Mervyn City Council FY2027 Budget Work Session - June 30, 2026

The Mervyn City Council held its third budget work session for fiscal year 2027 on June 30, 2026, starting at 6:00 p.m. City staff presented the proposed fee schedule, a comprehensive budget overview, component unit finances, general fund details, and the utility fund. The city manager emphasized the city's strong financial position, strategic use of fund balance, and adherence to financial policies.

Discussion Items

Fee Schedule (Presented by Finance Director Bernadette Fitzpatrick Walker)

• Solid waste fees will increase by 4.7% due to Republic Services' CPI adjustment. Residential once-per-week service rises from $14.20 to $14.87 (a $0.66 increase), with similar increases for recycling and other services.
• Water and wastewater volumetric rates follow Scenario 3 approved last fiscal year: a 7.3% increase for water and 7.61% for sewer. Tiered rates are designed to conserve water by increasing the percentage impact on higher usage. The lowest tier (under 15,000 gallons) has the smallest percentage increase.
• Winter averaging methodology changes: Instead of excluding December, the city will now use the three lowest consumption months from November through February to calculate sewer charges.
• New meter-related fees were introduced, including meter relocation (price quote basis), meter testing fees ($500 for sending out), meter tampering ($250 minimum plus damages), obstruction fees, and increased meter costs for new meters (residential 3/4-inch meter from $330 to $430; 1-inch from $420 to $530). Council member inquired about a reconnection fee; staff will consider adding one.
• Hydrant meter relocation fee set at $25.
• The fee schedule is expected to be placed on the consent agenda for adoption in August.

Budget Overview (Presented by City Manager)

• The budget was developed collaboratively with all departments present, and public engagement increased through an April survey (133 responses) and a new online tax receipt tool launched June 15.
• The survey ranked street maintenance as the top priority (133 votes), followed by park improvements (108), personnel growth, software/technology, new equipment, recreation programs, and MCC modernization.
• The tax receipt tool allows residents to see how much they pay in property and sales tax to the city and how it is allocated.
• Overall fund balance remains strong, with all funds meeting the 20-25% reserve policy through the five-year projection.
• Total preliminary budget for all funds is $68.9 million, a 9.2% increase over the prior year, largely due to major capital projects.
• One-time funding requests from the general fund total approximately $253,000, funded from fund balance. These include software, facility upgrades, and equipment.

Component Units (MCDC and MDD)

• The MCDC (4A corporation) fund has a 1% change in budget; one-time requests include tables, painting, sod, volleyball sand, water bottle refilling stations, archery equipment, and event tents ($1,000 each for better durability).
• The MDD (4B corporation) fund will fund infrastructure projects: pedestrian bridge ($1.2 million) and HEB turn lane.
• Community events budget totals $795,000 for FY27, with revenues of $707,000, including $57,000 in event revenue and $17,000 sponsorship projection for May Days alone. Personnel overtime accounts for approximately $250,000 of the events budget.

General Fund Overview

• FY27 general fund revenues are projected at $21.2 million, primarily from property tax and sales tax. Expenditures are higher to strategically use fund balance.
• Public safety (police and fire) accounts for the largest share, followed by administrative services (22%), public works (13%), and neighborhood services (12%).
• Two new patrol officers are budgeted, along with two elections and facility maintenance.
• One-time funding of $253,000 from fund balance is recommended.

Utility Fund Overview

• Utility fund rates follow the approved 5-year rate study; no new rate analysis this year. The city plans to pause annual studies and revisit in FY29 for FY30 rates.
• Projected water revenue $12.2 million, sewer $5 million, total utility fund expenditures increase 8% ($1.5 million) largely due to contractual provider cost increases from North Texas Municipal Water District.
• The city uses 92% of its budget for contractual services.
• Proposed personnel changes: two crew leaders in wastewater and a reclassification of public works superintendent to assistant director.
• One-time capital requests include a material storage pad ($80,000), low-water crossing on South Maxwell Creek, and painting of elevated storage tank.
• Discussion on water conservation noted that wet weather reduces revenue, and the city is not projected to exceed its cap this year.

Key Outcomes

• The fee schedule will proceed to adoption on the consent agenda at a future council meeting in August.
• The budget work session schedule was adjusted: the July 7 meeting will focus on police department policy, staffing, and equipment; the August 4 council meeting will include a work session for the tax rate; adoption of the tax rate moved from September 1 to September 15.
• Council expressed interest in adding a reconnection fee for utility tampering cases; staff will evaluate and potentially include.
• No formal votes were taken; all items will be formally considered at upcoming meetings.