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Memorandum TO: Mayor, Mayor Pro Tem, City Council FROM: Rose Beverly, City Manager SUBJECT: Proposed Fiscal Year 2025/2026 Budget Executive Summary DATE: July 28, 2025 Itein No. 16 Introduction It is with great satisfaction that I present the City Manager's Proposed Fiscal Year 2025/2026 ("FY25/26") Budget and Budget Message. This document reflects the hard work and collaboration of many individuals across the organization. Countless hours have gone into its careful review, refinement, and discussion resulting in a comprehensive and thoughtful proposal that we are proud to bring forward for your consideration. Summary Prior to getting started with the substance of this memorandum, we would like to present to you a few initial summary results regarding the Property Tax Levy and Rate, as well as the balancing of the Operational Funds. One of the most important aspects of the proposed budget is its impact on the property tax rate and levy. The City's property tax is divided into two components: the Maintenance & Operations (M&O) rate and the Debt Service rate (also known as Interest & Sinking or I&S). The M&O rate is subject to Senate Bill 2 (2019) growth limits, while the Debt Service rate is not. The proposed FY25/26 budget assumes an M&O rate of $0.30773 equal to the NNR M&O rate of $0.2891 plus the de minimis rate increase of $0.01863), which allows the City to generate $500,000 in new revenue based on current property values. Given ongoing inflationary pressures, City Management recommends adopting the de minimis rate for the next several years and/or developing a strategic long-term financial plan. The proposed Debt Service levy is increased due to the tax note issued in July, which funds essential emergency services equipment—including a fire apparatus, dive boat, SWAT van, and a tractor for the Codes Department. The combined proposed property tax rate for FY25/26 (M&O and Debt Service) is 0.47239. Final rates are influenced by property valuations determined by the Lamar County Appraisal District. 1 1? 7. C7'74,,, t 7i•„ ,` A G 7 at1 *'F t C -7$ M8' 19 :—PA, 15,,T