Council grapples with $200,000+ shortfall, considers tax rate and reserve withdrawals for capital projects

The Hollywood Park City Council spent significant time at the Aug. 25 budget workshop discussing an operating gap in the draft fiscal year 2025–26 budget and how to fund capital needs without jeopardizing reserves.

City Treasurer Fred presented a draft that, depending on line items and contingency choices, produced a general-fund shortfall in the low- to mid‑six figures. Council members reviewed options: keep the property-tax rate at the current rate, adopt the higher “no‑election” maximum rate the city clerk noted (0.47805 per $100 valuation) to avoid a voter referendum, or rely on reserve funds and special revenue to fund capital items such as HVAC, a generator and streets projects. Fred explained the mechanics: capital expenditures funded from reserves appear in the operating budget as both an expense and an offsetting revenue line titled transfers from reserves; council members said that presentation can be confusing and asked for clearer separation between operating results and one‑time capital draws.

Council asked staff for specific, prioritized alternatives. Suggestions included: (1) hold a modest tax-rate increase and preserve some core operating items; (2) use specific special-revenue or designated funds for equipment and the fire command vehicle (EDC funding was discussed as a possible source for that vehicle); (3) defer lower‑priority capital until revenue improves; and (4) pursue user‑fees for services (residents suggested converting city-paid solid‑waste pickup to a subscription model, which staff estimated could save roughly $300,000 annually if fully enacted, though councilors warned that shifting a current service to a fee is politically and administratively sensitive).

Treasurer Fred and other staff also reviewed the city’s cash and investment position: the city holds multi‑million dollar balances across general and special funds, invested primarily in municipal investment pools (TexPool/TexasCLASS), earning multi‑percent yields. Staff reminded the council that designated street reserves already hold a multi‑hundred‑thousand‑dollar commitment and that use of those funds reduces the city’s unallocated reserve cushion.

Ending: Council directed staff to produce several budget variants showing (a) the impact of holding the tax rate steady, (b) the effect of adopting the higher no‑election rate, (c) using reserves for one‑time capital and (d) deferral scenarios. Staff will present those alternatives at the next budget workshop for a direction the council can adopt in the fall.