Hillsborough council votes to notify county it may exceed revenue-neutral rate, sets 42-mill ceiling

The Hillsborough City Council voted July 15 to notify the county clerk that the city intends to exceed its revenue-neutral rate for 2026, specifying a maximum of 42 mills to preserve flexibility while staff finalizes the draft budget.

City staff explained the county-computed revenue-neutral rate is 37.989 mills and that reaching revenue neutrality would require cutting roughly $72,000 from the draft budget. Staff recommended submitting a higher preliminary figure—42 mills—and then adjusting downward as the city finalizes the budget, which must be certified to the county clerk by Oct. 1 and published with the budget hearing.

During discussion, staff said the city’s general-fund pressures include insurance and health-care cost increases and that personnel costs account for roughly 67% of general-fund expenditures. Council members pressed staff on where cuts would come if the council later chose to adopt a revenue-neutral rate; staff said they can show scenario breakdowns (for example, what would be lost if the pool or other services were cut) and will provide more detail in subsequent budget reviews.

On a motion by Councilman McCarty (speaker 6) and second by Councilman Wilkins (speaker 3), council voted to notify the county clerk that the city plans to exceed the revenue-neutral rate, not to exceed 42 mills. Council members said the notification is a procedural step required by July 20 and does not bind the council to adopt that final levy.

Staff outlined the timeline: notify the county clerk by July 20, review a full draft budget at the August meeting, hold a revenue-neutral and budget hearing in September, and adopt the budget before the Sept. 20 or Oct. 1 certification deadlines. Council directed staff to prepare clearer scenario materials showing trade-offs tied to revenue-neutral decisions.