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Tomball council previews FY27 budget with $33 million bond on horizon, modest rate increases
Summary
City staff told council the city is running ahead of budget this year on sales tax and projects a conservative FY27 plan that assumes 1% sales tax growth, 6% property tax base growth and a $33 million bond issuance to finish major water and sewer projects; staff warned of planned utility rate increases and a projected 3% COLA for employees.
City of Tomball staff told the City Council on June 15 that revenues have outpaced conservative expectations for the current year and laid out assumptions that will guide preparation of the FY27 budget.
Finance director Bragg said sales tax receipts rose by about $140,000 year‑to‑date and that April’s receipts of $243,000 have pushed the city roughly $400,000 over the adopted revenue plan — about 2.7% ahead for the fiscal year so far. Property tax collections were reported at about $7.2 million (roughly 104% of budget) though staff noted an accounting adjustment due in June will reduce the year‑to‑date figure to roughly $6.8 million (about 98% of budget after temporary entries are processed).
City staff used those current‑year trends to frame budget assumptions for FY27. City manager David (staff) told council the proposed baseline assumes a conservative 1% growth in sales tax receipts and a 6% increase in taxable value for property tax calculations (the city saw ~8% growth last year). The presentation also rests on the utility rate plan adopted in recent years: staff projected an average residential water and wastewater increase of about 9.2% and roughly 11.7% for commercial users as the enterprise fund is expected to shoulder a growing share of debt service for capital infrastructure.
The council was told the remaining borrowing required to complete four major capital projects — Baker Drive water plant, an East water plant on Lizzy Lane, the south wastewater treatment plant and the FM‑2920 gravity lift consolidation — is now estimated at $33 million, slightly higher than earlier estimates. ‘‘We won’t have to do the $11 million issuance previously planned for 2027 if we complete the $33 million issuance in FY27,’’ staff said during the presentation, adding that final timing will depend on market conditions and council direction.
On the spending side, staff included seven new full‑time positions in the draft requests (one reclassification in police), a recommended 3% cost‑of‑living adjustment for all employees and a 2% market‑study contingency in personnel costs. Major medical/employee benefit costs are preliminarily modeled at a 16% increase in FY27, down from earlier projections in the budget process.
Staff also reminded council the city’s enterprise fund is being positioned to contribute more to debt service over time, which will help mitigate pressure on the property tax rate but requires continued utility rate progression. Bragg reported the city’s investment pool has drawn down as capital projects are invoiced and noted liquidity remains adequate.
Council members asked about timing and contingencies for the proposed bond issuance, the financial impact of the utility rate plan on residential bills and whether grant funding could offset some capital costs. Staff said they would come back with more detailed budget workshops in July and August and recommended the council prioritize any policy changes now so they can be reflected in the proposed budget schedule. The council scheduled a series of public budget workshops in July and August, with the fiscal year beginning Oct. 1.
