Rockville holds second FY2026 budget public hearing; staff proposes $174.9M operating budget, $33.8M CIP and $1M for housing fund

Rockville City Council continued its review of the fiscal 2026 budget Monday, March 17, 2025, with a second public hearing and an initial work session in which staff presented a proposed $174.9 million operating budget, a $33.8 million capital improvement program (CIP) and new, one‑time and ongoing investments including $1,000,000 for a Housing Opportunities Fund.

City Manager Jeff Michalak and finance staff opened the session describing the budget’s major totals and priorities. “The budget really includes a total expenditure of $175,000,000 across 10 funds,” Stacy Webster told the council, noting the document represents a 3.9 percent increase from FY2025 while maintaining the current property tax rate.

Why it matters: the FY2026 proposal would expand capital work across 65 projects, add targeted operating capacity for economic development and permitting, and create a dedicated revenue transfer and reserve allocation to seed a city housing fund meant for preservation and down‑payment or employee home‑ownership assistance.

Key measures presented by staff include: - General fund operating proposal of roughly $116.6 million, driven by higher assessed values and other revenue growth; taxable assessed value rose an average 5.7 percent in the City’s forecasts. - A $33.8 million CIP supporting 65 capital projects, including senior center and Lincoln Park Community Center improvements, enhanced sidewalks and roadwork. - $10,000,000 in new funds for Vision Zero and pedestrian improvements. - $1,600,000 proposed support for Rockville Economic Development, Inc. and five new positions across funds to enable expedited plan reviews and next‑day inspections. - $1,000,000 initial transfer plus a $750,000 reserve allocation to the Housing Opportunities Fund (totaling $1,000,000) to preserve and add affordable units and to start employee homeownership and down‑payment assistance programs. - A recommended 2.5 percent cost‑of‑living adjustment in the operating budget and capacity to implement compensation and classification adjustments identified in the city’s study; staff also flagged a recommended FY2026 cap of 7.5 percent for targeted market adjustments for positions identified as below market. - A proposed refuse rate increase of $30 per year and a stormwater rate increase of $7 per Equivalent Residential Unit; water and sewer follow the multi‑year schedule adopted previously.

Public testimony and requests: the hearing drew more than a dozen speakers who urged funding for specific community programs and facilities. Items raised during the public hearing included: - Sunflower Bakery (a local nonprofit workforce training social enterprise): Executive Director Jodi Tick asked council to continue funding the organization’s expansion to support young adults and teens with learning differences; testimony stressed the organization’s enrollment growth and workforce placement work. - Cultural Arts Commission: Karen Askin, representing the commission, requested funding for a strategic arts and culture plan to guide implementation of public art and events amid large development projects in Town Center and elsewhere. - Rockville Sister Cities Corporation: David Hill and Drew Powell outlined grant requests to support cultural events, the Bubble Tea Festival and student exchanges and noted changes to planned activities that altered fiscal needs. - Rockville Volunteer Fire Department: President Eric Bernard and department leaders thanked the council for proposed funding lines and sought continued support for apparatus replacement and paramedic chase unit needs; the department noted volunteer service and quantified standby hours provided to the county. - Rockville Swim and Fitness Center advisory board: Chair Angus Chen thanked the council for proposed pool investments and said the center generates more than $2 million annually in revenue and 350,000 customer visits. - Other public speakers asked council to add or scope projects including a covered shelter at Wootton’s Mill Park, expanded transit/circulator service and accessibility audits, and a humane deer‑population management study.

Budget process and timing: staff kept the council’s public record open through April 7 and reminded residents that an additional public hearing is scheduled for March 24. The council introduced (first reading) an ordinance to appropriate funds and levy taxes for FY2026; final budget adoption is scheduled for May 5. Staff said they will continue monitoring state and federal revenue forecasts and will preserve at least $3 million above the reserve target to maintain flexibility if revenues weaken.

What the council asked: councilmembers pressed staff on the durability of revenue projections (especially income tax and commercial valuations), the use of one‑time reserves versus recurring revenues, fee increases (building permits, recreation fees) and potential impacts on development and affordability. Staff said permit fees are set to maintain cost recovery but noted the city’s fees remain at or below Montgomery County peers.

Next steps: the council will hold additional detailed work sessions on March 24 and April 7 to review operating departments, grants and the CIP; staff will return with follow‑up answers to council budget questions and updated balancing options ahead of final adoption.