What happened: The City of Midland released its 2025 Annual Comprehensive Financial Report, detailing where revenue came from and how the city spent it. The report shows that General Fund revenues exceeded budget projections by $15.1 million, or 9.3%. In comparison, property tax collections climbed to more than $75 million despite the city lowering its tax rate for a fourth consecutive year.

The report also documents $55.4 million in certificate of obligation debt issued without voter approval and a one-time $54.4 million payment to stabilize the firefighters’ pension fund. As of 2023, the pension carried a $120.9 million unfunded liability after years of underfunding by the locally elected fire pension board. The payment came from oil and gas revenue that otherwise would have funded quality-of-life projects.

The big picture: The report notes the city lowered its property tax rate four years in a row. Even so, property tax collections grew 71%, from about $44 million in 2016 to more than $75 million in 2025, as Midland’s taxable property base nearly doubled because of rising values and new development. When the city adopted its current $461 million budget last fall, the latest rate cut still resulted in about an $8 increase for the average homeowner.

Go deeper: Findings in the report worth noting:

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  • City policy requires enough unassigned General Fund reserves to cover at least 120 days of operating expenses because Midland’s finances tend to rise and fall with the oil and gas industry. At the end of fiscal 2025, reserves totaled $109.1 million, enough to cover about 207 days.
  • Sales tax collections finished 6.3% above estimates, investment earnings exceeded projections by $5.6 million, and hotel occupancy tax collections reached a record $9.2 million, up 22% from the previous year. Combined, General Fund revenues finished $15.1 million above budget.
  • The city issued $55.4 million in certificates of obligation for water, sewer, solid waste and golf projects. Texas law allows cities to issue this type of debt without voter approval. Total outstanding principal and interest reached $943.6 million.
  • The city contributed $54.4 million to the Midland Firemen’s Relief and Retirement Fund to bring its unfunded liability back within the 30-year amortization period recommended by the Texas Pension Review Board. The payment accounted for most of the 14.4% increase in governmental spending during the year.
  • Franchise fee revenue, payments utilities make to use city rights-of-way, fell from a historical average of about $17 million annually to $8.2 million. The report does not explain the decline.
  • The report attributes budget savings to vacant positions in engineering, parks, support services, and the police department but does not say how many positions were vacant or for how long.

What’s next: City Manager Tommy Gonzalez said the city’s goal during the upcoming budget process is to get “as close to no-new-revenue as we can.” The City Council will hold a budget workshop on Wednesday, Aug. 12, to set the maximum property tax rate before budget hearings on Tuesday, Sept. 8 and Tuesday, Sept. 15.