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Type:
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Adoption
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Status:
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Agenda Ready
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On agenda:
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5/5/2025
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Final action:
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Title:
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Adoption of an Ordinance to Appropriate Funds and Levy Taxes for Fiscal Year 2026
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Subject
title
Adoption of an Ordinance to Appropriate Funds and Levy Taxes for Fiscal Year 2026
end
Department
Finance
Recommendation
Staff recommends that the Mayor and Council adopt the attached Ordinance to Appropriate Funds and Levy Taxes for Fiscal Year 2026 through the following actions: 1) motion to amend the ordinance as modified in Attachment 1, seconded, and passed; and 2) motion to adopt the amended ordinance, seconded, and passed.
Change in Law or Policy
Adoption of the Operating and Capital Improvements Program (CIP) budgets will require passage of the standard budget ordinance. This budget ordinance was introduced by the Mayor and Council on March 17, 2025.
Discussion
In accordance with the City Charter, the Mayor and Council adopt the budget at the fund level. The attached ordinance (Attachment 1) sets the FY 2026 property tax rates, FY 2026 operating budget, and FY 2026 Capital Improvements Program (CIP) budget for each fund. The tax rates and budget figures presented in the ordinance are consistent with the Mayor and Council's direction throughout the FY 2026 budget process.
Community engagement is a core component of Rockville’s budget process. The FY 2026 budget process included three budget public hearings, a community budget priorities survey, and community Propose-A-Project submissions. A summary of all public testimony, including Propose-A-Project submissions can be found in Attachment 2. The final community budget priorities survey report can be found in Attachment 3, with 767 responses in total.
Throughout the budget process, staff received questions from the Mayor and Council on the City Manager’s proposed budget. The Budget Q&A document was maintained throughout the process and used to track questions received and staff responses. The final Budget Q&A can be found in Attachment 4.
Final Budget Adjustments
The adjustments made to the FY 2026 budget include an increase to tax duplication revenue, administrative adjustments (including personnel updates), a reduction in the allocation to REDI, adjustments to several of the city’s community services and enrichment grants, the addition of funding for a feasibility study for a park shelter with a restroom at Woottons Mill Park and for noise abatement studies along Gude Drive, and increases in the addition to reserves specifically for emergency assistance and Rainbow House Shelter. Tables showing General Fund revenue and expenditures changes by category are summarized below.
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General Fund Revenue |
FY 2026 Proposed |
FY 2026 Adopted |
Dollar Change |
Percent Change |
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Property Taxes |
$51,610,000 |
$51,610,000 |
$0 |
0.0% |
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Other Gov’t |
$37,281,560 |
$37,754,960 |
$473,400 |
1.3% |
|
Fines/Forfeiture |
$2,234,100 |
$2,234,100 |
$0 |
0.0% |
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Use of Money/Property |
$2,130,730 |
$2,130,730 |
$0 |
0.0% |
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Charges for Services |
$8,967,140 |
$8,967,140 |
$0 |
0.0% |
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Licenses and Permits |
$5,069,070 |
$5,069,070 |
$0 |
0.0% |
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Other Revenue |
$9,321,900 |
$9,321,900 |
$0 |
0.0% |
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TOTAL |
$116,614,500 |
$117,087,900 |
$473,400 |
0.4% |
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General Fund Expenditures |
FY 2026 Proposed |
FY 2026 Adopted |
Dollar Change |
Percent Change |
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Personnel |
$70,372,340 |
$70,298,240 |
($74,100) |
(0.1%) |
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Operating |
$18,292,250 |
$18,404,650 |
$112,400 |
0.6% |
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Capital Outlay |
$4,546,430 |
$4,546,430 |
$0 |
0.0% |
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Other |
$7,890,070 |
$7,807,170 |
$82,900 |
(1.1%) |
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CIP Transfer |
$9,800,000 |
$9,800,000 |
$0 |
0.0% |
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Transfers Out |
$5,063,410 |
$5,063,410 |
$0 |
0.0% |
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TOTAL |
$115,964,500 |
$115,919,900 |
($44,600) |
(0.0%) |
General Fund Tax Rates and Tax Credits
The Mayor and Council establish the tax rates each year in order to finance General Fund activities. For FY 2026, the City’s real property tax rate is set to remain unchanged at $0.292 per $100 of assessed value (note: the City has not increased its real property tax rate since 1995). The personal property tax rate is set to remain unchanged at $0.805 for every $100 of assessed value. In FY 2026, total property taxes are estimated at $51.6 million, or approximately 44 percent of the General Fund revenues.
Parking District Tax Rate
In order to support the debt service costs of the three City-owned garages in Town Square, the Town Center Parking District was formed in 2007. The Parking District is a special taxing district that levies a real property tax on the commercial properties within the Town Square boundaries. The FY 2026 Parking District tax rate is set to remain flat at $0.33 per $100 of assessed value.
FY 2026 Operating Budget
The total FY 2026 all funds operating budget of $175.5 million increased by $7.1 million, or 4.2 percent, from the FY 2025 adopted budget. The General Fund budget increased by $8 million or 7.3 percent. The following chart shows the total operating appropriations by fund for FY 2025 and FY 2026:
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Operating Fund |
FY 2025 Adopted |
FY 2026 Adopted |
Dollar Change |
Percent Change |
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General Fund |
$109,081,850 |
$117,087,900 |
$8,006,050 |
7.3% |
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Water Fund |
$15,827,850 |
$16,314,940 |
$487,090 |
3.1% |
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Sewer Fund |
$15,546,630 |
$15,982,230 |
$435,600 |
2.8% |
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Refuse Fund |
$8,902,760 |
$8,759,240 |
($143,520) |
-1.6% |
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Parking Fund |
$2,791,920 |
$2,926,520 |
$134,600 |
4.8% |
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Stormwater Mgt Fund |
$7,319,350 |
$7,625,700 |
$306,350 |
4.2% |
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Special Activities Fund |
$2,838,210 |
$1,797,500 |
($1,040,710) |
-36.7% |
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CDBG Fund |
$263,000 |
$263,000 |
$0 |
0.0% |
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Speed Camera Fund |
$1,305,930 |
$1,380,080 |
$74,150 |
5.7% |
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Debt Service Fund |
$4,455,600 |
$3,342,000 |
($1,113,600) |
-25.0% |
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TOTAL |
$168,333,100 |
$175,479,110 |
$7,146,010 |
4.2% |
FY 2026 CIP Budget
The total FY 2026 CIP budget of $120.7 million increased by $1.2 million, or 1.1 percent, from the adopted FY 2025 budget. The CIP budget generally fluctuates from year-to-year, depending on the number and type of projects that are funded. The FY 2026 budget includes a $9.8 million transfer from the General Fund. The following chart shows the total CIP appropriations by fund for FY 2025 and FY 2026:
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Capital |
FY 2025 |
FY 2026 |
Dollar |
Percent |
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Fund |
Adopted |
Adopted |
Change |
Change |
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Capital Projects Fund |
$63,912,767 |
$54,536,325 |
($9,376,442) |
-14.7% |
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Water Fund |
$22,094,904 |
$29,218,055 |
$7,123,151 |
32.2% |
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Sewer Fund |
$12,132,725 |
$15,249,173 |
$3,116,448 |
25.7% |
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Refuse Fund |
$741,022 |
$719,618 |
($21,404) |
-2.9% |
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Stormwater Mgt Fund |
$17,867,082 |
$19,619,853 |
$1,752,771 |
9.8% |
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Special Activities Fund |
$1,509,109 |
$ 1,370,286 |
($138,823) |
-9.2% |
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Speed Camera Fund |
$1,178,470 |
$0 |
($1,178,470) |
-100.0% |
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TOTAL |
$119,436,079 |
$120,713,310 |
$1,277,231 |
1.1% |
Impact Statements
Equity
The city’s budget development process requires that all operating and capital budget proposals provide equity impact statements. The FY 2026 budget includes funding for a number of items that are intended to promote more equitable outcomes for city residents. Such initiatives include but are not limited to funding allocations for expanded housing assistance programs, the development of a Justice, Equity, Diversity and Inclusion (JEDI) strategic plan, the addition of a 0.5 FTE ADA Coordinator, expanded access to free nature and swim programs for students attending Title 1 schools within Rockville, and the advancement of the development of the Talbott Street Park (RB25) project which is located in a park deficient area of the city.
Environment
The city’s budget development process requires that all operating and capital budget proposals provide environmental impact statements. The FY 2026 budget includes funding for a number of items that are intended to promote improved climate resiliency for the city. Such initiatives include but are not limited to funding allocations for the purchase of electric landscaping equipment, the development of a Green Space Management Plan, and the addition of 10 hybrid/electric vehicles to the city’s fleet.
Economy
The FY 2026 budget reflects the economic uncertainties that are facing the region. The city has historically maintained strong reserve levels which help to mitigate risks during periods with less predictable revenues. The FY 2026 General Fund budget includes a $1.2 million addition to reserves (revenues exceeding expenditures) which may be utilized for major initiatives under consideration during FY 2026 and/or to address emerging needs from the community. Finance staff will closely monitor revenues during the fiscal year. If the city needs to implement mid-year budget adjustments in response to changing economic conditions, these will be brought forward with a formal budget amendment.
Mayor and Council History
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Date |
Action Item |
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October 28, 2024 |
Public Hearing #1 |
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March 17, 2025 |
Public Hearing #2 Introduction of Budget Ordinance M&C Worksession #1 - Strategic Initiatives, Reorganization, Revenues |
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March 24, 2025 |
Public Hearing #3 Budget Worksession #2 - Operating Expenditures, Grants, Fund Balance |
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April 7, 2025 |
Budget Worksession #3 - Operating Expenditures, CIP, Grants, Debt Review, and Final Balancing |
Public Notification and Engagement
The FY 2026 budget public record closed on April 7, 2025. The final public hearing was held on March 24, 2025.
The FY 2026 budget process included multiple opportunities for public input, including “Propose-A-Project” submissions, three 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 2026. This form was available in 3 languages (English, Spanish, and Simplified (Mandarin) Chinese) and was posted through April 7, 2025. The final community budget priorities survey report is attached with the materials for budget adoption.
Boards and Commissions Review
The Financial Advisory Board met on April 9, 2025, to discuss the proposed FY 2026 Operating Budget and Capital Improvements Program (the budget). Over the course of several weeks, board members reviewed the budget and forwarded their questions and comments to staff. City staff responded in a satisfactory manner to the questions and met with the Board to discuss the budget document.
Consistent with its opinion in prior years, the Board believes that the proposed budget is clearly written and continues to serve as an effective policy document, financial plan, operations guide, and communications device. The Board recommends that the city continue to take a balanced approach in managing the finances of the city and intends to transmit a separate memorandum on the budget to the Mayor and Council.
Fiscal Impact
The proposed real and personal property tax rates and the appropriated amounts by fund for the FY 2026 operating budget and CIP are included in the attached ordinance (Attachment 1).
Next Steps
The FY 2026 adopted budget will begin July 1, 2025, and continue through June 30, 2026. The FY 2026 budget book will be posted to www.rockvillemd.gov/budget <http://www.rockvillemd.gov/budget> in July 2025.
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