San Antonio staff report FY26 Q1 finances roughly on budget; council backs taxpayer impact statement and May goal-setting

San Antonio’s interim budget director said the city’s fiscal position for the first three months of fiscal 2026 is largely in line with the adopted budget, but flagged weak sales-tax and hotel occupancy-tax receipts and rising employee benefits costs as items staff will monitor going into FY27 planning.

“Our financial position for the first three months is in line with the adopted budget,” said Freddy Martinez, interim budget director. He reported general fund revenues were about $8.6 million ahead through December, driven by stronger CPS receipts, while sales tax lagged plan by roughly $700,000 for the quarter and continued to show a larger shortfall in January.

Martinez told council the hotel occupancy tax fund was roughly $1.9 million below plan in Q1 because occupancy and average daily rates were lower than assumed; he estimated a potential $3 million year-end shortfall in that fund if current trends hold. The airport and development-services funds are tracking near plan, he added.

Mayor Jones and staff also discussed a growing employee benefits fund shortfall tied to claims activity. Martinez said Q1 claims were about $7.4 million over plan and the office is projecting roughly $4.5 million in excess costs by year end; staff will continue monitoring and provide a May update with the 6+6 forecast and five-year projection.

City management presented a recommended FY27 budget calendar that would put the 6+6 forecast on May 6, a goal-setting session on May 22 (after a mid-April community survey), a trial two-year budget on June 17 and a manager’s proposed budget on August 13, with adoption targeted for Sept. 17. Council members asked staff to finalize the calendar by Feb. 25 so it can be published to the public by March 6.

Council members broadly supported a proposed taxpayer impact statement — a CCR filed by District 10 — that staff described as a one-page comparison showing property-tax and commonly paid fee impacts for a typical homeowner. Martinez said the city could publish the statement online and in local newspapers and could adopt it by ordinance. “We can put it,” he told Councilman McKee Rodriguez, who urged writing the requirement into ordinance language.

Why it matters: the taxpayer impact statement is intended to make budget changes more transparent to residents by summarizing how the proposed budget would affect typical households. Council members asked staff to include utility changes from CPS and SAWS where feasible and to publish the information across media channels so residents can readily access it.

What’s next: staff will return with a May 6 forecast and May 22 goal-setting session materials that incorporate community feedback, the core-versus-noncore analysis, and any midyear adjustments. Martinez said midyear budget ordinances could be presented May 14 so the taxpayer impact statement can accompany budget materials after property-tax notices are issued.

Sources and attribution: statements and figures in this article come from the City of San Antonio FY26 Q1 3+9 financial presentation delivered to the City Council on Feb. 18, including remarks by Freddy Martinez (interim budget director), city staff and Mayor Jones. The council discussed calendar timing and public engagement plans during the session.

The council did not take a formal vote on the calendar or the taxpayer impact statement during the B session; staff requested feedback by Feb. 25 and said they will return with ordinances and the midyear budget package in May.