San Patricio County holds budget workshop as state, federal grant cuts and insurance costs tighten 2026 outlook

San Patricio County Commissioners met in a budget workshop following the July commissioners court to discuss looming revenue constraints driven by reduced state and federal grant support and rising county insurance costs.

The court heard that some federal- and state-funded grants are being cut with little notice. “We received one letter: a PHEP grant was cut 28% starting July 1,” a county budget official said during the workshop, noting the county might not know grant reductions until the day a grant starts. The county’s audit and budget staff told commissioners that a 28% reduction could leave some grants covering only a single salary instead of the full program.

Why it matters: commissioners said county-funded services and personnel currently supported by grants could require local funding to continue. That, combined with legal limits on property-tax revenue increases, narrows options.

Budget pressures and insurance shortfall

County officials described a separate but related pressure: the county’s self-insurance fund has drawn down reserves after prescription costs and other claims rose. The county estimated that lowering the employer contribution from $12,000 to $11,000 per insured employee reduced projected outlays by roughly $480,000 this year. County staff said they currently pay about $8,900 per covered employee and that restoring insurance reserves will be expensive.

The court discussed possible personnel and pay policies under the constrained outlook. Staff presented two example cost scenarios for a general cost-of-living adjustment (COLA): a 3% COLA would increase payroll costs by about $848,000; a 5% COLA would be roughly $1.4 million. County staff said combining an insurance reserve increase with a 3% COLA would add about $1.9 million to next year’s payroll and benefits cost.

Revenue cap and abatements

County staff reminded the court the county is operating under a statutory tax revenue cap (described in discussion as roughly a 3.5% limit on new revenue from existing property) for the coming year. That cap means new recurring spending must come from new construction or other newly taxable activity rather than drawing down existing capped revenue. Commissioners also noted a stream of tax abatement expirations over the next two to three years that may affect future receipts but will not immediately lift the cap on usable revenue.

Halo Flight request

Randy Inslee, chief flight nurse for Halo Flight, presented the nonprofit air ambulance’s 2026 budget request and asked San Patricio County to increase its annual contribution by 5 percent to help offset uninsured patient write-offs and rising operating costs. “Approximately 35 percent of our patients transported for medical care do not have financial means or any insurance of any kind,” Inslee said. He cited equipment and maintenance cost increases, for example, a helicopter windshield replacement rising from about $10,000 to $12,000 and a critical antenna cost increasing from about $11,000 to $15,000.

Inslee acknowledged an error on the written request and said Halo Flight would resubmit a corrected letter with the official amount for the county record. Commissioners said the Halo Flight request will be considered in the county’s overall budget process and that formal action would occur when the court finalizes the 2026 budget.

Next steps

County staff said more workshops would be scheduled and that departments had submitted personnel requests and reclassification proposals the court is still reviewing. Staff urged commissioners to identify which grant-funded services the county should continue if state or federal funding is reduced or terminated; for some positions, county leaders said only two choices exist if grants end—eliminate the position or fund it locally.

Judge David Krebs summarized the outlook: “So, Court, y’all will be hearing a lot about the budget until we get this thing wired down,” and staff said more budget workshops are planned to allow the court to prioritize programs under the constrained revenue outlook.