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Terrell presents FY2026 budget with proposed tax rate of 76.42¢; public hearing set, tax vote moved to Aug. 29
Summary
Interim City Manager Mark Mills proposed keeping Terrell's tax rate at 76.42 cents per $100 valuation to fund the FY2026 budget, detailed staffing and compensation options that could add as much as $1.3 million in the coming year, and said the formal tax-rate vote will be held at a separate Aug. 29 meeting.
Interim City Manager Mark Mills told the Terrell City Council on Aug. 26 that staff is presenting a FY2026 budget built on a proposed tax rate of 76.42 cents per $100 of taxable value, down from the 81-cent notice published for the required legal advertisement. "I am pleased to tell you that we actually will be presenting you a budget this evening that is based on a tax rate of 76.42¢," Mills said.
Mills said the rate is split roughly 58.4 cents for maintenance and operations and about 18 cents for interest and sinking (I&S). He said fully funding principal and interest would require an I&S rate of about 19.29 cents, and the budget uses about $266,000 of I&S fund balance to lower the I&S portion to 18 cents.
The proposal would set general-fund revenue at about $40.1 million and expenditures at roughly $38.4 million, plus $1.5 million in recurring additions and $296,000 in one-time items; Mills described a planned $214,000 drawdown of fund balance for one-time needs such as equipment.
On personnel, Mills proposed restoring a code enforcement officer (net ~$34,000), creating a Neighborhood Services department with Denish Simon as director and adding a housing manager effective Jan. 1, and expanding convenience-center hours with a part-time employee. He said a police reorganization allowed the city to add six officers last year; partial funding this year addresses restructuring and could lead to a net increase of three officers next year once vacancies are filled.
Mills presented four compensation options to make Terrell more competitive with nearby cities. The most aggressive option, benchmarked to Forney plus 5 percent, would cost about $1.3 million in the first year and an additional $727,000 the following year. "This change brings it up to a difference of 8%" between police and fire pay in some scenarios, Mills said while explaining range and step adjustments.
Council members pressed for details on revenue comparisons, staffing needs for a planned new fire station and recruitment strategies; one member urged advertising multi-year pay progression to improve hiring. Mills said the budget includes funds for a compensation/classification study in FY2026.
Because Texas law prohibits adopting a tax rate the same night as a budget public hearing, Mills and the council scheduled the formal tax-rate vote for a special meeting Friday, Aug. 29, 2025, at 1 p.m. in Terrell City Hall. Amberlyn Spencer McNutt, a property owner, told the council she appreciated staff for keeping the rate low and said she favored continuing the current rate. "I'm very much in favor of continuing at the rate that we have presently," McNutt said.
Next steps: the council will consider final budget and tax-rate ordinances at the Aug. 29 special meeting with a roll-call vote and a separate ratification of the tax increase tied to property value changes.
