Fulshear outlines preliminary FY2027 budget with modest surplus and proposed police pay increases

Fulshear, Texas ' City finance staff presented the preliminary FY2027 operating and capital budget at a special council meeting on July 7, describing a balanced plan that includes investments in public safety, parks and infrastructure while relying on conservative revenue assumptions.

"We are showing a balanced budget," the presenter said, adding that the city expects to finish FY2026 with a fund balance above expectations and to carry a modest surplus into FY2027. Staff identified a projected surplus of $339,000 in the preliminary numbers and proposed several targeted uses including park improvements, building repairs and drainage projects funded from one-time excess fund balance.

Key assumptions and items noted by staff:

- Tax rate: staff proposed keeping the current rate at 0.168 for planning purposes while running scenarios after certified tax rolls are available in late July.
- Debt (I&S) rate: staff forecast an increase to the I&S component from 0.051 to about 0.069 next year because of voter-approved park bonds.
- Staffing and compensation: the preliminary plan includes a 4% cost-of-living adjustment (six months) and six new general-fund positions (three police, three public works) plus one utility operator in the enterprise fund. Council members discussed using a 55% median target for police pay comparisons; staff said the police salary adjustments are estimated to cost roughly $500,000 and would be supported by the reallocated sales-tax revenue.
- Capital projects: staff highlighted several CIP items including Primrose Park phase work, Eastside drainage and the Katy-Fulshear lift station; staff said some projects will be funded with transfers and some with bond proceeds.
- Utility fund and impact fees: staff assumed no water-rate increase in the current planning numbers; they reported an open legal question about whether impact fees can be used to pay debt service. If impact fees could be applied to debt service, staff said the utility fund's coverage ratio could improve materially (staff cited a $4 million impact fee balance as relevant to the analysis).

Council members asked for additional data and KPIs on recruitment/retention and on the sales-tax reallocation that funds police costs; staff said they will return with more detailed breakdowns and scenario analyses before final budget adoption in September.

Next steps: staff will run tax-roll scenarios when certified values are available, provide more granular KPI and police-compensation detail at the next budget meeting, and continue weekly or biweekly budget work through adoption.