The Athens City Council adopted the 2027 fiscal year budget and tax rate Monday at the regular council meeting.
The rate of $0.532751 per $100 of taxable value, is the same rate adopted by the city last year.
The budget includes $17.3 million in General Fund spending and just under $8 million in Utility Fund spending.
The new General Fund budget is about $458,000 lower than the budget adopted last year.
According to Athens Public Information Officer, Michael Hannigan, “A sales tax issue forced the city to consider significant cost reductions in both the current and upcoming budgets.”
Sales tax is collected by the State of Texas, not by the city. Businesses report and pay sales tax to the state, and the state then sends the city its share of those collections.
In this case, a large business in Athens discovered it had made an error in its sales tax payments that stretched across three budget years. Because of that mistake, the state allotted the city more sales tax money than it should have received.
Hannigan did not name the business saying he believed it was an unfortunate and unintentional error.
The city received those payments through normal state funding processes and had followed all regulations and procedures. “There was no reason to believe the amounts were wrong,” said Hannigan.
The city therefore built three-year budgets based on the money it had received.
When the accounting was discovered in early 2026, the city had to reduce its current budget by more than $600,000.
The city must also repay an estimated $1.2 million in sales tax it received by mistake. Those repayments will leave less money available in future budgets.
That financial pressure is one reason the City is reviewing costs across the organization.
The city has already reduced spending in several areas. Departments cut operating expenses during the current year, some positions and vehicle purchases were eliminated, and the new budget reduces funding in some areas like grants to outside organizations.
The city continues to review other costs as it prepares for the repayment of the sales tax overpayment.
One option discussed Monday would end the City’s repeating cost-of-living adjustment for TMRS retirees beginning in 2027.
That change would save an estimated $322,772. The proposal received its first reading on Monday and has not yet received final approval.
The FY 2027 budget takes effect Oct. 1.
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