FULSHEAR — City Council unanimously approved an $87.5 million budget for fiscal year 2025-26 and set a tax rate of $0.167903 per $100 valuation, dramatically reducing a proposed 23.51% tax increase to 3.74%.
The Sept. 2 decision came after council postponed budget adoption in August amid taxpayer concerns over the original proposal, which would have raised the tax rate to $0.199901 per $100 valuation.
Dramatic Rate Reduction
The approved tax rate represents savings of more than $160 for households with $500,000 in property value compared to the originally proposed rate, according to Council Member Jason Knape.
"By making the above adjustments, we were able to set the M&O portion of the tax rate to the No New Revenue amount which we haven't done in years, always increasing by the 3.5% allowed by state law without a vote," Knape said.
Budget Adjustments Enable Lower Rate
City officials made several strategic adjustments to achieve the dramatic reduction while maintaining essential services. The budget includes a $19.4 million general fund with $6.2 million allocated for police services.
The city used nearly $1 million from its $2 million budget surplus to address previous underpayments to municipal utility districts and provide an additional $500,000 in taxpayer relief for the debt service portion of the tax rate.
Instead of filling all four open police positions, the city will fund three positions and use savings from the fourth to provide $2,000 hourly pay increases for existing officers to remain competitive with surrounding communities.
Officials also increased revenue projections for plan reviews and building permits by $150,000 each, aligning expectations with actual performance and reducing reliance on property tax revenue.
Infrastructure Focus Maintained
Despite the rate reduction, the budget still funds all needed pavement improvement projects while addressing other infrastructure needs. Half of the $1 million previously budgeted for City Hall repairs was redirected toward debt service, with the remainder allocated to water and wastewater asset management.
The city moved $445,000 from budget surplus to compensate for the county's undercalculation of MUD rebate numbers.
Future Outlook
Knape expressed confidence in using surplus funds due to continued residential growth and the city consistently exceeding projected revenues.
"With continued growth to the sales tax, additional commercial property, better than forecasted plan/permit revenues, I believe this is possible for a few more years," Knape said.
The new budget takes effect Oct. 1, marking the start of fiscal year 2025-26.