Rockport City Council Budget Workshop #4 - May 12, 2026

The Rockport City Council met for its fourth FY 2026-27 budget workshop on Tuesday, May 12, 2026. The workshop was called to order at 1:04 p.m. and adjourned at 2:54 p.m. It was a discussion-and-direction session; no formal ordinances were adopted. Staff presented updated data on property taxes, hotel occupancy tax revenues, water and wastewater rates, the COPS grant, debt capacity, parks projects, and the budget calendar. Council consensus was to work toward a tax rate at or below the voter-approved rate, with a goal of reducing the current rate.

Taxpayer Impact Statement

• Per the agenda, the required statement reflects the prior year's budget process because FY 2026-27 figures were not yet available.
• For a median-valued homestead of $338,830: current FY 2024/25 property tax bill $1,373.26; estimated FY 2025/26 bill if the proposed budget is adopted $1,445.03; estimated bill if a balanced budget is adopted at the no-new-revenue rate $1,299.91.

Public Comments & Testimony

• Jennifer Day, Executive Director of the Rockport Cultural Arts District, raised concerns about accountability of Hotel Occupancy Tax (HOT) funds spent on city events. She said nonprofits receiving HOT funds must file quarterly reports but city-held events are not equally scrutinized. She cited Open Records data for the city's kite festival: $6,174 in FY 2022-23; $10,004 in FY 2023-24, including a $6,000 HOT allocation; $10,207 in FY 2024-25; and $15,207 shown in the HOT transparency report for the one-day event, excluding city payroll and resources. She argued the HOT allocation calculation uses an $11 average nightly room rate as transcribed, and does not include short-term rental average rates, which she said are about $293. She urged Council to preserve nonprofit event support and apply equal accountability to city events.

Property Valuation and Tax Rate

• The current tax rate is $0.426475 per $100 valuation. Staff modeled debt-service and tax-rate options using available debt capacity of approximately $1,598,450, created by $264,137 of freed-up debt service.
  • Using all available debt would increase the rate to about $0.431331.
  • Using 50% of the available debt, about $800,000 with $132,068 in debt service, would lower the rate to $0.425744.
  • Using 75% would raise the rate slightly to about $0.428.
  • Using about $400,000 would lower the rate further.
• Council directed staff to target the 50% debt option and a lower tax rate. Staff agreed to email the estimated effect on an average home tax bill before the next meeting.

Hotel/Motel and Short-Term Rental Revenues

• Short-term rental revenues are a larger driver of hotel/motel tax revenues than hotel revenues and historically account for more than 50% of those taxes.
• Current hotel/motel tax revenues are running ahead of last year, largely because of catch-up collections after a previous billing-system conversion. A separate HOT budget workshop will be held later.

Water and Wastewater Rates

• Staff presented updated rates based on council guidance: a 5.1% increase in May/June and a 7.2% increase in October, with the water cost pass-through included.
• For an inside-city residential customer using 5,000 gallons of water and wastewater: the current bill is $97.33; the May/June increase would add $4.93, bringing the bill to $102.26; the October increase would add $7.33, bringing it to $109.59.
• The rate model includes a $4.48 water cost pass-through. Outside-city customers would not be affected until October. Rates will be adjusted when the new wholesale water rate is received.
• The utility fund is currently losing about $50,000 per month from utility reserves, not from a general fund subsidy. If no action is taken, the monthly loss is projected to grow to $150,000 in January. The five-year rate plan is intended to stop the deficit and repay funds taken from reserves. Water and sewer sales and gallons continue a downward trend.

COPS Grant and Police Staffing

• Staff presented a three-year COPS grant opportunity for up to five officers. The grant total is about $500,000; total cost for five officers is roughly $3 million over the grant period, with the city share about $2.4 million.
• One-time gas-sale proceeds would cover first-year capital costs such as vehicles and equipment. Police are authorized for 27 street officers and are currently one short; street officers were last added around 2004-2005. The grant expires in September 2030, and officers could be hired as late as October 2027 while still receiving full grant funding.
• After discussion, Council directed staff to proceed with five officers under the grant. One councilmember initially favored delaying the grant, but ultimately supported it after clarification that hiring could be phased and the focus would remain on lowering the tax rate.

Gas-Sale Proceeds, V&E, and Debt Prepayment

• Gas-sale proceeds are planned to bring reserves to about 200 days, above the city's 180-day target, fund vehicle and equipment needs, and cover the first year of the COPS grant.
• Staff recommended against prepaying the 2014-2015 GO refinance certificates, about $1.2 million, because their remaining interest rates are 2.9% and 2.3%, lower than current borrowing costs of roughly 3% to 3.5%. Council did not direct early payoff.

Parks and Debt-Funded Improvements

• Parks staff presented a menu of projects at Memorial Park and the 40-acre property. Council consensus was to keep development centralized at Memorial Park for now. Any sale of the 40 acres would require voter approval, and no sale decision was made.
• Council directed staff to build a package around roughly:
  • $400,000 for two playscapes at Memorial Park, including safety surfacing if it fits within that amount;
  • $200,000 for a quad pickleball court complex;
  • $140,000 for Memorial Park field renovations for baseball, softball, and soccer;
  • a temporary parking solution tied to the pickleball project, with a longer-term study of permeable and grant-funded parking at Memorial Park.
• Permanent expanded parking at the back of Memorial Park was discussed but not funded this year because it needs road, drainage, and engineering work. A 38-foot community Christmas tree at the plaza, estimated at $65,000, was discussed as a possible HOT-funded or county-supported item. Council also asked staff to compile real tournament impact data, such as hotel and sales-tax effects, to support future park and sports-tourism investments.

Other Budget Items

• Staff proposed adding $30,000 to the general fund and $30,000 to the utility fund, $60,000 total, for grant writing, grant match, and related engineering costs.
• Staff plan to ask Council to adopt a resolution, with the budget, ending post-65 retiree health insurance for employees hired after October 1, 2026, while grandfathering current employees and retirees.
• Staff reported a preliminary S&P credit-rating call focused on water issues; no downgrade or rating action was indicated, and the city will work to protect its rating because it affects future borrowing.

Budget Calendar and Next Steps

• No budget workshop will be held on May 26.
• A work session is scheduled for June 9 at 3:30 p.m. before the regular council meeting to review refined park numbers and tax-rate effects.
• The HOT funds budget and distribution workshop is scheduled for June 23 at 1:00 p.m.
• Staff will update the budget calendar with state-mandated budget meetings.

Key Outcomes

• Council directed staff to prepare water-rate ordinances using the 5.1% May/June and 7.2% October increases.
• Council directed staff to pursue the full five-officer COPS grant, using gas-sale proceeds for first-year costs.
• Council directed staff to use about $800,000 of available debt capacity for parks, while lowering the tax rate from $0.426475 to $0.425744.
• Early payoff of the 2014-2015 refinance certificates was not recommended and was not directed.
• No formal votes were taken; these are staff directions for the FY 2026-27 budget process.

Note on Transcript Content

• The raw transcript also includes the beginning of a separate regular Rockport City Council meeting later the same day. In that segment, Carl Brown, president of the South Rockport Neighbors, invited the council to a police memorial at 11 a.m. on Friday. This summary otherwise focuses on the 1 p.m. budget workshop.