San Antonio staff warn of growing budget gap; council weighs cuts, CPS reserves and limited fee changes

San Antonio officials told the City Council’s goal‑setting committee on June 27 that the city faces a growing structural imbalance in the general fund through fiscal year 2027 and presented three broad ways to respond: large expense reductions, a combination of targeted cuts plus reserving CPS Energy off‑system sales to close the gap, or a package that could include a property‑tax rate increase.

“My name is Justina Tate. I’m the budget director for the city of San Antonio,” Justina Tate said as she opened the staff update, then summarized the revised general‑fund picture: the FY25 revised budget totals about $1.6 billion and, after adding two months of revenue data, the city expects to finish FY25 roughly $5 million ahead of the revised budget but remains structurally out of balance in FY26–FY27. She flagged two state measures that will reduce local revenue: HB9, which would exempt up to $125,000 in business personal property if approved by voters and is expected to lower property‑tax receipts by about $5.6 million in FY27, and SB1008, which limits a municipality’s ability to assess both liquor and food licenses and caps some food‑related fees, costing the general fund an estimated $1.9 million.

Troy Elliott, the city’s chief financial officer, walked the council through the city’s financial policies and how state rules shape tax‑rate options. He reiterated the council’s 15% ending‑balance policy and explained truth‑in‑taxation mechanics under Senate Bill 2, including the 3.5% voter‑approval limit on maintenance‑and‑operations revenue growth and limits on taxable value growth for homesteads and small commercial properties. Elliott cautioned that key numbers remain preliminary until the certified tax roll is delivered later in July.

Ben Gorzell reviewed CPS Energy payments to the city and the policy the council adopted last year to reserve city payment from off‑system sales above a $10 million baseline. Gorzell said that, under conservative projections, the city could reserve about $59.3 million across FY25–FY27 and recommended holding that amount to help address the FY27 shortfall. “We are recommending consistent with that policy to reserve this $59,300,000 to help us address the gap,” he told the council.

City Manager Eric (first name provided in the record) presented three scenarios to balance FY26 and FY27: Scenario 1 relies primarily on expense reductions (including comprehensive departmental reviews); Scenario 2 combines some departmental reductions with use of reserved CPS payments and modest increases in fees and charges; Scenario 3 layers on additional revenue options — including the state‑allowed property tax increase — and is the most politically difficult. Staff scheduled the proposed budget release for Aug. 14 and noted tax‑rate hearings would follow certification of the roll (expected July 25) with adoption currently scheduled for Sept. 18.

Councilmembers across the dais stressed common priorities: protecting public safety, preserving core services used by vulnerable residents, and addressing long‑deferred infrastructure needs such as streets, sidewalks and drainage. Several members voiced strong opposition to raising property taxes this year. “Scenario 3 is an absolute nonstarter. No new tax hikes on our citizens,” one member said during the discussion.

Multiple council members pressed staff for clearer options and analyses: concrete examples of the $45 million in reductions outlined in Scenario 1, a cost‑benefit comparison of using CPS reserves to fund the general fund versus keeping them as ratepayer protections, and a list of vacancies and the costs associated with filling positions in public safety and other high‑need departments. The council also requested practical proposals to prioritize streets and sidewalks equity (a public mapping of PCI scores and timelines) and better accountability for delegate agencies receiving city funds.

Staff and department representatives provided targeted clarifications: police told the council there were 25 unfilled sworn positions and the fire department reported 48 uniform and 10 civilian vacancies as of May 31, 2025. Survey results presented by Alana Reed and Ryan Murray of ETC Institute showed affordable housing, homeless encampment services and animal care among the top community priorities, which several councilmembers said should guide trade‑off decisions.

Next steps: staff will provide follow‑up materials over the summer — including vacancy lists and cost estimates, a cost‑benefit analysis of CPS reserve use versus returning funds to ratepayers, and more granular options for departmental reductions and fee adjustments — before the proposed budget is released on Aug. 14 and the public hearings that precede any tax‑rate action.