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The city is projected to finish fiscal year 2025-26 with a $350,000 general fund surplus, down from approximately $2.3 million projected during last year’s year-end budget process.
Finance Director Jay Patel presented the estimate during the City Council’s Sept. 1 study session. The projected surplus would leave the city at its council-established 90-day general fund reserve target.
The $350,000 is not a final figure. The city still has September financial activity to account for, and audit adjustments could change the total before final year-end results are known. Patel described the estimate as conservative and said the audit will provide a clearer picture of where revenues and expenses ultimately land.
Deputy Mayor Pro Tem Roger Neal questioned why the projected surplus is significantly smaller than in recent years, when the city had substantially more money available at the same stage of the budget process.
City records show the fiscal year 2024-25 surplus was approximately $2.3 million, driven primarily by interest income, court fines and sales tax revenue. This year, Patel said, overall revenue is tracking closer to budget.
“We’re expected to meet our revenue budget for this fiscal year,” Patel said.
The city had spent about 65% of its general fund budget through June 30, but Patel cautioned that the remaining 35% should not be viewed as potential savings. Some city departments typically see higher expenses during the summer, while other costs may already be committed but have not yet appeared in financial statements because goods or services have not been received.
Finance staff calculated the $350,000 estimate after reviewing projected revenues, expenditures, outstanding commitments and remaining budget authority across city departments.
Because the surplus would be one-time money, staff recommended against using it for expenses that would create continuing costs in future budgets.
Patel outlined several options, including funding a one-time capital project or council priority, leaving the money in the general fund until the audit is complete, adding it to the economic development fund balance or applying it toward a long-term liability such as future landfill costs.
Patel also confirmed that staff had not identified an outstanding expense that needed to be funded with the $350,000, leaving council members to consider several possible uses.
Council member Tina Bennett-Burton asked whether some of the money could be used for one-time employee bonuses. She noted that the proposed fiscal year 2026-27 budget includes a 1% merit-based compensation increase for eligible employees.
Patel said a one-time bonus would be within the council’s discretion. Bennett-Burton said that aside from potentially providing additional compensation to employees, she favored holding on to the money.
Council member Elizabeth Villafranca also said she could support retaining the surplus but suggested exploring whether some of the money could be used toward a columbarium in Farmers Branch.
Villafranca said a columbarium could give residents an opportunity to have their final resting place in the city while also generating revenue.
“I’d like to explore that,” she said.
The discussion came as the city enters the final month of its fiscal year and prepares to adopt its fiscal year 2026-27 budget. Patel said public hearings and votes on the proposed budget and tax rate are scheduled for Sept. 15. The current fiscal year ends Sept. 30.
The council did not give staff direction on how to use the projected surplus during the Sept. 1 discussion and is expected to revisit the issue after members have additional time to consider their priorities.
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