By Mary Ellen Leonard, Director of Fiscal Services
The proposed FY 25 budget presented to the College Station City Council in a special meeting on Monday continues the city’s focus on core services, critical infrastructure, and residents’ quality of life while reducing operations and maintenance spending compared to inflation.
Through citizen feedback, the council’s strategic direction, and input from city leadership, the proposed budget is designed to maintain our community’s positive trajectory while meeting short- and long-term challenges – especially population growth and inflation.
The council will hold a series of budget workshops from July 15-17 to discuss the proposal in detail. A public budget open house will be at City Hall from 6-8 p.m. on July 22. Public hearings are scheduled for the budget on July 25 and the tax rate on Aug. 22.
Adoption is tentatively scheduled for Aug. 22, with the new fiscal year beginning Oct. 1.
The $540.5 million proposal includes $366.2 million for operations and maintenance, a less-than-inflation 2.5% increase over FY 24. The $174.3 million capital projects budget marks a 29% increase due to new and rehabilitated water wells and construction beginning on projects approved in the 2022 bond election.
Most of the budget covers our electric, water, and wastewater utilities, which operate on funds generated by ratepayers. User fees also fund solid waste collections, drainage, and roadway maintenance.
The $124 million general fund is supported primarily by property and sales tax revenue. The fund pays for police and fire protection, public works, parks and recreation, and other community needs.
Sales and property taxes contribute generally equal shares of city revenue.
The good news is that no increase is proposed in FY 25 for the property tax rate, electric, and wastewater rates. College Station maintains one of the lowest tax rates in Texas at .513096 cents per $100 of property value.
As a result of recent legislative changes, the city is limited to a 3.5% increase in operations and maintenance tax revenue without going out for an election. Higher property values and the tax rate are expected to generate about $3.7 million in additional revenue to fund governmental operations. The estimated revenue from new property on the tax roll is about $1.49 million.
College Station’s portion accounts for about 25% of your property tax bill, which means the owner of a $250,000 home pays the city less than $100 monthly.
Solid waste, drainage, and roadway maintenance are indexed to inflation and will likely see a 3.5% increase.
Let’s examine two of our most significant challenges and how they impact the budget.
Challenge No. 1: GROWTH
Planning a city budget typically begins with a close look at the current and projected population. For a unique city like College Station, that conversation always starts with Texas A&M, the nation’s largest university.
With an enrollment approaching 80,000, A&M’s rapid expansion increasingly strains essential city services, including public safety and utilities. Meanwhile, College Station’s population grows by about 2,500 residents annually.
We’re on track to surpass 130,000 residents in 2025 – a 30 percent increase since the 2010 U.S. Census.
As areas of the city become more densely populated – Northgate is the most vivid example – city services must expand to meet the ever-increasing demands.
Challenge No. 2: INFLATION
As if population growth weren’t enough of a challenge, the effects of inflation persist. Although inflation has moderated in the last year, the cost of goods and services has increased by about 20 percent since 2021.
The modest gains in sales tax receipts in recent years have not kept up with additional services or staffing costs.
So, what are the critical decision points in the FY 25 budget?
Decision Point No. 1: WATER DEMAND
It shouldn’t surprise anyone that an expanding population needs more water. Substantial investments in infrastructure and strategic planning related to growth and conservation are necessary to maintain our high quality of service and meet future water needs.
Securing an adequate supply requires three new wells totaling $69 million ($23 million each), including collection lines. To help fund these critical projects, a 10% increase in water rates is proposed for FY 25.
The last water rate increase was five years ago.
Decision Point No. 2: PUBLIC SAFETY
The expansion of fire services and the desire for a better proactive policing ratio requires investing more than future budgets can support without additional revenues.
In 2022, College Station voters overwhelmingly approved a seventh fire station for the growing south area of town. The bonds cover construction, but recurring costs of about $2.65 million will be needed to cover pay and benefits for 24 firefighters when the station opens in 2026.
Part of that cost will be covered in FY 25 through a future budget amendment. In 2026, additional resources must be considered to make the new fire station fully operational.
Meanwhile, the police department needs more officers to handle greater demands and keep our expanding community among the nation’s safest. The department plans to add three officers and four total positions in FY 25 and five more the following year.
Decision Point No. 3: OUTSIDE AGENCY FUNDING
Supporting our community sometimes means helping to fund agencies such as the Brazos County Health Department and others that benefit residents.
An annual examination of these relationships and the cost-benefit of each is critical.
Decision Point No. 4: WORKFORCE RETENTION
The city competes with other employers for the best and most skilled workers. Attracting and retaining a qualified workforce is a continual challenge.
City leaders are committed to offering attractive compensation and benefits to lure new workers and keep our talented long-term employees. Helping the city workforce cope with inflation also remains a priority.
As a result, the FY 25 budget proposes a 3% increase in pay scales and a 1% market adjustment for most city employees.
Other Priorities
The FY 25 budget also addresses other significant areas, including traffic management, roads, affordable housing, alternative transportation, city facilities, and parks. At the same time, city leaders are also focused on strategic initiatives to enhance our quality of life and set a solid foundation for our community’s continued success.
And don’t forget the essential capital projects happening across College Station, some supported by tax dollars and others by utility revenues. As we expand our infrastructure and make necessary upgrades, you’ll see many more projects in 2025, including expanded roads, additional city facilities, park amenities, and traffic signals.
Funding for sidewalks, multi-use paths, and bike lanes is also included to address mobility and alternative transportation methods. Utility projects include electric transmission line relocations, a new substation, the new water wells, and related rehabilitation projects.
A Responsible Path Forward
College Station consistently ranks among the nation’s most desirable places to live because of its high quality of life, partly due to sound fiscal management and the value of city services provided to our citizens and visitors.
Challenges are inevitable, but so are opportunities. We’re confident the proposed FY 25 budget represents a responsible path forward and will position College Station for continued success.
About the Blogger
Mary Ellen Leonard has been the city’s director of fiscal services since 2016. She previously was the chief financial officer for the Grub Burger Bar restaurant chain and operated her accounting firm for 14 years. A CPA since 1988, Mary Ellen has also served as a senior manager at Accenture and Arthur Andersen, CFO at Devereux Hospital, and senior financial analyst at Tenneco Gas Pipeline. She earned a degree in accounting from Texas A&M in 1986.
If you liked this post, share it with the buttons below!
