San Antonio Budget Goal Setting Session – May 22, 2026

The City of San Antonio held a budget goal setting session on May 22, 2026 from 9:07 a.m. to 2:47 p.m. The meeting focused on the FY2027-2028 budget outlook, financial policies, property tax options, community survey results, and a new framework for evaluating city services. Staff presented a recommendation to use unused increment and the state‑allowed 3.5% revenue growth to raise the property tax rate by about 3.5 cents, generating $53.8 million in additional revenue, primarily to cover rising public safety costs. Council members expressed a range of views, with several supporting the recommendation and others staunchly opposing any tax rate increase. The meeting also reviewed the community budget priority survey and a new mandated/priority/city service lens for evaluating expenditures.

Consent Calendar

• No consent calendar items were discussed. The meeting was a working session with no routine approvals.

Public Comments & Testimony

• No public comments were taken; the session was a council and staff working session.

Discussion Items

1. Financial Policies & Property Tax Overview

• Troy Elliott (CFO) reviewed the city’s financial policies, including maintaining a 15% general fund ending balance and the impact of the state’s 3.5% property tax revenue cap (SB2, 2019). He noted the city has never rescinded homestead exemptions and has instead increased relief, including a tax freeze for seniors/disabled residents. Estimated property tax relief (foregone revenue) for 2026 is $149 million – $73M homestead exemption, $50M over‑65 exemption, $23M tax freeze.
• HB9 (effective 2027) will exempt $125,000 of tangible personal property, reducing general fund revenue by $5.6 million and debt service by $3.6 million (total $9.2M).
• Elliott presented options: current property tax rate would lose $8.2 million in FY27. Using $29.1 million in unused increment (from tax years 2024‑25) plus moving to the 3.5% state‑allowed growth would raise the M&O rate by 3.49 cents (to about $0.36), generating $53.8 million. For the average homestead ($233,000 value), this means $6.75 per month increase; for the median homestead ($198,000), $5.84 per month. About 117,000 of 254,000 homesteads have a frozen tax bill (over‑65/disabled) and would not be affected.
• Eric (City Manager) stated the additional revenue is solely to pay for existing public safety expenses (police/fire CBAs, health care, technology, equipment, fuel, mandated costs) totaling $77.2 million in FY27. The $53.8M would cover a portion; $15.6 million in targeted reductions over two years would still be needed.
• Freddie Martinez (Budget Director) showed the five‑year forecast: revenues decline 0.6% in FY27 then grow 2.1% on average; expenses grow 6.3% in FY27 and 3.8% thereafter. The projected deficit in FY28 is $130.7 million, growing to $264 million by FY31. Using the recommended property tax changes reduces the FY28 deficit to zero and the FY31 deficit to $155 million.

2. Council Discussion on Property Tax Increase

• Councilmember McKee Rodriguez supported the recommendation and suggested adopting a policy for annually reviewing unused increment to avoid losing it. He asked for evaluation of a formal policy similar to the CPS energy policy.
• Councilmember Mungia supported the recommendation, noting that $130M in cuts over two years would be unacceptable. He requested a district‑by‑district breakdown of median/average home values.
• Councilmember Alvarete‑Gavito opposed raising property taxes, especially with other cost increases (SAWS, groceries, gas). She urged looking internally first.
• Councilmember Mesta Gonzalez supported the recommendation, saying residents understand the need to pay for services like ambulances. She stressed better communication with the public.
• Councilmember White strongly opposed, calling the tax increase a “non‑starter.” He argued for cutting spending, citing a “structural problem” with 68.5% personnel costs and $231M in non‑mandated services. He opposed the idea that the increase would only go to public safety, saying money is fungible.
• Councilmember Viagran supported the recommendation, insisting on honest conversations about where cuts would fall. She urged colleagues to identify what they would cut instead. She also noted San Antonio has not raised property taxes in 33 years.
• Councilmember Galvan supported the recommendation, arguing that austerity alone won’t deliver the services communities deserve. She asked for an estimate of staff reductions if cuts were made.
• Councilmember Castillo supported the recommendation, emphasizing the importance of protecting city employees’ jobs and that additional revenue is needed to fund public safety and fair CBAs.
• Councilmember Corr was cautious, wanting to understand the full impact of cuts before supporting a tax rate increase. She noted 800 vacancies citywide and suggested some could be eliminated. She also stressed improving service delivery to build public trust.

3. Community Survey Results

• Alana Reed (Communications Director) presented FY2027 budget priority survey results: 9,554 responses to the SA Speak Up survey (8,355 online, 1,199 paper) plus a statistically valid survey by ETC Institute (1,104 completed, ±2.9% margin of error). Top priorities: homeless services, affordable housing, police services, streets, fire/EMS, and animal care services. Affordable housing was the #1 first choice.

4. PFM Presentation on Budget Decision‑Making Lens

• Danielle Parker (PFM) outlined a new framework categorizing services as mandated (72% of general fund), priority (services council identified as vital but not legally required), and city services (all other). Of mandated services, 40% were also considered priority by council. Staff prepared individual department breakdowns for 21 public‑facing departments. Parker summarized council’s one‑on‑one input: priorities include public safety (response times, speeding, gun violence), infrastructure (streets, sidewalks, mobility), and human services (homelessness, seniors, parks, libraries). She encouraged focusing on outcomes, multi‑year strategies, and partnerships.

5. Afternoon Discussion on Goals, Priorities, and Budget Reductions

• Mayor opened with remarks: need to identify new revenue streams, balance budget over two years, and show the public that efficiencies have been maximized. He emphasized digital twin investment, audit recommendations, and linking cuts to service impacts.
• Councilmember McKee Rodriguez reviewed the $231.1 million in non‑mandated/priority services, noting that cutting programs like SA CORE, health & wellness, domestic violence, mental health, Head Start, library services, and police mental health units would be harmful. He asked for more granular breakdowns (personnel, commodities, contractual) to identify scaling opportunities.
• Councilmember Mungia highlighted recent tragedies (domestic violence, mental health) and argued that cutting prevention programs would make police jobs harder. He asked for incremental tax increase options (1%, 1.5%) and analysis of how cuts affect previously adopted strategic plans (ACS, SA Tomorrow, SHIP).
• Councilmember White reiterated that the tax increase only delays the deficit (still $155M in FY31). He advocated for growing revenue through economic development, not taxing residents. He listed several “city services” (e.g., downtown events, sister cities, fair housing analysis) totaling millions that should be scrutinized before raising taxes.
• Councilmember Alvarete‑Gavito opposed a tax increase, calling for partnerships with the county to avoid duplication. She stressed cutting before asking residents to pay more.
• Councilmember Galvan supported using the property tax revenue, arguing for long‑term investments in education, workforce, and infrastructure to drive economic development. He opposed “technical” abatements that forego revenue. He wanted to preserve prevention programs and quality‑of‑life services in underserved areas.
• Councilmember Viagran offered to defer a public works project in her district to help balance the budget. She defended international programs (sister cities) as economic development tools. She suggested increasing permit fees (e.g., for fireworks, garage sales) and enforcing parking ticket collection.
• Councilmember Mesta Gonzalez called for better transparency on the $53.8M increase – residents need to understand how it improves their neighborhood and safety. She urged clear communication in town halls.
• Councilmember Castillo supported aligning budget with adopted plans (SA Tomorrow, SHIP). She asked for departments to be named when discussing cuts to humanize the impact. She advocated for preserving grant‑funded positions and programs like Pet Care Connect.
• Councilmember Corr highlighted that low‑barrier shelter funding (for 190 people) expires this year; she argued it should be a priority to continue. She also pushed for expanding the sidewalk rebate program and for better data on street maintenance history.
• Councilmember Spears asked how the deficit “sneaked up” on the city; she wanted to see a model without a tax increase, a list of all grants available, and information on one‑time expenditures. She emphasized cutting luxuries before raising taxes and called for intergovernmental relations to find state/federal funding.

Key Outcomes

• Staff Recommendation Endorsed by Several Members: The property tax increase (unused increment + 3.5% growth) has support from a majority of council members, but strong opposition from at least two members (White, Alvarete‑Gavito). No formal vote was taken.
• Next Milestone – June 18, 2026: Staff will present a Trial Budget that includes specific reduction options, fee adjustments (EMS transport, fire prevention, etc.), and potential revenue from other sources (vacant properties, short‑term rental fees, etc.). The trial budget will be a first draft; the proposed budget will be released in August 2026.
• Direction to Staff:
  • Provide more granular breakdowns of non‑mandated/priority programs (headcount, salaries, vacancies).
  • Show impact of cuts on service levels, performance measures, and strategic plans (e.g., SA Tomorrow, ACS plan, Vision Zero).
  • Include a model without a tax increase to illustrate required cuts.
  • Explore partnerships with county (Animal Care Services, libraries, etc.).
  • Evaluate options for small tax rate increments (e.g., 1%, 1.5%).
  • Enhance communication materials explaining how property tax revenue directly supports public safety.
• Future Discussions: Economic development framework (B session in June), bond program (debt service tax rate options), and continued intergovernmental relations efforts.