Subject
title
FY 2027 Budget Worksession #3 -Capital Improvements Program, Debt Review, and Final Balancing
end
Department
Finance
Recommendation
Staff recommends that the Mayor and Council review the FY 2027 Proposed Operating Budget and Capital Improvements Program, and provide direction as needed.
Discussion
This is the Mayor and Council’s third budget worksession related to the FY 2027 Proposed Operating Budget and Capital Improvements Program. As part of this worksession, staff will provide an overview of the city’s Capital Improvements Program (CIP), including the FY 2027 CIP budget, planned debt, and highlights of capital projects by program area. As part of this final worksession, staff will share the recommended changes between the proposed and adopted budget and seek final direction ahead of budget adoption. The objective of this worksession is to provide greater insight into the FY 2027 Capital Improvements Program and allow time for final direction and a balancing exercise. The budget worksession presentation (Attachment 1) provides a high-level summary of the content provided in the FY 2027 Proposed CIP Budget.
CIP Overview
The Capital Improvements Program, or CIP, maps the city’s capital investment plan over a five year period. The CIP is both a fiscal and planning device that allows the city to monitor all capital project costs, funding sources, departmental responsibilities, and project schedules. Each year, the CIP is reviewed within the context of ongoing city, County, State, and Federal planning programs and policies, as well as the city’s Comprehensive Plan. The new year of the CIP, along with any unspent prior appropriations, comprise the capital budget for each project beginning July 1 of each fiscal year. The remaining four years of the CIP serve as a financial plan for capital investments. The five year financial plan is reviewed and updated each year, and the Mayor and Council adopt both the capital budget and the five year financial plan.
Projects in the CIP are organized into five program areas: General Government, Recreation and Parks, Stormwater Management, Transportation, and Utilities. Each program area in this document includes an overview section followed by individual project summaries, shown in alphabetical order for each project within the program area. These program area overviews and individual project summaries are located in the CIP Projects <https://city-rockville-md-cleardoc.cleargov.com/19982/759530/d> section of the budget document.
The CIP includes both recurring and non-recurring projects. Recurring CIP projects, which involve ongoing major improvements, rehabilitation, or repairs (such as major street repaving or water infrastructure rehabilitation), are budgeted in five year increments. These projects are readily identified in this document by the inclusion of the five year timeframe at the end of the project title (for example, Asphalt/Concrete Improvements: FY26-FY30). Non-recurring (discrete) projects have defined beginning and end dates and long useful lives. These investments are generally capitalized as fixed assets and are eligible for debt financing according to the city's Financial Management Policies. The majority of the projects in the city’s CIP are discrete projects.
An interactive map of discrete projects that are funded in the FY 2027 CIP can be seen at www.rockvillemd.gov/FY27CIPprojects <http://www.rockvillemd.gov/FY27CIPprojects> and includes the option to add a layer displaying the Community Equity Index. The Community Equity Index (CEI) is a composite measure of equity-related indicators developed to help analyze existing conditions in neighborhoods and to explore factors that may contribute to social inequities in Montgomery County. It describes each neighborhood’s level of advantage or disadvantage based on its combined indicator score compared to the county’s overall score of five indicators: poverty status, education level, English language proficiency, housing tenure, and per capita income.
The CIP relies on multiple types of funding sources to advance the city’s projects. The city seeks outside funding sources when possible, to meet capital needs without affecting taxpayers and/or ratepayers. Funding sources incorporated in the FY 2027 Proposed CIP include:
• Pay-As-You-Go (Paygo) Funding - Current resources used to fund capital projects, including General Fund transfers, enterprise fund revenues (Water, Sewer, Refuse, Stormwater).
• Bond/Loan Proceeds - Long-term financing from the issuance of bonds or loans to fund capital projects, including programs such as the Drinking Water State Revolving Fund (DWSRF).
• Grant Funding - External funding from federal, state, or other agencies for specific projects; does not require repayment but may include matching requirements.
• Developer Funding - Contributions from developers to support public infrastructure improvements associated with private development.
• Other Funding Sources - Additional revenues not captured above, including County impact taxes, State bond bill funding, and MDOT SHA contributions.
Debt Management
The city currently has $22 million in taxpayer supported debt and $78 million in Enterprise Fund debt. During FY 2027 the city will retire $10.3 million in outstanding debt. Neither Maryland State law nor the City Charter mandates a limit on municipal debt, however the city's Financial Management Policies establish parameters that are designed to ensure that debt burdens remain within manageable levels. No bond issuance is planned for FY 2027, but the CIP anticipates that enterprise debt will be issued in FY 2028 and FY 2030, and that taxpayer supported debt will be issued in FY 2029. The city often seeks to combine two fiscal years' worth of debt issues into one issue to reduce costs and increase efficiency. The Mayor and Council will receive a Notice of Intent Resolution for projects that will incur expenditures before the new bonds are issued.
Bond issuance decisions are guided by a combination of financial capacity, project needs, and regulatory considerations. The city evaluates overall debt service affordability, existing obligations, and credit rating impacts alongside the timing of capital projects and prevailing market conditions. Additional factors, including pay-as-you-go funding strategies, legal and policy constraints, and federal arbitrage regulations, further shape when and how much debt is issued. Together, these elements ensure that borrowing is approached in a coordinated, sustainable manner aligned with long-term financial goals.
FY 2027 Capital Budget
The FY 2027 proposed CIP budget includes new appropriations of $35.2 million to address the priorities of the Mayor and Council and residents of Rockville. This new funding combined with prior year carryover funding of $93.1 million, supports a total of 56 capital projects in FY 2027 for a total of $128.3 million in appropriations. A summary of the proposed appropriations by Program Area can be seen in Table 1. The carryover amounts will be updated for the adopted budget ordinance to reflect expenses to date.
Table 1 - FY 2027 CIP Appropriations by Program Area
|
|
CIP Appropriations |
|
Program Area |
Carryover Funding |
New Funding |
Total FY 2027 Appropriations |
|
General Government |
4,432,396 |
1,991,140 |
6,423,536 |
|
Recreation and Parks |
10,642,637 |
8,315,840 |
18,958,477 |
|
SWM |
19,046,814 |
1,094,000 |
20,140,814 |
|
Transportation |
19,192,172 |
14,105,820 |
33,297,992 |
|
Utilities |
39,744,171 |
9,688,000 |
49,432,171 |
|
|
|
|
|
|
Total |
$ 93,058,190 |
$ 35,194,800 |
$ 128,252,990 |
Highlights of the FY 2027 CIP by Program Area can be seen in the budget worksession presentation in Attachment 1 and the corresponding project pages can be found in the CIP Projects <https://city-rockville-md-cleardoc.cleargov.com/19982/759530/d> section of the proposed budget document. A listing of all projects with new or carryover funding for FY 2027 can be seen in Attachment 2. There are seven new discrete projects presented in the FY 2027 through FY 2031 capital budget, which are listed along with a basic description (note: not all new projects are funded or are scheduled for FY 2027).
• Building Energy Performance Improvements (NEW1) - This project plans, designs, and implements building energy improvements at city facilities to support compliance with Montgomery County and Maryland Building Energy Performance Standards (BEPS) and implementation of the Climate Action Plan
• Civic Center Maintenance Yard Improvements (NEW2) - This project enhances the security, functionality, and sustainability of the Civic Center Maintenance Yard.
• King Farm Farmstead Park Master Plan Implementation - Phase 1 (NEW3) - This project funds the implementation of phase one of the King Farm Farmstead Park Master Plan including design and renovation of the main farmhouse and Dairy Barns, and a bridge that will connect the two Dairy Barns.
• Woottons Mill Park Pavilion Plan (NEW4) - This project funds the construction of a park pavilion in Woottons Mill Park based on the results of the feasibility study commissioned in October 2025.
• Stream Restoration: Woottons Mill Park (NEW5) - This project designs and constructs stream restoration within Woottons Mill Park, beginning at Watts Branch Parkway and at Hurley Avenue, continuing downstream to Wootton Parkway.
• Shady Grove WMATA Access Road Streetlighting (NEW6) - This project designs and constructs streetlights on the WMATA Access Road between MD 355 and Somerville Road at the Shady Grove Metro Station. The roadway is used by pedestrians, bicyclists, and commuters from the King Farm neighborhood.
• Water Treatment Plant Storm Drain and Culvert Rehabilitation (NEW7) - This project rehabilitates a metal storm drain within the Water Treatment Plant and rehabilitates and protects five stream culverts between the Water Treatment Plant intake structure at the Potomac River and the plant necessary to protect the raw water pipe and electrical and communication lines.
Changes Between Proposed and Adopted
Following the preparation of the proposed budget, the city became aware of several changes that will need to be reflected in the adopted budget. In addition, changes include an updated personnel forecast that brings forward adjustments for employee turnover and other changes. For the General Fund, the net impact of all adjustments provides remaining operating budget capacity of $131,400 which will be the focus of the Mayor and Council’s final balancing exercise. A summary of all recommended changes is provided in Attachment 3.
Mayor and Council Considerations
This is the final FY 2027 budget worksession. Staff recommends that any requested revisions to the operating or capital budget be communicated during this final worksession so that they can be incorporated into the FY 2027 budget ordinance.
The Mayor and Council also routinely submit questions on the proposed budget document. A listing of questions and staff responses can be found at www.rockvillemd.gov/budget <http://www.rockvillemd.gov/budget>.
Mayor and Council History
|
Date |
Action Item |
|
November 10, 2025 |
Budget Public Hearing #1 Budget Timeline Presentation |
|
January 5, 2026 |
Mayor and Council Priorities Discussion |
|
March 9, 2026 |
Public Hearing #2 FY 2027 Budget Introduction M&C Worksession #1 - Strategic Initiatives and Revenues |
|
March 23, 2026 |
Budget Public Hearing #3 M&C Worksession #2 - Operating Expenditures and Grants |
Public Notification and Engagement
The FY 2027 budget public record is closed as of April 13, 2026. The final public hearing was held on April 13, 2026 (the same night as this worksession item).
The FY 2027 budget process included multiple opportunities for public input, including “Propose-A-Project” submissions, four budget public hearings, and offering written testimony to be included in the budget public record.
The Rockville community also submitted an online budget survey to communicate their budget
priorities for FY 2027. This form was available in 3 languages (English, Spanish, and Simplified (Mandarin) Chinese) and was posted through April 13, 2026. The final community budget priorities survey report will be attached with the materials for budget adoption.
Boards and Commissions Review
The Financial Advisory Board performed a comprehensive review of the FY 2027 Proposed Budget and engaged city staff in a Q&A on items contained within the budget document. City staff met with the Board on March 25, 2026 and discussed a range of budget topics. The Financial Advisory Board will transmit a memo to the Mayor and Council prior to the adoption of the budget.
Fiscal Impact
The FY 2027 proposed operating budget appropriation by category and fund can be found in the Financial Summaries section of the budget document. The FY 2027 proposed CIP budget appropriation by fund, program area, and department can be found in the CIP Overview section of the budget document.
Next Steps
|
Date |
Action Item |
|
April 13, 2026 |
Budget Public Hearing #4 Close of the community budget priorities survey and public record M&C Worksession #3 - CIP, Debt Review, Final Balancing |
|
May 4, 2026 |
Adoption of FY 2027 Budget and Capital Improvements Program |