The San Marcos City Council adopted the budget and property tax rate for fiscal year 2026-27, addressing a projected $4 million shortfall and approving a tax rate above the no-new-revenue rate.
The big picture
The council approved a total operating budget of $406.56 million, a 9.5% increase from FY 2025-26, during a Sept. 15 council meeting. The city faced a forecasted $4 million shortfall at the beginning of the budget planning process, according to agenda documents.
Additionally, the city budgeted $1.4 million for the newly established Emergency Medical Services department. City staff addressed the shortfall and funding needs and presented the council with a balanced budget, which the council subsequently adopted.
Multiple cost drivers influenced major increases in the city’s general fund, according to agenda documents, including:
$2.6 million in increased personnel costs
$775,000 in expiring federal funding
$230,000 in increased social services in addition to HSAB funding
$24,000 in new Risk Terrain Modeling software
To address rising expenditures, the city saved $2 million by implementing a retirement incentive program that eliminated 20 positions, saved $540,000 by holding departments’ operating budgets flat and saved $2 million with an ongoing managed hiring program.
Also of note
The council adopted a property tax rate of $0.6515 per $100 of taxable value. While the tax rate remains the same as in FY 2025-26, the rate has a 2.5% increase when compared to the no-new-revenue rate of $0.635574 per $100 of taxable value, according to agenda documents.
The median taxable value of a home in San Marcos decreased from $307,050 in FY 2025-26 to $296,301 in FY 2026-27. For a home valued at that amount, the city will collect $70 less in property taxes.
In 2022, the City Council approved a local homestead property tax exemption of $15,000 and increased the local senior and disabled property tax exemption by $10,000 to $35,000, according to agenda documents. The exemptions remained the same and provided residents with $1.6 million in property tax relief for FY 2026-27.
