Conroe officials are weighing a balanced fiscal year 2026-27 budget that would keep the city’s property tax rate unchanged, bring police salaries closer to Montgomery County’s pay structure and fund nearly $29.3 million in general government capital projects.
Chief Financial Officer Ariel Khanh Gibbs presented the proposal as the mayor’s budget during a July 27 workshop, although City Council members can still make changes before adoption.
“What I bring to each of you on council today is a balanced budget, a budget with no tax increase, and a budget that meets our objectives,” Mayor Duke Coon said. “Now it’s up to all of you to move forward on this budget.”
The details
The city’s full proposed operating budget totals about $364.7 million in expenditures, documents show. However, after removing transfers between city funds, which can otherwise count the same money twice, proposed expenditures total about $288.2 million.
The general fund, which pays for services including police, fire, parks, public works and administration, includes about $143.57 million in revenue and $143.46 million in expenditures, leaving a projected surplus of roughly $115,300.
The city expects to end FY 2026-27 with approximately $90.83 million in its general fund balance, equal to 231 operating days and well above Conroe’s 90-day reserve policy.
The proposed budget maintains Conroe’s property tax rate of $0.4272 per $100 of valuation. It projects $50.44 million in general fund property tax revenue and $56.61 million in sales tax revenue. Sales tax, the city’s largest general fund revenue source, is projected using 3% growth over the current-year estimate.
The city’s five-year forecast shows projected general fund shortfalls of about $724,000 in FY 2027-28, $2.92 million in FY 2028-29 and $2.07 million in FY 2030-31. However, projected reserves remain above the city’s required level throughout the forecast.
Breaking it down
The budget includes approximately $2.87 million in raises for police civil service employees as city officials look to compete with Montgomery County salaries.
Under the proposal, the salary increases by position include:
- Police officers: $13,137
- Sergeants: $16,711
- Lieutenants: $17,500
- Captains: $31,458
- Deputy chiefs and the police chief: $32,000
Coon said the city should not wait until the next fiscal year to address police compensation.
“It’s time we stand up and address this head-on,” Coon said. “I am completely confident in a pay study that would be coming. I support it. ... I do not believe we can wait a fiscal year to address this issue with police pay.”
The proposal also initially included a 3.5% raise for other city employees. Council member David Hairel asked finance staff to determine whether that increase could be raised to 4%. Last budget cycle, all city employees received a 6% cost-of-living adjustment, which cost the city $4.3 million, according to prior reporting.
“I wish that we, the council and the finance team, could possibly find another half a percent for all the other employees in their salaries,” Hairel said.
Coon directed staff to return with a recommendation for the compensation plan as the council continues reviewing the budget.
The city is also considering a comprehensive compensation and classification study. Interim City Administrator David Willard said the process would compare Conroe with similar cities, review employee duties and develop a plan for addressing market pay over multiple years.
Also of note
Conroe’s proposed capital improvement program includes 24 projects totaling about $29.32 million for FY 2026-27. That includes:
- $16.32 million for street projects
- $5.82 million for traffic signals
- $5.66 million for drainage
- $1.53 million for facilities
The city uses a combination of current revenue, grants and bonded debt to finance its capital program.
Projects of more than $1 million proposed for bond funding include the East Dallas Street widening, South Pine Lake Road rehabilitation, land acquisition for future fire stations and West Fork drainage improvements.
The broader five-year plan also includes design work beginning in FY 2027-28 for Fire Station No. 9 in Grand Central Park, future work on a Woodlands Hills fire station and annual funding for fire station land acquisition. Police Chief Jon Buckholtz also asked the city to consider adding small police substations within future fire stations as Conroe expands.
Before you go
Council members also discussed debt tied to the Hyatt Regency Conroe and Convention Center.
The proposed budget includes a $903,600 transfer from the Conroe Industrial Development Corp. to cover interest on the hotel’s third-lien bonds. Finance staff said CIDC is contractually obligated to make that payment, which is separate from the hotel’s first- and second-lien debt.
“If there is not enough sufficient revenues from the hotel’s operations to pay either of those first or second liens, then it’s not up to the city to use taxpayer money to supplement either the first or second lien,” Finance Manager Michael Monteilh said.
Staff also said the proposed budget and its later-year projections do not set aside additional city funding for an anticipated hotel refurbishment. The hotel places 4% of monthly revenue into a furniture, fixtures and equipment reserve, but staff said current performance means that reserve may not be enough to pay for the eventual work.
Council is scheduled to continue reviewing the proposal before its planned adoption in September. The new fiscal year begins Oct. 1.
