broaden the tax base. Council and staff said two issues in particular have driven concern: a newly identified shortfall caused by an underpayment tied to municipal utility district (MUD) rebates, and urgent requests for higher police pay and increased preventative street maintenance.

Public testimony and key concerns - Steve Crowe, a Del Webb resident, told the council: "Fulshear's stockholders are the residents," urging fiscal restraint and saying many households cannot absorb repeated tax increases. Crowe said he favored rigorous budget targets and spending reductions before raising taxes. - Diana Serlin, a commercial real estate broker recently appointed to the Planning and Zoning Commission, urged the council to speed infrastructure projects (notably the Wallace Street buildout) so commercial buyers will commit, arguing commercial growth is essential to diversify the city—s tax base. - Resident John Dowdall highlighted the MUD rebate arrangements and said "31% of all property tax revenue collected by the city is rebated to these two MUDs," calling for a review of the long-standing rebate agreements and their sliding-scale mechanics.

Staff explanations and council concerns City staff reviewed recent budget work. Staff said the budget presented July 1 had been balanced at the voter-approval tax rate, but that two items drew new attention during the August meetings: preventative street maintenance (to address the city's pavement condition index needs) and proposed police salary increases to remain competitive with neighboring jurisdictions.

On the MUD rebate issue staff said Fort Bend County tax-assessor reports used in prior years omitted some property values in the Cross Creek Ranch/Fullbrook MUDs and that the omission was discovered during recent audits and communications from the MUDs; the county corrected the reports after inquiries. Staff and advisors advised the council the change increased the rebate liability and therefore increased the city—s interest-and-sinking (I&S) debt-service portion of the tax rate. Councilmembers and staff emphasized the correction was not caused by council action but by a county reporting error that staff only recently confirmed.

Council action and next steps Council voted to postpone Ordinance No. 2025-15O7 (adoption of the FY2026 budget) and to schedule a public budget workshop to review the figures, MUD rebate calculations, and alternative funding options. Staff and council asked for additional clarity on: the split between MUD-related obligations and park-bond debt-service; a line-by-line review of department wage increases and contingencies; and a multi-year plan for police staffing and dispatch costs.

Votes at a glance (items mentioned during the hearing/meeting) - Motion to approve consent items A–E and G: passed (unanimous). (Consent items address routine purchasing, minutes and similar matters; details in council packet.) - Consent item F (MOU between Fort Bend County and City of Fulshear for equipment sharing): motion to approve passed (mover: Councilmember Johnson; second: Councilmember Kanopy). - Consent item H (meter retrofit/work order contract): motion to approve passed (mover: Councilmember Kanopy; second: Councilmember Miller). - Ordinance No. 2025-15O7 (adopt FY2026 operations and capital budget): motion to postpone approval to allow a budget workshop (mover: Councilmember Kanopy; second: Councilmember Powers): passed (unanimous).

Community context and immediate impacts Speakers and council members said the corrected MUD rebate numbers will increase the city—s near-term I&S obligations and are a key driver of the tax-rate debate. Staff noted the parks bond will have additional principal-and-interest impacts in the next fiscal year, and that some preventative street maintenance could be funded by county assistance for ETJ roads; council directed staff to identify specific, constrained options and produce a public-facing schedule for workshops and follow-ups.

The council did not finalize a tax rate or adopt the FY2026 budget on Aug. 18. Staff will return with a workshop schedule, updated rebate calculations and a clearer multi-year plan for police compensation, dispatch options and pavement maintenance.