Victoria City manager proposes historic pay program, council posts voter-approval tax rate for later decision

Victoria City Manager Daryl Garza on Tuesday presented a proposed $254 million fiscal year 2026 budget and recommended the council publish a voter-approval tax rate of 0.482 to help fund a large compensation package, capital projects and one-time purchases.

The proposed spending plan includes a $4.4 million package of recurring and one-time pay increases labeled a “historic pay program,” a roughly $29 million fiscal‑2026 allocation toward a planned $35 million community center, and more than $6 million of public‑safety fleet purchases including police vehicles, ambulances and fire apparatus. Garza told the council the net effect would be an estimated $600,000 increase in general‑fund revenue if the proposed tax rate is adopted later in the process.

The package targets increases for police, fire, public works and other city employees. Garza described adjustments to starting pay and rank progression: “the increase in starting pay for a police officer between fiscal year 25 and '26 is 14%,” and he said fire rank positions would see larger percentage increases to address retention. He also proposed a $1,000 one‑time stipend for employees already within market range, a limited PTO buyback and raising the part‑time minimum wage to $14 an hour (excluding the golf course).

Garza framed the request against property‑valuation changes: Victoria’s net taxable assessed value fell 1.2% for 2025, a 4.3% drop in residential values and a 2.8% rise in commercial/industrial valuations. He warned the council that lower or flat assessed values make sustaining recurring compensation increases more difficult, and urged continued focus on economic development initiatives to grow the tax base.

Council members debated the tax‑rate question at length. Councilmember Butler said she understood Garza’s recommendation but voiced philosophical concerns about raising the voter‑approval tax rate while the tax base is shrinking, asking the administration to return with budget scenarios showing alternatives to the maximum rate. Councilmember Kidder and others said they supported the pay increases for recruitment and retention but asked staff to show options for rates lower than the voter‑approval ceiling and the impacts on recurring expenditures and multi‑year obligations.

The council voted 5–1 to publish the proposed voter‑approval tax rate of 0.482 as the rate to use in the public‑notice and hearing process; council members emphasized that publishing a proposed rate does not finalize the tax rate. Garza and staff were directed to return with budget scenarios showing the fiscal impact of lower tax‑rate options, including what recurring programs or positions would change under those alternatives.

Garza also provided details on revenue assumptions built into the budget: a conservative sales‑tax estimate of $19.5 million, an expected HUD CDBG allocation of $537,925 for the coming program year, and a projected reprogramming of prior unallocated CDBG funds. He said the city will continue to rely on conservative revenue forecasting and use one‑time cash for major capital projects.

Council set a schedule for further review: a budget work session on Aug. 19, public hearings and first readings in early September, and formal adoption later in the month. Garza said the administration will produce the scenarios the council requested ahead of those meetings.

What happens next: the council will hold public hearings on the budget and a formal vote on the tax rate in September. Staff will return with the requested fiscal scenarios that show the budget impacts of lowering the proposed tax rate and the longer‑term costs of recurring pay increases.