Deer Park staff present FY27 draft budget with $59M general fund, proposed 2.8% COLA

City staff presented a draft FY27 budget at the June 22 Deer Park city council workshop that proposes a general fund operating budget just under $59 million and a 2.8% cost‑of‑living adjustment for employees.

Sarah (finance staff) told the council the city received roughly $25,000,000 in PSLO (Program Service Level Option) requests this budget cycle, which staff trimmed to just over $12,000,000 and is proposing to fund just under $13,000,000. "Of that $25,000,000... those have been cut just over $12,000,000," Sarah said during her overview, and she told council almost $9,000,000 of the proposed funding is capital while roughly $4,000,000 is operating.

Why it matters: staff said conservative revenue assumptions and historically cautious spending have built strong reserves and helped Deer Park keep a top bond rating. Nicole (finance) summarized revenue performance, saying the city budgeted $56.9 million in general fund revenues for FY26 and is estimating actual collections of about $59.4 million — a roughly $2.5 million surplus that would help produce an estimated year‑end fund balance near $54.5 million. Nicole said staff proposes maintaining the 72¢ tax rate and estimates property tax revenue of about $31.3 million next year.

On employee pay and benefits, a staff director leading human resources described a compensation study underway and said the 2023 adjustments left the city in a comparatively strong position. The budget includes a proposed 2.8% COLA — Sarah said that figure, tied to regional CPI, translates to almost $1,000,000 citywide with about $800,000 in the general fund. The HR presenter said preliminary compensation recommendations appear targeted (not broad) and estimated the FY27 impact of further targeted adjustments at about $100,000 split between general fund and water/sewer funds.

Staff also flagged transfers and constrained revenue sources: the budget proposes roughly $1.5 million in transfers from the general fund to support the golf course and a grants fund used for matching awards; staff said hotel occupancy tax revenue has recovered to pre‑COVID levels but that fund balance has been drawn down by prior uses. Sarah said staff will return in July with updates when new CPI and final health insurance numbers are available, and the formal budget readoption (including the CIP) is scheduled as part of the September adoption cycle.

Next steps: staff will present a fuller budget packet in July with any CPI or insurance adjustments and bring the final budget for adoption in September. The council did not take votes on the FY27 budget at the workshop.