San Marcos adopts $371.3 million budget, sets tax rate at 65.15¢ after EMS funding fight

San Marcos City Council on Sept. 16 adopted a $371.3 million fiscal 2026 operating budget and set the city property tax rate at 65.15 cents per $100 of taxable value following extended debate over how to pay for emergency medical services.

City Manager Stephanie Reyes said the proposed budget "supports the essential services residents rely on every day: parks, libraries, roads, police, fire, and emergency management," and outlined new investments including $750,000 for human services, expanded tenant-protection legal aid and a new Office of Community Support and Resource Navigation created by realigning existing staff. Reyes and finance staff warned that sales-tax and property-value pressures made the choices difficult.

Finance Director John Lock emphasized the revenue outlook that framed the discussion, noting sales-tax collections and growth assumptions used in the fiscal forecast. Lock told council the city portfolio yielded 4.4% in the quarter and that sales-tax forecasts remain below earlier projections.

Public commenters expressed mixed views. Lucy Johnson said she was uncomfortable with raising taxes to hold funds for projects that are not fully defined, telling council that she found out "the proposed tax rate was increasing by over 10%" only recently and urging caution.

A central point of debate was emergency medical services. Staff said several emergency-services districts that had been partners with the regional San Marcos-Hays County EMS are creating their own systems; that transition would leave the city responsible for a larger share of costs. Reyes said the city commissioned a study and expects recommendations by the end of November on possible operating models. Fire Chief Les Stevens told council that ambulance billing recovers a minority of transport costs: "We charge only if there is a transport," and the overall collection rate for transports is "between 35 and 40%."

Council members wrestled with tradeoffs between recurring needs and one-time projects. Some members opposed the higher tax-rate proposal at first: a motion to adopt a 67.69-cent rate failed. Council later approved 65.15 cents (a rate staff described as the no-new-revenue option plus an estimate to cover a $2 million EMS transition) on a 5–2 vote. Council had approved the budget ordinance earlier in the evening on a 7–0 vote.

Council members said the approved rate provides immediate operating capacity while staff completes the EMS study and returns in future months with more precise costs. Staff told council that the one-time spending list shown during budget workshops would be prioritized at a later date and that some ARPA-funded items may need local funding in FY27 if grants expire.

The city manager said the EMS study nd its recommendations are due by the end of November 2025; council must then decide whether to absorb recurring EMS costs, find alternate partners, or cut other services. "We're working through it," Reyes said; the November study will inform how much recurring funding is necessary.

What happens next: The budget and tax-rate ordinances were adopted and will take effect as adopted; staff will continue the EMS study and return to council with implementation options and any recommended amendments as the situation evolves.

Vote totals and next steps: The budget ordinance (2025-36) passed 7–0; the council ratified the property-tax revenue increase and then adopted the tax-rate ordinance (2025-37) at 65.15 cents by a 5–2 vote. Staff will submit the EMS study in late November and return to council with options for providing or contracting for emergency medical services.