June 2, 2026

By Mary Beth Gahan

The budget season kicked off Monday night at the town council meeting with staff laying out the argument for why voters will more than likely have to decide on a tax rate increase in the next couple of years.

Town Manager James Childers said the point of talking with council and members of the public about the budget process over several sessions was to show why the town is under financial strain and why a VATRE, or voter-approved tax rate election, will be needed.

“I don't want us to be blindsided by a train,” Childers said. “I want us to see it coming around the bend.”

The town has made cuts to services and personnel, but inflation continues to make it difficult to cover costs. When several developments on the west side of town are complete, tax revenue will increase, but so will the amount of municipal services needed.

One council member said the optics of asking for money from the residents while designing a publicly-funded art center, with a cost of at least $75 million, are bad. 

“I can't reconcile going forward with an art center and then turning around and asking for a VATRE,” Mayor Pro Tem Adam Schiestel said.

John Zagurski, the town’s chief financial officer, had a presentation with several slides touting the accomplishments of the town, like a AAA bond rating, a fire department response time of six minutes, as well as technology that reduces paperwork and increases transparency.

He pointed to ways the town has diversified revenue and slowed spending in an effort to offset a sales tax shortfall. The town also has brought in $200 million grants and capital contributions in the last 10 years, allowing them to pay for things with money outside of tax revenue.

Before he got to the next slide labeled, “however,” Childers jumped back in.

He said he understood the old adage about tightening the belt in tough times, but pointed to Zagurski’s presentation and the council’s decision to lower the property tax rate and increase the homestead exemption as things they’ve done already to offset “superficial” pressures put on them by decisions made in the state legislature.

“We can't feel our legs. That's how tight our belt is,” Childers said.

In 2019, the legislature passed Senate Bill 2, which capped the amount a town could raise a tax rate at 3.5 percent. Anything higher, the voters have to approve.

When the bill was passed, State Sen. Tan Parker was the representative for District 63 and Jane Nelson, the current Texas Secretary of State, was the state senator for District 12. Both voted for Senate Bill 2.

“We are facing revenue limitations that have not been seen here in the state of Texas before. Specifically, costs are rising faster than revenues can increase legally without an election,” Zagurski said.

The consumer price index, the widely-used indicator to track inflation, rose 3.8 percent over the last 12 months ending in April, according to the Bureau of Labor Statistics.

Fuel has gone up 100 percent in the last year, he said.

“That’s hitting us hard,” Zagurski said. “Really, really, really hard.”

In the last five years, the town’s population has grown 8 percent and so has the town’s staff in order to accommodate added residents. For every 1 percent in population growth, the town adds about seven staff members, he said.

Maintenance costs and the price of construction equipment went up 25 percent and 40 percent, respectively, in the last five years, according to Zagurski.

To help alleviate the pressure, some departments have combined a part-time and full-time position to lower staff levels. The fire department has reduced community outreach and training costs.

In the future, police officers will more often be doing administrative and jail-related tasks rather than being on the streets and doing public engagement. Crews from the parks department will be responding to fallen limbs rather than doing proactive tree trimming in all public places.

“We’re pulling every lever internally that we can,” Zagurski said.

Childers said it was “a little frustrating” because they went to Austin to warn the legislature that Senate Bill 2 does not allow them to keep up with the rise in inflation. He said the financial strain they’re under isn’t the biproduct of mismanagement.

“This is how it’s designed to work. Cities are being pushed off a cliff to go to the voters,” Childers said. “We didn't do anything wrong. This is the product of a math equation. Simply put, the revenue we’re allowed to generate each year isn’t enough to pay our people.”

Childers said it’s “inevitable” that the town will have a VATRE and that he’s spoken with counterparts in Texas who are thinking of having voters decide on a tax rate increase in the next year.

Schiestel pushed back.

“I don't want to do a VATRE. I don't think we have to do a VATRE,” Schiestel said. “I understand that there's a lot of belt-tightening that's been done but, I mean, talk to anybody anywhere, in any sector. We're all going through it.”

A bright spot on the horizon is a sales tax revenue increase when the west side of Flower Mound, like the Monarch and Furst Ranch, is developed, but that also means more town services will be needed. Childers mentioned when that happens – in the next five years – another fire station will be necessary, with 17 people. Police will have to add a beat – around five officers.

“There’s going to be some huge personnel requests associated with that,” Childers said.

Additionally, in the next year, a new police headquarters will need to be built, he said.

Toward the end of the presentation, Schiestel pointed to the publicly-funded art center at the Riverwalk that is in the design phase.

“The problem I have is that we just had, not six weeks ago, a consultant in here who showed us a $75 million art center that's being paid for by a TIRZ, that is consuming over the next 10 years, $50 million of our own ad valorem tax, not including the county's share,” Schiestel, who is in favor of the art center, said.

Schiestel said he’d like do one or the other — an art center or VATRE — but not both. A third option he floated would be to tie together a VATRE and the art center in one item on a ballot and let the residents decide.

Childers acknowledged the issue of how it looked spending that money, but said each large expenditure like the art center and police headquarters comes from different funds that can’t be easily moved around.

“With all of those things, they’re separate, but somewhat interrelated,” Childers said.

In the case of the art center, the Tax Increment Reinvestment Zone that funds it could be dissolved and that money could be rolled over into the general fund.

That one-time sum would help in the short-term, but not in the future as costs continue to rise, Childers said.

Still, Schiestel said he wouldn’t be willing to go to the state capitol and say they don’t have enough money to run the town when millions of tax dollars were spent on an art center.

“I couldn’t go to Austin and look those legislators in the eye,” he said. “Honestly, I would be embarrassed.”