July 17, 2026

By Mary Beth Gahan

In early 2024, Town Manager James Childers met with John Zagurski at Cristina’s Fine Mexican Restaurant. Childers needed a town CFO and wanted to talk about looming hurdles in the wake of Senate Bill 2, which passed in 2019 and limits the ability for municipalities to raise its property tax rate more than 3.5 percent without going to the voters.

Childers knew the cap would mean that, at some point, the rising cost of current service levels would exceed money the town could bring in.

“I need you to figure out when we hit this cliff,” Childers remembers telling Zagurski. “I know it's coming. I need your help figuring it out.”

Zagurksi was one month into the job in April 2024 when he gave a presentation to town council about budget strategies going forward.

A slide titled “THE SB2 CLIFF” showed a graph with one line for general fund expenditures and another for general fund revenues from 2019 to 2029. Both increased as the decade went on, but at different rates. At one point, the lines crossed, and expenditures outpaced revenues. That year was 2026.

“It is coming,” Zagurski told council members at the time. “If we hold personnel at 6.4 percent growth, if we hold sales tax at 1 percent growth, if we hold revenue, basically property taxes, at 3.5 percent, it's a two year cliff.”

26 months later, sales tax revenue is on track to be down 7.5 percent by October, prompted in part by HD Supply’s source for its internet sales changing to San Marcos instead of Flower Mound.

On top of that, inflation is at 3.5 percent. Fuel prices have doubled. People have less discretionary money to spend, and so does the town.

And, for better or worse, the council has lowered the tax rate and upped the town’s homestead exemption to the highest allowed by the state, causing the town to lose out on millions in possible revenue.

Childers laid out the situation again for the council in June, warning them that by next year, stagnant tax revenue and high inflation would likely require either a voter-approved tax rate election, VATRE for short, a cut to services the town provides, or personnel reductions.

The headlines caught the attention of residents, but Childers contends that he’s been talking about this for years and there’s still time for taxpayers to voice their opinion about what they think should happen.

If the town council does decide to go ahead with a VATRE, the election will need to be called next August for voting on Nov. 2, 2027.

“I can be accused of a lot of things, but waiting till the last second is not one of them,” Childers said.

Last fall, Childers set up a series of presentations titled “Value of Municipal Services” that had directors of each town department giving town council an overview of what they do, the successes they’ve seen, and what challenges they face. The multi-week series started with the police department and ended with the fire department, a schedule that was deliberate to showcase the two departments that take up about 60 percent of the general fund.

The issue with deciding where to make cuts in times like these, Childers said, is the diversity of opinions in a town of 81,000 people. Some want a smaller government, with money spent only on public works and public safety.

“No libraries, no parks, nothing. That's the perspective. I don't get mad or get angry about that,” Childers said. “The problem is that I have 23,000 people show up to Independence Fest. I have 250,000 visits to the library.”

Flower Mound isn’t alone in its search for cost-saving measures.

Dallas just announced mandatory unpaid furlough days for city employees to address budget shortfalls. The move has already impacted residents. On July 10, the first of several scheduled furlough days, City Hall, administrative offices, and all libraries were closed.

Childers has said some of his counterparts are looking at the option of calling a VATRE, but hasn’t disclosed which ones.

Some council members have publicly expressed a desire to do anything but a tax rate increase.

Mayor Pro Tem Adam Schiestel would like to see look at the possibility of dissolving TIRZ 1, a tax reinvestment zone that will help pay for the future Arts Center near the River Walk, in a way to alleviate pressure financially. Schiestel is in favor of an Arts Center, but doesn’t feel comfortable spending tax dollars on it if the town is asking for a tax rate increase.

Mayor Cheryl Moore said a VATRE would be the “last possible conclusion” and pointed to the things that the town council has done to “not impose any strain on our taxpayers at all.”

The town council has lowered the tax rate to one of the lowest municipal rates in North Texas. Currently, it’s at $0.387 per $100 of assessed property valuation.

And last October, the council agenda had an item that would have increased the homestead exemption from 12.5 percent to 17.5 percent. At the meeting, the council voted to push it to the full 20 percent that is allowed by the state.

If they hadn’t done that, it would have added $2 to $3 million in tax revenue this fiscal year, Zagurski said.

“It started at two and a half percent in 2018. So, it’s gone up aggressively,” Zagurski said of the homestead exemption. “Yes, all of that together would have given us an additional $16 million, and we wouldn't be having this conversation now.”

Still, Zagurski said, the council viewed that money as better off in the hands of residents.

“We've seen good payoff on that,” he said. “Residents' property tax bills have remained relatively flat during the highest inflationary times that most people have ever experienced in their lifetime, besides those who lived during the Reagan era and experienced those kind of crazy times.”

At a recent town council meeting, two residents connected the town’s budget issues with votes that town council members have cast in recent years.

“It is the result of your blatant, irresponsible fiscal decisions. You campaigned on lowering the tax rate. You made those promises. You pursued popularity instead of responsibility and now the consequences are here,” Patsy Mizeur said. “This crisis was not created by us, it was created by you.”

If Flower Mound does go ahead with a VATRE, town staff will prepare two budgets for both possible outcomes of the election: one that takes into account the tax rate increase, showing what would be used for the revenue above the 3.5 percent line, and another without it.

Before any election, there will also be several opportunities for the public to give their opinion on the budget.

Childers would like the conversation to be brought town council meetings, he said, or the public education meetings Flower Mound hosts.

Often, when the town sets up events to get input from residents about the budget or bond elections, there are more staff in attendance than residents. The town then approaches groups like the Lions Club and Rotary Club to answer any questions they have.  Childers would like to have meetings with HOAs around town too.

At the very least, Childers wants residents to email him their questions.

“I just would love to get people off the sidelines, more engaged, on a board or commission, willing to run for council, willing to show up at meetings. Come to our Citizens Academy,” Childers said. “Let's have the conversations.”

This year, the town council will first se the proposed budget during an Aug. 13 work session. A public hearing and vote on the budget will take place on Sept. 21.