June 15, 2026

By Mary Beth Gahan

On Monday night, CFO John Zagurski and Town Manager James Childers responded to online criticism that the smaller budget they have to work with is the product of mismanagement. They welcomed discourse on the subject, but said the problem stems from a flagging national economy and decisions of the state legislature, not local officials — elected or otherwise.

Since the beginning of the month, there has been more public attention than usual on the budget, which hasn’t been presented in its full form yet. Childers will do that at the end of July and the town council will vote on it in September. It will go into effect on Oct. 1.

The Facebook live stream of Monday’s meeting has been viewed 6,400 times. Discussions on social media about how to manage town funds have stacked up hundreds of comments.

Still, there were just a handful of people in the audience at the town council meeting by the time Zagurski stood to give the overview of sales and property tax revenue. One was former town council candidate Susan Cox. Another, Missy Grau, spoke publicly earlier in the meeting to ask why council members did not say anything about budget concerns before Election Day in May.

The council members cannot respond to public comment, but Childers addressed Grau’s comments later.

“I want people to understand that the council can provide input, but I'm the one putting together the budget at this time. It's not your budget until you adopt it,” he said.

The looming possibility of a tax rate increase was mentioned as early as last fall, but Childers said it’s not until now that they’ve known what revenue looks like for this year. Property tax rolls are still preliminary. The town doesn’t receive certified numbers from Denton and Tarrant counties until July.

Sales tax revenue doesn’t immediately hit the town’s coffers when someone makes a purchase, either. It has to be collected by the state, then is distributed to municipalities. So when there’s a change in the amount of money spent in the town limits, it’s not realized for a few months.

That’s what happened when, in March, Zagurski saw December’s sales tax revenue data. It showed that the town was down 9.15 percent in the previous six months compared to the same time period the year before.

He said the town needed to “pull back” spending, so they initiated a soft hiring freeze, directors figured out what they could do without, and staff started to look at how the next few years would look was levels of service decrease.

“Overall, the economy is experiencing a recession,” Zagurski said. “Whether we want to call it that or not, the only things that are booming right now is AI and data centers.”

It will take two years of “normal economic conditions” for sales tax revenue to get back to where it was in 2024, Zagurski said. The town expects to end the fiscal year down 7.5 percent — a shortfall of $3 million.

In addition to that, property tax revenue has not increased enough to keep up with inflation and fund the town at its current level. When appraisals first went out, preliminary property values in Flower Mound were up 11 percent from last year. After protests, that number is now 2.65 percent.

In 2018, the homestead exemption for Flower Mound was 2.5 percent. It has steadily increased since then. Last June, the town council approved to increase it from 12.5 percent to 20 percent, the maximum allowed by state law. Without any homestead exemption, the town would have $16 million more to work with, Zagurski said.

The town council also increased the senior exemption from $100,000 to $150,000 in 2023. Most notably, in the last six years, the council has lowered the tax rate by $0.05, or 12 percent.

“This council and past councils over the last six years have done more for property tax relief than had probably ever been done in the history of this town,” Zagurski said. “Now, with that said, it causes some financial constraints because the flexibility we once had to absorb inflationary costs is not there. That's not council's problem. It is a problem facing the state legislative sessions.”

To offset those funding gaps, the town has slowed spending by implementing a soft hiring freeze. Childers reviews every open job before it is posted and determines if they can do without someone else filling it, he said.

Zagurski said he has a team that spends most days reviewing staff’s spending decisions. Departments have cut back on “nice-to-haves” and figured out what they can do without.

“I want to make it very clear that this is not people wastefully spending property tax dollars. Many of the people who work here, live here. Many of them have been longtime residents, have been here 20-plus years,” he said. “The idea that they're just asking somebody to pick up the cost of something is a little absurd for the hard work they do.”

The town is looking at how to address continued budget shortfalls in the coming years. Things like mowing, tree trimming, and community engagement will be part of cuts starting next fiscal year.

The following year, a VATRE, or voter-approved tax rate election may be called in November 2027 if the town council decides to go that route.

If the tax rate were to be bumped up 3.5 percent, 50 percent of residents would see an increase on their property tax bill of less than $65 annually, or $5.42 a month, Zagurski said. The tax rate of just over $0.40 would bring in an additional $1.9 million for the town.

If the council doesn’t call the election or voters say no to an increase, there will be more drastic cuts to services the town provides.

Mayor Cheryl Moore said she’d like to look at what they can pull back on to address the budget issues, without affecting public safety, so they can avoid going to the voters for a tax rate increase.

“I would hate to do that,” she said.

Council member Chris Drew reiterated a previous request by Mayor Pro Tem Adam Schiestel to see what it would look like if they dissolve TIRZ 1, the 1,465-acre reinvestment zone that includes the Riverwalk and would help fund an art center.

Childers said he would bring that information to council, along with comparable cities and how they’re dealing with any budget shortfalls.

The town manager tried several times in the meeting to not step on a soap box, but failed by the end. He continued to point the finger at the state legislature, which has limited local control of issues in recent years. In 2019 when it required municipalities to go to the voters if the tax rate were to increase more than 3.5 percent. Before that, an 8 percent increase triggered an election.

“It would be great if this was a collaborative effort with the legislature. It would be awesome if they sat down with city managers, CFOs, council members and came up with something that makes sense. The problem is they just do it. Say, ‘Y'all figure it out.’ There's no collaborative component to this whatsoever.

There was an effort in the last special session in Austin to reduce the threshold for a VATRE from 3.5 percent to 1 percent.

“This is gonna start hitting the components that people say they care about the most. Public safety in particular,” Childers said. “We have a legislation that says you can't defund the police, well guess where this is sending us if, at some point, you don't make an intervention. You're going to defund the police. Nobody wants to do that.”

Public safety, including personnel and equipment costs for firefighters and police officers, constitutes roughly 60 percent of the general fund.

“You do the math. I can close a library and it's not going to have an effect on very much,” Childers said, quickly adding, “I'm certainly not advocating for that.”