San Marcos Council weighs tax-rate choices as FY2026 budget projects $366.4 million

SAN MARCOS, Texas — City staff on Tuesday presented the proposed fiscal year 2026 budget for San Marcos and urged the City Council to choose a tax-rate path that officials said will affect services and staffing in the coming years.

City Manager (interim) Elizabeth Reyes and Finance Director John Locke outlined a $366,400,000 all-funds proposal that includes $122,800,000 for the general fund and several policy priorities, including a $750,000 allocation for the Human Services Advisory Board, a new Office of Community Support and Resource Navigation, and $70,000 for tenants’ rights efforts.

Reyes said the plan “represents months of collaboration” and called the budget “a road map that turns your values and priorities into action for San Marcos.” She told the council that rising costs, slower sales-tax growth and state-imposed limits on property-tax increases mean council choices this year will affect whether services are sustained or cut.

City staff presented three tax-rate scenarios: the “no new revenue” rate of 62.78 cents per $100 of assessed value; a “long-term focus” rate of 64.96 cents per $100 (staff-recommended baseline); and the voter-approval rate of 70.47 cents per $100, which would trigger an automatic election if exceeded. Under the no-new-revenue rate staff said the general fund is balanced for FY2026 but faces a projected $5.6 million shortfall in FY2027. The long-term focus rate would generate about $1.9 million in additional FY2026 revenue and reduce the FY2027 shortfall; the voter-approval rate would generate larger capacity in the short term.

Locke walked the council through multi-year forecasts showing that without additional revenue the city will likely face larger shortfalls in later years. He…