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Finance director warns of sales-tax dip, proposes small raises and deferred budget adoption
Summary
Interim finance director Todd Simono told the council that August sales-tax receipts ran about 9% below expectations, that payroll is roughly 75% of general-fund spending, and he proposed targeted raises and timing that would delay budget adoption until a tax-rate hearing in mid-September.
Todd Simono, the interim finance director for Nacogdoches, outlined the proposed fiscal year 2026 budget at the Aug. 19 workshop and underscored revenue pressure from sales-tax volatility and property-tax mechanics.
"In August, we received 9% less than what we were expecting," Simono said, noting that sales tax is the second-largest revenue source for the general fund and that month-to-month swings have been pronounced. He recommended conservative budgeting for hotel-occupancy and sales-tax receipts because the city often receives taxes on a lag and some payers have made late payments.
On property taxes, Simono said the proposed voter-approval rate is 57.5¢ per $100 valuation, with 49¢ for maintenance and operations and 8¢ for debt service. He illustrated how most recent tax-rate increases were driven by voter-approved bonds and debt needs rather than general-fund spending.
Simono emphasized payroll as the largest general-fund expense at roughly 75% of expenditures and proposed targeted staff raises — 3% for employees earning less than $62,500 and 2% for those above — with a general-fund cost of about $475,000 (including payroll taxes and pension costs). He said the proposed budget also includes a code-enforcement officer position ($60,000) and converting a part-time animal-control role to full time (about $28,500) among other prioritized hires.
On utility and sanitation funds, Simono said the utility fund still meets reserve requirements but operating cash declines year over year; the presentation called for a 5.41% water and sewer rate increase (about $2.58/month for an average household using 4,000 gallons) and a 4% sanitation rate increase (about $0.99/month residential) plus a 9% increase for roll-off landfill charges.
Simono recommended the council receive the budget at the regular meeting, set a public hearing for Sept. 2 and a tax-rate hearing for Sept. 16, and postpone final budget adoption until after the tax-rate hearing so the council can adopt the tax rate and budget together.
