Terrell staff proposes Aug. 26 public hearing on 2025 tax rate as council weighs modest increase to cover debt, staffing

Interim City Manager Mark Mills asked the Terrell City Council on Aug. 14 to set a proposed 2025 tax rate on the public notice and to schedule an Aug. 26 public hearing at 6 p.m., with a follow-up meeting at 1 p.m. on Aug. 29 for a final vote.

Mills told the council the notice must list a proposed tax rate — the highest rate the council could legally adopt — but that the council could adopt any lower rate later. He said the citys current total tax rate is 76.42 cents per $100 of valuation and that the voter-approval (rollback) ceiling is about 86.2142 cents, which would trigger an automatic election if adopted. "The proposed tax rate is the highest tax rate that the city council can consider and adopt," Mills said.

Why it matters: Council members said they need to balance service levels, hiring and infrastructure work against the political and practical impacts of raising taxes. Mills and councilors discussed two components of the rate: maintenance and operations (M&O), which funds general services, and interest and sinking (I&S), which pays debt service. Mills said that, because of prior transfers from the utility fund and recent bond activity, the I&S calculation for tax year 2026 would be about 19.29 cents.

Mills described previous budget actions that moved money between funds: he said roughly $1.8 million was transferred in FY25, about $1.2 million of which was utility debt and roughly $607,000 of which covered property-tax-supported bonds. "I don't believe the utility fund should have paid that additional $607,000, but that's the way our debt number was structured last year," Mills said.

Council members and Mills ran examples to translate small changes in the tax rate into dollars: county collection assumptions put one cent at about $206,000 in revenue. Using that calculation, Mills said a move to 77 cents would generate roughly $174,000; he estimated 80 cents would yield about $430,000. Councilors said modest increases could help fund new firefighters and police officers; Mills estimated staffing Station 3 would cost roughly $780,000 and three police officers about $450,000.

Several council members urged caution and asked staff to pursue additional efficiencies and present budget scenarios tied to tax-rate impacts. Mills said staff had identified roughly $500,000 in potential general-fund savings and would return with additional details and Kaufman County appraisal-district valuations to show how property values had changed.

On notice strategy, councilors were split. Some favored publishing the legal ceiling on the notice and telling constituents the council intended to "work back down" to a lower rate; others said publishing a number they did not personally support would be misleading. "If I put an 86-cent tax rate out there, you're all gonna get phone calls," Mills said, adding he would not present a budget that used the 86.2142-cent ceiling.

The council prepared motion language to approve the resolution to set the public hearing date, time and the proposed rate to publish (the agenda packet referenced the resolution number aloud as "2244" and later the clerk read a version as "2242" during motion preparation; staff said the clerk would publish the notice and confirmed the Aug. 26 hearing and Aug. 29 final vote schedule). No final vote on the resolution or a tax rate was recorded at the meeting.

What happens next: Staff will return with the appraisal-district valuation changes and a budget presentation showing specific items tied to tax-rate alternatives so the council can decide what to add or remove. The council is scheduled to hold a workshop Aug. 22 and the public hearing Aug. 26 before the Aug. 29 vote.

Sources: Remarks and figures provided by Mark Mills, Interim City Manager, during the Aug. 14 Terrell City Council special meeting; council discussion and procedural items at the same meeting.