PRIOR CITY COUNCIL ACTION:

• March 25^th City Council Regular Meeting
  • Budget Schedule Overview, Parks 5-Year CIP, and all other 5-Year CIP Update
  • City staff informed City Council of four (4) specific dates for budget related meetings and workshops, including June 17^th (Budget Workshop #1), July 15^th (Budget Workshop #2), July 31^st (Budget Workshop #3), and, if needed, August 5^th (special meeting).
• April 5^th Strategic Management Workshop
  • Update on the progress on actions in the FY25 Strategic Plan and discussion on priorities for the future.
  • Council gave preliminary direction on Parks 5-Year CIP.
• June 17^th Budget Workshop #1
  • FY26 budget development, budget requirements, Fund Balance Policy, and development of a fiscally constrained 5 Year CIP
  • City Council was provided with the initial compilation of the FY26 General Fund Base Budget (preliminary line-item detail)
• July 8^th Council Workshop
  • At the Council workshop, City staff covered two topics – Rethinking the City’s Fund Balance Policy and Employee Market Compensation Study and Cost of Living Adjustment for FY26.
• July 8^th  Regular Meeting
  • During the regular meeting, the City Council gave direction to the city manager and staff on the City Fund Balance Policy, Employee Market Adjustments and COLA, and the 5-Year Fleet Replacement CIP.
  • Fund Balance Policy. City Council discussed amending the fund balance requirement and supported modifying it from 28% to 25% under Item 8.J. This modification was supported by the information provided during the workshop.  A motion passed to modify the Fund Balance Policy and to set the minimum fund balance at 25%.
  • Employee Market Compensation and COLA. City Council received a presentation and discussed adjusting employee compensation to provide competitive compensation based on employees’ knowledge, skills, and experience relative to what the comparable cities are paying for similar positions as well as discussed options for a Cost of Living Adjustment (COLA) for positions that were not being adjusted under Item 8.K. A motion passed to move affected employees to 100% of market with up to a three percent (3%) COLA for other employees not receiving a market adjustment as funds are available.
  • 5-Year CIP and Fleet Replacement. City Council received a presentation and discussed the City’s fleet replacement capital improvement plan (CIP) and how it fit into the 5 Year CIP under Item 8.L. A motion passed to support the 5-Year Fleet Replacement Plan as presented.
• July 15th Budget Workshop #2
  • Discussion/Direction on FY26 Budget, including the Economic Development Fund, Development Services Fund, Water/Wastewater Utility Fund, Drainage Utility District Fund, Special Revenue Funds, General Fund, and Other Items
  • City staff presented a preliminary FY26 General Fund with a 26% Fund Balance along with a preliminary budget for all other funds.
• July 31st Budget Workshop #3
  • City Manager committed to finding an additional $100,000 in reductions to the General Fund expenses from the initial proposed FY26 budget.
  • Tax Rate. City Council members each expressed their opinion on a tax rate to fund the FY26 budget. The majority of City Council members supported the Voter Approval Tax Rate (VATR) of $0.5226, but there was an emphasis on finding additional costs to cut in the budget. Council mentioned it needs to reduce its own budget because it was asking staff to make further cuts to the proposed budget.
  • General Fund Update. City Council expressed support for one-time costs, including Cash match for 2026 MVCPA grant, Litigation, Strategic partnership grants, Computer replacements, Special events, Library donation. On the fund balance, City Council learned with cost reductions and revenue adjustments in the General Fund that the current fund balance was calculated to be 26.8%. No concerns were expressed at this time.

• August 12^th City Council Meeting
  • Maximum Tax Rate and Public Hearing. City Council discussed setting the maximum tax rate and setting the date for the public hearing on the tax rate and subsequent adoption of the proposed 2025 (FY 2026) property tax rate under Item 10.G. A motion passed to set the maximum tax rate at $0.5226 and to set the date for a public hearing on the property tax rate on September 18, 2025.
  • Fee Schedule. City Council discussed and gave direction on the FY 26 Proposed Fee Schedule under Item 10.H. A motion passed to support the proposed fee schedule, which will return to be adopted by ordinance, on September 9^th.
  • Public Hearing on FY26 Budget. City Council set the date for the public hearing on the Fiscal Year 2026 Proposed Budget under Item 10.I. A motion passed to set the public hearing on the FY26 budget for September 18, 2025.
  • Submission of City Manager’s Proposed Budget. The City Manager submitted his proposed budget under Item 10.J. The proposed budget included a 2% COLA for positions not included in market adjustments for FY26, because the 2% was supported with available funds. In response to the discussion at the July 31^st Council Budget Workshop, the City Manager’s Proposed Budget made the following revisions to revenue and expenses the proposed General Fund budget to reduce costs by up to $100,000 from the initial, preliminary FY26 budget that had been submitted to City Council in June:
    • Adjust miscellaneous park and court fees, increasing revenue by $31,000
    • Reduce PPE and travel expenses in Police Department by $46,000
    • Reduce PPE and travel expenses in Fire Department by $19,000
    • Reduce IT by $12,000 for printing overages
    • Reduce PW Park supplies and maintenance by $8,500 and added .25 FTE for custodial staff
    • Reduce PW Streets supplies by $11,000
    • Reduce supplies and travel in administrative departments by $10K
  • One-time costs. City Council also supported the recognition of the following one-time costs in the General Fund, which the list no longer included the library contribution:
    • Identified one-time costs = $393K (from fund balance)
    • Cash match for 2026 MVCPA grant of $97,423
    • Litigation costs of $100,000
    • Strategic partnership grants - $12,000
    • Computer replacements - $110,000
    • Special events - $74,600
  • City Council’s Budget. Council requested the City Secretary to send possible reductions to the City Council budget. (An e-mail was sent to City Council on August 14^th from Peggy Cimics with suggested cuts of up to $8,000 in the City Council budget.) It also discussed whether to support the Tri-County Chamber membership ($5,250), but no direction was provided.
  • Senior Program Coordinator. Lastly, the City Council discussed increasing the City’s funding for the Senior Program Coordinator position that oversees the Cibolo Senior Program. They would like to see it funded at $20/hour or up to $22/hour. The proposed General Fund budget included $5,200 for this position, which would be provided to the SelRico non-profit that will fund a position for Meals on Wheels.
  • Cibolo Public Facility Corp. Fund. Further, in the Cibolo Public Facility Corporation Fund, the City Council gave direction to staff to reallocate the $50K for the consultant for federal grants to the City’s Neighborhood Traffic Management Program (NTMP).
• August 26^th City Council Meeting
  • Fund Balance Policy. City Council adopted Resolution 1728 to amend the City’s Fund Balance Policy under Item 11.C, reducing the amount of fund balance in the General Fund from 28% to 25%.  

• September 8, 2025
• The City held a Budget Town Hall at City Hall from 6:00 pm to 8:00 pm. This town hall was promoted on the City’s social media, website, and electronic signs.

• September 9th City Council Meeting

• Feedback on the City Manager’s proposed budget provided at the August 12th Council meeting:
  • Chamber Memberships. A majority of the City Council supported lowering the Tri-County Chamber membership fee from $5,250 to $650 (Government).
  • InCibolo Magazine. A majority of City Council supported retaining the funding for the InCibolo Magazine. No change.
  • Council Budget. The majority of the City Council supported reducing its expenses consistent with the suggested reductions from the City Secretary (per her August 14th e-mail) and to use the $8,000 to cover expenses for training or special projects for the volunteers on our boards. This is a net zero adjustment. The Council’s direction was to create a new line item to place the $8,000 and with the purpose for it to be used for boards to request funding from Council for special projects or training.
  • Senior Program. For the Senior Program Coordinator, Council supported increasing the City's funding toward this position. The proposed budget includes $5,200. An additional $2,000 was to be added to the budget to accomplish this hourly rate.
• City Council requested to see the difference between the initial, preliminary FY26 General Fund budget, which was provided at the Budget Workshop #1 on June 17^th, and the City Manager’s Proposed FY26 Budget that was presented on August 12^th. This will allow Councilmembers to see the reductions and changes at the line-item level that have occurred over the past few months and as represented by City staff in various presentations, including on August 12^th.
• City Council requested the City post actual salaries of employees. The examples provided were the City of Schertz and the City of New Braunfels.

BACKGROUND:

The City Manager's proposed FY26 budget includes a 2% COLA. At the July 8th Council workshop and at the regular meeting, City Council received a presentation and discussed adjusting employee compensation to provide competitive compensation based on employees’ knowledge, skills, and experience relative to what the comparable cities are paying for similar positions. During the regular meeting on July 8th, City Council continued discussing options for the market adjustment and a Cost of Living Adjustment (COLA) for positions that were not being adjusted under Item 8.K. A motion passed to move affected employees to 100% of market with up to a three percent (3%) COLA for other employees not receiving a market adjustment as funds are available. As the budget was further developed after this meeting, the COLA was adjusted to 2% to ensure a balanced budget. 

The FY26 Budget reflects market compensation adjustments for positions that were not adjusted to market in the prior year, and a 2% COLA for all those that are not being adjusted to market in FY26.  By fund, the total cost in the budget for these compensation adjustments are as follows:

• General Fund - $271,000
• Development Services Fund - $23,000
• Water/Wastewater Utility Fund - $24,000
• Drainage Utility District - $12,000

STAFF RECOMMENDATION:

Staff recommends approval of the 2% COLA as reflected in the FY26 Budget.

FINANCIAL IMPACT:

Total impact is calculated to be $330,000 city-wide.

MOTION(S):

I move to approve the 2% COLA as reflected in the FY 26 Budget.