Facing a $158 million budget deficit in fiscal years 2026-27 and 2027-28, San Antonio City Manager Erik Walsh on Aug. 13 presented a proposed FY27 budget supported by the city’s first property tax increase in 33 years.
Alongside budget cuts and consolidation, the proposed tax rate would eliminate projected deficits over the next two fiscal years and reduce the projected FY29 deficit from $206 million to $38 million. During trial budget discussions in June, the estimated FY31 deficit was $264 million; under the Aug. 13 proposal, it would fall to $136 million.
Walsh said the proposed budget provides a foundation for future fiscal years, leaving an estimated $48 million ending balance by the end of FY28.
The proposed property tax increase was approved by all but three council members: Marina Alderete Gavito, Misty Spears and Marc Whyte. The final vote is scheduled for Sept. 17, and the rate can still be reduced during budget workshops and town halls before approval.
Mayor Gina Ortiz Jones said she is happy to see cuts but concerned about where they are coming from. She cited Ready to Work, the San Antonio Book Festival and the San Antonio Botanical Garden as programs she has identified for potential cuts, with the option to “be creative” with the allocation of Ready to Work funds.
The proposed budget
One of the greatest challenges facing the $1.76 billion general fund is declining property values. In FY27, the city projects a 2.71% decrease in total property tax revenue, resulting from a $4.3 billion decline in taxable value.
Walsh said the city has not experienced negative taxable-value growth since 2011. To offset the loss, the proposal would raise the property tax rate by about two cents in FY27.
The FY27 rate includes unused tax increment from previous fiscal years. To further reduce deficits, the FY 28 budget will also need a tax rate increase. This tax rate will use unused increments from FY27 to achieve a similar increased rate.
For the average homestead, the increase would amount to about $2.95 per month, or roughly $35 annually.
Due to a senior citizen tax freeze and other homestead exemptions, 47% of the city’s 257,396 homesteads would not be affected by the rate increase. The revenue forgone through these exemptions totals $156.4 million.
Based on council and community feedback, budget priorities include homeless services, housing services and public safety. Police, Fire and Animal Care Services are expected to receive departmental increases, while other city departments face cuts.
Cuts over the next two years would reduce city staffing by 101 positions, 54 of which are currently filled. Other programs would also be reduced, with total cuts reaching $89.6 million. These cuts are dependent on two budget cycles.
In addition to the tax increase and budget cuts, the proposal would adjust fees for select city services to generate additional revenue. Changes include a library fee for non-San Antonio residents, park rental fee adjustments, EMS fees and other service fees.
Council direction
Three of the 10 council members opposed any tax rate increase.
District 10 Councilmember Marc Whyte said the city has more room to cut from the budget rather than raise taxes. Whyte called the budget bloated by decades of poor spending habits and described a tax increase as a Band-Aid that does not address long-term deficits.
“I am not happy at all with where we are at,” Whyte said. “And the thought that we would raise taxes on the citizens of San Antonio right now is frankly unconscionable.”
Whyte and District 9 Councilmember Misty Spears continue to advocate for increased public safety staffing, citing a heightened need for police and fire personnel.
District 7 Councilmember Marina Alderete Gavito said residents in her district have raised concerns about affordability, and she cannot support a rate increase.
“To me, it is important that we are cognizant of what families are feeling right now,” Alderete Gavito said.
District 3 Councilmember Phyllis Viagran said she has anticipated the city reaching this budget challenge since 2021, during the COVID-19 pandemic. She said the tax rate increase is an investment in city growth and the services residents expect.
“What we are asking is not for the citizens to be burdened more; what we are asking them to do is to invest in their city,” Viagran said. “Invest back into the city services that they expect and that they deserve.”
Councilmembers who supported the increase highlighted the work city staff did to identify departmental cuts over the next two years.
Sukh Kaur (District 1) called the proposed budget a “happy medium” between cuts and a rate increase. Kaur highlighted the $48.9 million fund balance for the end of FY28 as an accomplishment for city financial planning.
“Moving capital from one space to another that is just short-term isn’t going to solve our long-term challenges,” Kaur said. “So, finding ways to plan ahead and keeping some reserve there for next year, I think, is a very smart financial move.”
Ric Galvan (District 6) said the government should intervene when it can to support residents whose tax dollars fund the city. He said he is open to budget cuts but wary of cutting programs “to the bone” and placing additional burdens on residents who rely on city services.
“We can of course cut the fluff, but let’s not also pretend that the fluff will disappear,” he said.
Moving forward
The Aug. 13 ordinance does not end the debate over the tax rate or budget cuts. The proposed budget can be amended, and the tax rate reduced, before final approval on Sept. 17.
The first budget work session is scheduled for Aug. 17, with budget reductions and revenues listed as staff presentations. The town halls also begin Aug. 17 with Districts 2 and 7. Budget and tax rate hearings are scheduled for Sept. 2 and 10.
The proposed budget would eliminate the projected deficits in FY27 and FY28, while reducing projected deficits in later fiscal years. City Council will continue reviewing the proposal before the final vote Sept. 17.