Liberty Hill council signals support for ‘no new revenue’ tax rate while weighing fund-balance ceiling and a salary study

Finance Director Josh Armstrong laid out the city’s preliminary fiscal picture at a Feb. 11 special meeting of the Liberty Hill City Council, asking for direction on the property tax rate, employee pay and a formal fund-balance policy before staff finalizes the FY26 draft budget.

Armstrong told the council that after removing last year’s one-time items and reviewing department requests, expenditures are about $2,000,000 below the current budget and that development-services engineering costs accounted for a large share of the change. “I am proposing that we utilize the no new revenue rate,” he said, explaining that the approach would keep this year’s rate the same for current property owners while allowing growth in new value to generate additional revenue.

Why it matters: Armstrong said the city held roughly $15,000,000 in fund balance as of Sept. 30, 2024, and that the current policy requires a 25% minimum. He proposed adding a ceiling — a 33% threshold that, once exceeded, would trigger a planned spend-down. Armstrong gave two illustrative spend-down options, suggesting a 15%–20% draw on the overage (about $1.5 million–$2.0 million) phased over several years to fund one-time priorities such as downtown projects or capital work.

Several councilmembers said they were comfortable moving forward with the no-new-revenue rate for now but emphasized that staff’s revenue estimates and supplemental request detail would be needed to make final decisions. “You’re asking us to give you what the rate is without seeing the whole plan,” said Councilmember Diane Williams, urging a cautious approach that ties the rate decision to an operational plan.

Employee pay: Council members debated whether to adopt the 3% cost-of-living adjustment already included in the draft or to commission a market-rate salary study. Armstrong said Liberty Hill had used the City of Taylor and data from the TML survey as a proxy and estimated a full market study would cost roughly $150,000–$200,000 and take about six months. Multiple councilmembers said the study should be done this year; the mayor confirmed Candace will serve as HR director and will work with staff to issue the RFQ if the council wants the study added to the supplemental list.

Supplemental requests and CIP: Armstrong said the supplemental list currently totaled about $1.2 million in one-time requests, including a $150,000 engineering manual and a $175,000 transportation master plan/roadway impact fee study. He also flagged a $215,000 line that should be removed because it was already approved. The finance team will send updated supplemental sheets and initial revenue estimates to council members on Friday to inform further decisions.

Process and next steps: Armstrong emphasized that the council was not finalizing decisions at the meeting but giving staff direction to refine the budget. He said certified property values would not be available until July, and that staff would model revenue conservatively until then. Councilmembers asked staff for timelines and comparison tables showing approved positions, their approved rates and current salaries; Armstrong said he would provide those materials.

The meeting closed with the council signaling general agreement to proceed with the no-new-revenue rate for now, to develop a fund-balance policy draft with a 25% minimum and a 33% ceiling, and to advance the salary study RFQ process if the council chooses to budget it as a supplemental item. No formal votes were recorded at the meeting; staff will return with more detailed revenue estimates, supplemental sheets and HR timelines. The mayor adjourned the meeting at 6:18 p.m.