On May 16, city of Kyle staff outlined the multiyear causes that resulted in a projected $14.2 million budget shortfall by the end of fiscal year 2025-26. The proposed almost $417 million budget for the upcoming year aims to address the deficit through a variety of tactics, including a hiring freeze and decreased departmental budgets.
The gist
The city’s budget is made up of four major operating funds, including the general fund. A reserve fund must be maintained in the general fund, equal to at least 25% of operating expenses.
Interim City Manager Perwez Moheet, who previously served as the city’s finance director for 16 years, presented a structurally balanced FY 2026-27 budget to the City Council on Aug. 1. The budget funds all essential city services, operations and maintenance to adequately serve residents and businesses, according to agenda documents.
“The actions reflected in my recommended proposed budget are intended to address current financial and economic realities,” Moheet said. “It is not to define our future as a city organization.”
Additionally, council determined the scope of an approved forensic audit to investigate potential financial misconduct during a July 22 meeting.
“Achieving a balanced proposed budget required significant sacrifices across the city of Kyle organization to reduce recurring operating expenditures and to protect the city’s long-term financial position,” Moheet said.
The impact
Most of the city’s departments face cuts in the proposed budget, although the City Council, attorney’s office, manager’s office, solid waste services and the Kyle Police Department will not.
“The objective of my recommended proposed budget for next fiscal year is to restore structural balance, strengthen the city’s financial foundation and position the city of Kyle organization for long-term financial stability,” Moheet said.
The proposed budget eliminates the employee leave buyback program, tuition reimbursement, the city-paid 12-week parental leave program and other benefits.
“I fully recognize the impact of these actions on our workforce,” Moheet said. “Their willingness to adapt during a period of fiscal constraint has played a critical role in helping the organization navigate these financial challenges.”
How we got here
To further reduce overall costs, 11 full-time positions were eliminated. The proposed budget does not include employee layoffs, the elimination of currently filled positions or salary reductions.
“What we were able to do in this budget is really look at redundancies and find efficiencies,” said Assistant Director of Finance Holly Holt-Torres. “Depending on operational needs, that’s how [eliminated positions] would be brought back in.”
The city’s budgetary challenges have developed over multiple years, according to previous Community Impact reporting. City expenditures began to increase while revenue declined during the FY 2023-24 budget cycle. Other factors contributing to the projected $14.2 million shortfall include economic conditions, significant city growth, expanded staff and rising operational costs, according to Moheet.
While many departments and programs received cuts in the proposed budget, city staff worked to maintain and increase funding in certain areas, according to agenda documents.
Every sworn police officer will receive a 4% pay increase, with Corporal-ranked positions receiving an additional 2%. Parks will remain funded and road bond projects will continue. Council can change the proposed budget and, after budget approval, can vote on amendments in the future.
Next steps
