Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Municipal Budget topic
No spam. Unsubscribe anytime.
Town staff warns of sales‑tax shortfall; council briefed on options including service cuts or a voter tax increase
Summary
Town staff told the Flower Mound Town Council that a six‑month sales‑tax slump (about 10% year‑to‑date) could create roughly a $3 million shortfall across funds; staff outlined choices including reducing service levels, drawing on fund balance or asking voters to exceed the voter‑approved 3.5% rollback limit.
Town finance and management staff told the Flower Mound Town Council on June 15 that the town is facing structural revenue constraints and a notable sales‑tax shortfall that will shape the FY27 budget.
Town Manager James and budget presenter John Zagurski said staff now has six months of sales‑tax data and is working earlier than typical to prepare a proposed budget. Zagurski said the town is currently about "10% down for the year" in sales tax receipts and that staff anticipates ending the year closer to 7.5% down — a change that would translate to roughly a $3,000,000 reduction in funding across operating funds compared with the previous budget.
Staff emphasized that the situation is not a sudden accounting error but a structural issue driven by state policy and revenue trends. Zagurski and the town manager discussed the longer‑term effects of state laws such as SB 2 (2019), which limit the rate structure municipalities can set, and the cumulative impact of local tax‑relief measures the council has previously adopted (increases to homestead and senior exemptions). The town remains AAA rated and has healthy fund balances, they said, but staff presented three broad approaches for next year: (1) accept additional service‑level reductions and continue to absorb inflationary costs within department budgets, (2) use fund balance and one‑time measures to smooth the gap, or (3) place a measure before voters to permit a larger tax rate (above the automatic threshold) to support existing service levels.
Zagurski gave examples of what reduced service levels might look like — fewer community events, slowed capital spending, and a soft hiring freeze that subjects vacant positions to higher scrutiny — and said staff is already tightening spending and evaluating nonessential items. He quantified that moving to the voter‑approved 3.5% rollback calculation could yield roughly $1.9 million in additional property tax revenue in the coming year, but because of appraisal protest activity and slower valuation growth, achieving that increase would still represent a return toward earlier tax rates and would require clear voter authorization.
Council members thanked staff for early engagement and discussed outreach plans, including town budget hearings, community engagement sessions in August/September, and follow‑up analysis comparing other cities’ approaches. Staff stressed a forthcoming proposed budget release (anticipated end of July) and additional data points at a late‑July strategic planning retreat.
The presentation is advisory; no council decisions were made that evening. Staff said it would return with a formal proposed budget and public engagement schedule before any final action.
