Princeton City Council will review its First Quarter FY 2025–2026 Budget and Investment Report on February 9, showing a city with strong cash reserves, significant interest earnings, large restricted bond balances, and stable general operations, while also highlighting rising long-term water and wastewater costs tied to fixed purchase obligations and system growth.
Overall Financial Position
As of the end of the first quarter, the City reports about $249.6 million in total cash and investments.
That total includes large, restricted bond funds that cannot be used for general spending:
• $25 million from the 2025 Certificates of Obligation
• $55 million from the 2025 General Obligation bonds
Those amounts are legally limited to voter-approved or otherwise designated projects.
Interest and Investments
In the first quarter, the City earned roughly $2.39 million in interest income.
Most funds are held in highly liquid public investment pools with:
• an average yield of around 3.4 percent
• an average maturity of about 18 days
• full compliance with the Texas Public Funds Investment Act
This means the city is prioritizing safety and liquidity while still generating meaningful interest income.
General Fund
The General Fund, which pays for core services such as police, fire, streets, and administration, currently shows:
• about 35 percent of annual revenues collected
• about 25 percent of annual expenditures spent
• an ending fund balance of $14.3 million
• reserves at roughly 152 percent of the City’s required minimum
In practical terms, the General Fund remains financially stable and is well above the minimum reserve requirement.
Utility Funds
Water and wastewater revenues are below the straight-line budget pace for this point in the year.
According to the report, that is mainly due to:
• seasonal usage patterns
• wastewater credits that have been issued to customers
At the same time, the report identifies several longer-term structural pressures:
• rising wholesale water costs
• an $8.76 million annual take-or-pay obligation requiring Princeton to purchase a minimum amount of water each year regardless of actual customer demand
• minimum annual water demand already above 2.1 billion gallons
These issues do not appear to create an immediate crisis, but they are long-term obligations that will shape future utility rates, capital decisions, and growth planning.
Other Major Funds
The report also includes first-quarter updates for:
• debt service funds
• capital project funds
• special revenue funds
• internal service and enterprise funds
Each of those categories is described as operating within the adopted budget for the first quarter.
Expenditures and Staffing
Department-level spending across the city is generally tracking with the fiscal calendar.
No department is identified in the report as having first-quarter expenditures that are materially out of pattern for this stage of the year.
Why This Matters
Taken together, the first-quarter report shows:
• Princeton is in a strong cash and reserve position, with significant interest income on hand
• the city is carrying large restricted bond balances for voter-approved or designated projects
• water and wastewater operations are entering a period where fixed purchase obligations and rising wholesale costs will require careful planning
Residents who follow city finances should view this as a reminder that Princeton’s current balance sheet appears healthy, but long-term utility costs and continued growth will require deliberate decisions in the years ahead.
Image is an AI-generated illustration used to visualize the scale of city finances. It does not depict actual city practices.
