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Brownwood council reviews budget shortfall, HB 9 impact and proposed pay raises
Summary
At a May 26 special budget workshop, City Manager Marshal McIntosh told the Brownwood City Council that state law HB 9 and lower valuations could reduce property tax revenue by about $160,000, while proposed pay raises and higher utility and benefits costs push FY2026/27 expenses up by roughly $876,595; council asked staff to seek balancing options and schedule follow-up budget meetings.
City Manager Marshal McIntosh told the Brownwood City Council on May 26 that the city faces both new state tax changes and rising expenses as it prepares the fiscal 2026/27 budget.
McIntosh said HB 9, which took effect Jan. 1, 2026, authorizes a $125,000 property tax exemption for tangible personal property used for income production and repealed the previous exemption for property valued under $2,500. He said the city’s valuations are estimated to fall about 0.82% (roughly $11,544,123), which, combined with an increase in frozen properties, would reduce operating property tax revenue by approximately $160,000 at the current tax rate.
The workshop centered on whether the council should consider a tax-rate increase to help cover personnel costs. At present the property tax rate is $0.6925; McIntosh said an increase would likely be necessary to partially fund Civil Service pay increases that are being negotiated through the Meet and Confer process. Council members noted the historical rate of $0.7964 in FY2017/18 and discussed possible sales-tax gains from new retail openings but agreed those figures could not be relied on for budgeting.
McIntosh outlined major expense drivers for FY2026/27: a projected $199,753 increase in electricity costs; a proposed 4% police pay raise totaling $130,161; a proposed 4% fire pay raise totaling $110,859; and a proposed 3% cost-of-living adjustment for non–Civil Service employees totaling $421,891. He also said the TML Health Pool expects an across-the-board increase of about 11 percent. Together these items produced a projected expense increase of $876,595 and an overall projected budget increase of $845,294 in the manager’s summary.
Council asked whether capital or public works projects could be paused to help balance the budget. McIntosh replied that several projects are tied to grant commitments and therefore cannot be postponed. He indicated that budget cuts would need to be pursued in other areas while the council expressed a desire to retain the proposed pay increases in the draft budget to remain competitive for staffing.
McIntosh also reviewed grant activity and reserve-fund plans. He identified three projects likely to use reserve funds: construction and grant administration for the Bennie Houston Center, property acquisition of the Small School Building, and Riverside Phase II as a partial local match for grants. He said future funding needs include downtown parking-lot work and the Brownwood Regional Airport Runway/Taxiway Rehabilitation Projects, for which the city’s projected local match is $1,268,500 between 2027 and 2028.
The Finance Department and the City Manager’s Office will meet with individual departments to refine figures, McIntosh said, and the council will schedule another budget workshop once updated numbers are available. Mayor Stephen E. Haynes called and closed the special meeting with no formal votes taken.
