Rio Grande City adopts 2025-26 budget, sets 0.53 tax rate and approves $3.2M water-meter financing

RIO GRANDE CITY, Texas — The Rio Grande City Commission on Sept. 17 approved the city’s fiscal 2025-26 budget, set a property tax rate of 0.53 per $100 valuation and approved financing for a proposed $3.2 million water meter replacement project.

City staff presented the second reading of the budget and said the spending plan shows a $266,000 surplus for the year beginning Oct. 1, 2025. The commission later adopted an ordinance setting a property tax rate of 0.53 — a maintenance-and-operations rate of 0.393113 and an interest-and-sinking rate of 0.136887 — and approved issuance of combination tax and revenue certificates of obligation to support the water project.

The budget presentation identified several revenue and expense items that helped produce the projected surplus. City staff said the budget counts anticipated proceeds from the sale of a portion of St. Ives land estimated at $750,000 and credits savings from an internal reorganization that merged public works with utilities, which staff said saved the city more than $300,000. The budget also includes a pay-scale implementation the staff said will cost “over $300,000” and benefit more than 100 employees; a new animal-kennel allocation “over $200,000”; funding for three additional firefighters to staff a proposed west-side substation; planned street paving; a food pantry project; and a $150,000 parkland purchase.

“The budget does have a surplus of 266,000 for this upcoming year,” a city staff member told the commission during the second-reading discussion.

On taxes, a city presenter said the 0.53 rate is “keeping it under the de minimis rate, but over the voter approval rate,” and that the rate would raise maintenance-and-operations taxes on a $100,000 home by about $10.15 compared with last year. The motion adopting the tax ordinance passed on a recorded vote.

For the water project, Bobby Viriano, the city’s financial advisor with Straub and Hosea, told commissioners the certificates of obligation will finance an approximately $3.2 million water meter replacement and installation program. Viriano said about $990,000 of the project would be financed as a loan and the remainder would be provided as loan forgiveness through federal/state programs administered with the Texas Water Development Board.

“The interest rate on this loan will be 3.09 percent over 30 years,” Viriano said, and estimated the city’s additional annual debt payment at roughly $50,000. He said the combined financing structure effectively lowers the net cost to the city.

Dan Martinez, bond counsel with Winstead PC, explained that the commission also approved by resolution the principal-forgiveness agreement required by the Texas Water Development Board and an escrow agreement that will hold funds and authorize draws as project work is completed. Martinez described the documents as standard for financing that includes principal forgiveness from a federal or state program and said the agreements must be authorized by resolution before closing.

City staff and advisers told the commission they expect several additional closing steps and anticipated a closing around Oct. 16.

Votes at a glance: the second reading of the fiscal 2025-26 municipal budget (Ordinance No. 2025-10) passed on a record vote; the tax ordinance (Ordinance No. 2025-09) adopting a 0.53 tax rate passed on a record vote; Ordinance No. 2025-13 authorizing the issuance of combination tax and revenue certificates of obligation for the 2025 water project passed; and Resolution No. 12529 authorizing execution of the principal forgiveness agreement with the Texas Water Development Board passed. Commissioners on the record voted in favor during the recorded roll calls.

Why it matters: The budget and tax-rate decisions set the city’s spending and revenue plan for the 2025-26 fiscal year, including hiring, capital projects and an animal-kennel allocation, while the financing approvals enable a large utility infrastructure project with a mix of loan and loan-forgiveness funding.

The commission concluded the items with unanimous approvals and moved on to other city business.