Galveston council approves FY2026 budget amendment, sets maximum tax rate; vote 4-3
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Summary
After hours of debate about reserves and employee pay, the Galveston City Council approved a FY2026 budget amendment that raises the city's not-to-exceed tax rate to support a larger fund balance and a 2% cost-of-living adjustment for civilian employees.
The Galveston City Council approved an amendment to the city's proposed fiscal year 2026 budget and set a not-to-exceed property tax rate that would fund it, voting 4-3 on Aug. 28.
The motion approved "item 8a with the addition of funding the fund balance to a level of 120 days and a 2% COLA for civil employees," as read into the record by Mayor Craig Brown before the roll call. The motion passed 4-3 on a recorded vote.
Why it matters: Council and staff said the change is intended to strengthen the city's reserves and provide civilian employees a modest pay adjustment while preserving funding for planned capital projects. Opponents said the same goals should be pursued without raising the tax rate, by identifying efficiencies and drawing on internal-service fund reserves.
Key facts from staff: Finance Director Sheila Lagonye told council the FY2026 proposed budget includes roughly $235,400,000 for city operations, about $2,100,000 in one-time appropriations from fund balance and approximately $303,800,000 of capital improvement projects. The budget also includes about $42,000,000 in internal service charges billed to operating funds, and projected ending fund balances of roughly $73,800,000. Lagonye noted state law requires the budget be adopted by recorded vote and that the tax-rate action will be set later in September.
What council debated: Supporters of the amendment argued the city needs a stronger reserve in case federal disaster assistance is reduced and to honor planned wage commitments for first responders and other personnel. Mayor Brown said the increase would help the city be financially stable and prepared for uncertain future costs, including insurance and potential state-level changes. Opponents, including Council Member Rollins and Council Member Perretta, urged a no-net-new-revenue approach and said the council should first pursue efficiency measures and review internal service fund reserves before increasing the tax rate.
Estimated taxpayer impact: Staff gave an example using the county's average taxable value (about $295,000) and said the proposed higher rate would add roughly $60'$70 per year for that property; other speakers used $300,000 as a round figure and estimated an annual change of about $68.
Vote and procedure: The record vote called by the city secretary recorded the following: Mayor Craig Brown — yes; Mayor Pro Tem Raab — no; Council Member Lewis — yes; Council Member Finkley — yes; Council Member Brown — yes; Council Member Perretta — no; Council Member Rollins — no. The motion passed 4-3. The tax-rate hearing and final rate adoption remain scheduled for September; the rate approved tonight is a not-to-exceed figure to be published ahead of the public hearings.
Background and next steps: Council members requested follow-up analysis of internal service fund policy levels and directed staff to return additional detail on department-level reserves and potential efficiency gains. Lagonye said staff will present a draft internal-service fund policy to the fiscal affairs committee in September. Council also discussed timing for any additional COLA for non-management employees and signaled willingness to revisit adjustments in January if additional savings are found.
Ending note: State law requires additional public notice and a separate vote to adopt the final tax rate; the council's action on Aug. 28 set the budget framework and the not-to-exceed rate for that process.