Brittany Kelley
KYLE — City manager Bryan Langley and director of finance Perwez Moheet provided Kyle City Council with an overview presentation of the $603 million fiscal year 2025-26 budget at the July 26 budget workshop.
“This is certainly not the last conversation that you’re going to have on the budget. This is one of the most important ones because it’s my recommended proposed budget to you and then, over the next couple of months, you’ll have an opportunity to discuss it further with the council, talk about potential changes. Then, in September, you’ll be asked to vote on the budget itself,” explained Langley.
He began by noting several key takeaways: $460.3 million budgeted for water utilities, streets and transportation and parks projects; seven road bond projects will begin construction in the upcoming fiscal year for $130.8 million from the 2022 road bond; $241 million for water and wastewater utilities; $30.3 million in park projects; $1.2 million investment in the Kyle Police Department for a Meet and Confer agreement, making Kyle the third in the region for pay; and $21.5 million identified in cost savings in fiscal year 2024-25.
“All of those strategic initiatives do cost money; that projected tax rate is about $0.62. We’re in the process of finalizing that,” he said. “Most of that increase is related to the bond program and raising that rate up to pay for all of the bond projects.”
According to Langley, the budget aims to address all three areas that were listed as priorities — streets and transportation, police and public safety and water and wastewater infrastructure — after surveying 504 residents.
The proposed $603,536,633 budget is broken into several sections:
• $11,098,349 for wastewater utility
• $28,110,590 for water utility
• $75,389,651 in the general fund
• $2,772,627 for storm drainage
• $23,199,640 for debt service
• $460,359,255 for the Capital Improvements Plan (CIP)
• $2,607,521 in other
The budget highlights, said Moheet, include a rate increase for water and wastewater services, a 2.5% increase in solid waste service rates per contract terms with Texas Disposal Systems, a change in storm drainage fees and more.
Additionally, there are also 24 new proposed positions, including: youth services librarian, assistant city attorney, director of animal services, safety compliance officer, procurement specialist, recreation services supervisor, special events coordinator, emergency planner, fleet technician, K-9 officer, two project managers, two project coordinators, engineer, computer-aided design (CAD) & design engineering technician, facilities maintenance supervisor, wastewater treatment plant operator, lead water production operator, backflow technician, assistant wastewater treatment plant operator, division manager- water quality, instrument & control technician and a water/wastewater lab technician for a total of $2,766,705.
“General fund, the revenues and transfers in, total $78.5 million. Expenditures and transfers out total $77.5 million. If you’ll notice, it is a structurally balanced budget that we’re proposing for next year. The estimated ending fund balance is at $20.3 million,” explained Moheet. “If we follow the 25% minimum required balance, it’s calculated at $18.8 million … that is $1.5 million, roughly, above the minimum, so it gives us a good cushion for any changes that might happen during the fiscal year or if we see a slight reduction in our forecast on the revenue side.”
The top three sectors contributing to revenue are property taxes at $21,669,253, or $28%, sales and beverage tax at $22,204,515, or 28%, and transfers in at $15,127,389, or 19%, while the top three users of the general fund dollars are public safety for $20,400,770, or 26%, transportation and public works for $13,933,556, or 18%, and parks and recreation for $9,730,049 or 13%.
For homeowners in Kyle, the three biggest sections in their property tax bill are Hays CISD at 51%, Hays County at 14% and city of Kyle at 21%, with its current $0.4693 tax rate.
According to Moheet, the current estimate of the new tax rate is $0.6171, which will be discussed in further detail at the Aug. 19 meeting. Agenda documents break down the new tax rate into two brackets, maintenance and operations — $0.288900 — and interest and sinking — $0.328200.
“The debt service component is directly related to services that we’re providing to the community, such as the road bonds that are now coming on that we’re having to draw that money [from]. Now, the bonds were issued, but we don’t draw that money all the time. We start paying interest when we start drawing the money, so this is a direct result of all of this construction,” explained Moheet.
The new water and wastewater increases were also touched on again, as during the June 7 workshop, a recommendation was made for a 20% increase for inside city limits customers and a 77% increase for customers outside of the city limits for water services and then, a 6% increase for inside city limits customers and a 35% increase for those outside the city’s wastewater services.
Regarding the storm drainage utility fund, which is separate from wastewater, there is an expected $2.1 million in total revenue and $3.0 million total expenditures. Additionally, a drainage fee study completed in July 2025 by HDR suggested a $1 monthly fee increase, from $5 to $6, for residents and a $68.72 average monthly fee decrease, from $237.12 to $168.40, for commercial properties.
Moheet stated that “the fee adjustment takes into account the drawdown of the excess reserve of fund balance to minimize the fee increase. The consultants also recommend that the city review this fee on an annual basis and adjust accordingly because our costs are changing, capital costs are changing every year.”
Specifically, within the five-year CIP, which spans through 2030, there are 125 projects.
In 2026, there is a cost estimate of $460.4 million for the active projects, said the director, while the next five years amount to $1.27 billion, according to agenda documents. These projects range from sidewalks to park improvements. Moheet noted that $490.1 million or 38.6% will be tax-supported, while the remaining $781 million or 61.4% will be non-tax-supported. Non-tax-support CIPs are paid through user fees and developer reimbursements and mainly consists of water, wastewater and tax increment reinvestment zones (TIRZ).
Another topic of discussion was the status of current and upcoming bonds.
“Today, the principal amount of bonds outstanding is $140,590,000,” Moheet said. “On Aug. 5, staff will be asking you and our bond council will be asking you for your authorization to issue $45.9 million in [general obligation] bonds, mostly for the roads, and $7 million of that is for parks. That was approved by voters in 2020. Then, another $79 million in certificates of obligation bonds, [which is mostly] for water and wastewater utility. Then, there are some park projects. So, $124,000,950 will be authorized if council approves on Aug. 5 … [therefore, the] total principal increase to $265,540,000.”
This bond debt is planned to be paid over time through the following funds:
• Property taxes: $157,330,880 or 59.25%
• Water rates: $41,517,680 or 15.64%
• Wastewater rates: $40,206,784 or 15.14%
• TIRZ #1: $8,824,706 or 3.32%
• TIRZ #2: $17,660,000 or 6.65%
Because the bonds will be paid over time, an estimated $152.7 million of interest will accrue, bringing the grand total to $418.3 million in bond debt and interest payback.
Moheet also shared that there will be 54 new fees proposed in the city, amounting to 536 various fees in the city, such as open records fees, animal tag charges, etc. While 321 will remain unchanged, 158 will increase and three will decrease.
On Aug. 19, council will be presented with property tax rate calculations from the Hays County Tax Assessor-Collector, the strategic plan and human resources policy, as well as consider a resolution to increase the tax rate at a future meeting, while public hearings and budget and tax adoptions will be held Sept. 2 and Sept. 16.
Residents can visit www.cityofkyle.com/finance to view budget documents. To listen to the presentation, visit bit.ly/45bDWcq.
Kyle City Council will meet next at 7 p.m. Tuesday, Aug. 5.
