Megan Navarro
KYLE — Kyle City Council listened to a presentation during a special meeting Thursday, July 16, reviewing estimated savings from cost-containment measures to mitigate the combined projected deficit of $14.2 million in the city’s general fund in the fiscal year (FY) 2025-26 budget.
This follows interim city manager Perwez Moheet revealing the projected general fund deficit — driven by rising costs and lower-than-expected revenues — to council at another special meeting, held May 16, as previously reported by the Hays Free Press. It was during that workshop that council requested increased financial transparency and more frequent reporting regarding the city's fiscal condition, including regular updates on revenues, expenditures, fund balances and budget performance.
In response, staff brought forward a presentation July 16 to review the cost-containment measures that have been implemented by the interim city manager.
Originally, FY 2025-26 was expected to began with an adopted general fund balance of $19,244,259 and, based on the audited ending position from the prior fiscal year, the actual beginning fund balance was $14,977,707, stated assistant director of Finance Holly Holt-Torres. This is a reduction of approximately $4.3 million from what was assumed during budget adoption and immediately reduced the available resources entering the fiscal year.
Total general fund revenues are estimated at approximately $59.38 million, compared to the adopted $63.47 million; after included transfers in, that number equals approximately $74.51, which is about $4.1 million below expenditures.
Current year expenditures for FY 2025-26 are projected at $77.08 million, which is “essentially flat” with the adopted budget of $77.13 million, Holt-Torres said.
She emphasized that this is the current year estimate before significant cost containment efforts department-wide that included freezing non-essential spending, careful review of operating expenditures, delaying discretionary purchases where possible and strategically reducing unnecessary encumbrances through the purchase order review process.
“These actions helped prevent expenditures from increasing, despite ongoing operational pressures,” Holt-Torres said.
The estimated ending fund balance is projected at approximately $10.3 million, compared with the adopted estimated amount of $18.61 million. According to Holt-Torres, city policy requires maintaining a minimum unrestricted fund balance equal to 25% of annual operating expenditures. For the current year, that is approximately $19.8 million and, based on the current projection, the general fund is expected to finish the year approximately $9.5 million below the city's minimal policy requirement.
“When combined with the projected $4.68 million operating deficit, the general fund reflects a total gap requiring balancing of approximately $14.17 million,” the assistant director said. “This estimate underscores why staff implemented FY 2026 cost-containment initiatives and continues to closely monitor revenues and expenditures. These actions are intended to stabilize the general fund, while preserving essential city services and developing long-term structural solutions.”
Cost-containment measures included the elimination of six full-time equivalent “redundancy-based” positions, such as the following: chief communications officer, executive director of Strategic Development, chief development officer, assistant Finance director, deputy Parks and Recreation director and business and strategic planning manager. The elimination of these, according to Holt-Torres, results in $242,723 in savings for FY 2026.
Noting some concerns from the public, Mayor Yvonne Flores-Cale stated that it would be helpful to know the job descriptions and responsibilities of the different positions to avoid any confusion.
“...When I was serving previously, things like executive director of Strategic Development, chief development officer and business and strategic planning, they were the same as economic development,” Flores-Cale recalled. “So, when I had lunch with economic development this year, I didn't quite understand the different positions. I knew names, but I didn't really know positions.”
Council member Claudia Zapata asked for clarification on how staff determined which redundancy-based positions were eliminated.
Holt-Torres explained that they met with each department to ask questions about its organizational chart and structure to get a broad comprehensive understanding of what each job did, along with going through general ledger lines for reductions and where it was appropriate to reduce and find savings.
Then, Moheet stated that he, as the interim city manager, takes full responsibility, as it was ultimately his decision to select the redundant positions. He said that there were “three positions doing identically the same thing,” with the planning director, chief development officer and executive director of Strategic Development.
“We haven't skipped a beat since these folks have been let go. So, council, if council can point out what we have missed, I would be glad to reconsider these positions in the next budget,” he said. “But, in the current budget, these were clearly redundant. The titles did not go with what they were doing. The titles were created to set the salary.”
Moheet later added that the chief communications officer was a position created by the former city manager and, while the city of Kyle has always had a communications director, he also reclassified the assistant director to public information officer.
“That's all we need for a city this size … We don't need another assistant director. We don't need a chief communications officer,” he emphasized. “They're doing just fine. They're doing press releases. We haven't missed a beat. They're doing everything we've done before.”
As another cost-saving measure, the following positions have been placed on a temporary freeze, saving the city $846,782:
• Director of animal services
• Building inspector
• Code enforcement officer
• Procurement specialist
• Budget analyst
• Human Resources business partner
• Assistant director of library services
• Two part-time circulation assistants
• Parks aquatic maintenance technician
• Senior parks technician
• Emergency planner
• Two records specialists
• Engineering technician
• Engineering associate
• Two street technicians
• City manager
• Assistant Parks director
• Recreation coordinator
• Director of Transportation and Public Works
• Recreation divisional manager
Council member Lauralee Harris questioned why the director of Parks and Recreation was not also included on the list as, to her understanding, the city was having a temporary freeze on all positions.
However, Moheet responded that “those that are needed are not frozen,” to which Harris argued that she feels like the director of Transportation and Public Works is a more critical position than Parks and Recreation.
“We are examining the Public Works structure. Until that is completed, we will not have a decision whether to post that job as is or is going to be modified to some degree," Moheet said, adding that the city is also reorganizing the Parks and Recreation department, so a director is critical to go through that recruitment process.
Continuing her presentation, Holt-Torres said that two additional factors helped come to the total FY 2025-26 estimated savings of $5,195,972.
These include support cost containment, where departments completed an extensive line-by-line review of operating budgets, reduced discretionary spending, deferred non-essential purchases, etc.
City staff also conducted a comprehensive review of outstanding purchase orders across every department to see if reserved funds still represent actual future obligations, Holt-Torres said. It was found in many cases that projects concluded, purchases were completed and contracts had expired or operational priorities had changed, bringing those funds back into available resources.
“While cost containment alone is not a long-term financial strategy, these actions represent meaningful progress towards preserving fund balance, improving structural budget alignment and strengthening the city's financial position,” she noted.
Some members on the dais also spoke to clear up some misconceptions that have been circulating on social media and amongst the community.
Council member Melisa Medina shared that council discussed whoever it would bring on as interim city manager — even before Moheet was selected — would be in the position temporarily to help get through the budget and holiday season.
“... we're not freezing this position because you want to stay here. We know you want to go back to what you're doing because you, as well, love what you're doing in the Finance department,” Medina said.
It is not council’s responsibility to terminate employees and it’s also against the city of Kyle’s charter for members to be involved in those decisions beyond its responsibility, which is the hiring of the city attorney and city manager, council member Courtney Goza clarified.
“I want to make it abundantly clear that this process has been in accordance to the charter, that it is the city manager that has made those decisions in consortium with his executive team and that there has been no involvement from council on who to hire, who to lay off [or] force anybody out,” she emphasized.
The mayor also stated to city staff: “I do appreciate you guys bringing this. I do want to say on behalf of, for me, for sure, is you are not going to see this kind of transparency in any other city. I'm very proud of where we are at this very moment and if I only get one term to bring that and to lead a city through transparency, then I thank God every day that I had the ability to do it with the team that we have.”
To listen to the full discussion, visit bit.ly/4fJE9Ki.
A presentation of the FY 2027 budget is slated to be held Saturday, Aug. 1.
