San Marcos council directs staff toward higher tax-rate scenario to close FY26 budget gap

San Marcos City Council met June 26 for a budget workshop to review the city’s fiscal outlook and give direction to staff on building a proposed FY 2025–26 budget.

City Manager Reyes told the council, “This budget is a testament to a collaborative effort crafted through council direction, staff expertise, and public input,” and presented staff’s analysis showing that property- and sales-tax revenues are not keeping pace with projected expenses.

The nut of the presentation was stark: with an estimated 3% decline in overall taxable property value, staff said the general fund would require about $3.1 million in reductions to remain structurally balanced at the current tax rate. Finance Director John Locke told the council the proposed budget will be submitted Aug. 19 and that those materials will include the formal “no new revenue” and voter-approval tax-rate calculations after the Hays County certified roll is received July 25.

Council discussion focused on three tax-rate scenarios staff modeled: a “structurally balanced” rate of about 64.03 cents per $100 valuation, an initial “no new revenue” scenario near 64.96 cents, and a revised no-new-revenue option that would cash-fund equipment replacement in FY26 to reduce future debt service. Council members repeatedly stressed the tradeoffs: without a rate increase, staff said, the city would need deep program cuts that would affect personnel-heavy services such as police, fire and parks.

After discussion, a majority of council members voiced support for the higher no-new-revenue estimate. Council Member Rodriguez said, “I am definitely leaning towards the 64 96,” citing ability to fund increases to social-service grants and a proposed Office of Community Support and Resources. Council Member Lorenzo Gonzales and Mayor Hewson also expressed support; Council Members Mendoza and Scott indicated they preferred the lower structurally balanced figure. Council Member…