Subject
title
Introduction and Possible Adoption of an Ordinance to amend Ordinance No. 14-25 to appropriate funds and levy taxes for FY 2026 (Budget Amendment #3)
end
Department
Finance
Recommendation
In accordance with the City Charter, since the budget ordinance is adopted at the fund level, a change in the appropriated amount of any fund requires action by the Mayor and Council. The vehicle for such action is an amendment to the budget ordinance. The proposed ordinance, Attachment 1, would amend the FY 2026 budget. The FY 2026 budget was adopted by the Mayor and Council on May 5, 2025, and amended on August 4, 2025, and on November 10, 2025.
If the Mayor and Council wish to proceed with adoption of the ordinance at the same meeting, the ordinance should first be introduced and then a motion should be made to waive the layover period. If the motion to waive the layover period is approved by an affirmative vote of six or more members of the Mayor and Council, a motion to adopt the ordinance may then proceed.
Discussion
The proposed ordinance, Attachment 1, would amend the FY 2026 budget. This amendment recognizes the items that are described in this agenda report and detailed on Attachment 2. The 2Q FY 2026 Financial Report is included as Attachment 3.
Operating Budget
Swim and Fitness Center program fees and temp wages, $20,000 General Fund, $20,000 revenue and expenditure increase: Swim and Fitness Center program participation and resulting revenue has exceeded estimates for the year. This cost-neutral adjustment ensures the Swim and Fitness Center has sufficient funding to cover staffing needs to support the increased program participation levels.
Choice Hotels grant, $156,000 General Fund expenditure increase: The city participated with Montgomery County by providing a contingent grant award as an economic development initiative for Choice Hotels International, Inc. This grant award amount has been carried on the city’s financial statements as a portion of nonspendable General Fund reserves during the performance period. The County has confirmed that Choice Hotels met the performance requirements established by the grant, so this amendment recognizes the grant expenditure and removes the grant from the nonspendable portion of General Fund reserves. Because this amount has been held in the nonspendable category, there is no impact to General Fund unassigned reserves.
One-time initiatives, General Fund expenditure increases for items identified below during the recent budget planning process, funded by a reduction in the planned addition to reserves:
• Rockville Economic Development, Inc. (REDI) business survey, $40,000: REDI completed its first business survey in 2021. Having periodic surveys helps better understand the needs of the business community.
• Neighborhood Plan consultant, $150,000: Consultant funds to assist in the development of updated master plans for the Rockville Pike and East Rockville Neighborhoods, which will be incorporated into the Comprehensive Plan once adopted
• SQL Server Licenses, $30,190: Replacement of three SQL servers that have reached the end of their useful lives
• Network risk and vulnerability assessment, $110,000: Third-party cybersecurity risk and vulnerability assessment including penetration testing of the city's internally-managed networks
• Police firearms red dot pistol transition, $69,000: Replacement of the RCPD duty pistols with red dot sight pistol systems. This transition responds to an immediate training requirement from Montgomery County Police and aligns RCPD equipment with contemporary law enforcement best practices
• Bottle filler fountains, $48,000: Install eight water fountains equipped with bottle fillers to promote sustainability, health, and accessibility across city facilities. Once installed, every city-owned facility will have at least one water fountain with bottle-filling capability
• Outdoor furniture and trash receptacle replacements, $50,000: Replace aging tables and benches across various city parks, and replace trash receptacles within the park system with ADA-accessible units
Contracted water main repairs, $275,000 Water Fund expense increase: The city’s water infrastructure has experienced a high volume of breaks this winter due to the extreme temperatures. Additionally, breaks occurring during the snow emergency required outside contractors as city personnel were involved in snow cleanup.
Water Treatment Plant emergency repairs and maintenance, $151,790 Water Fund expense increase: The Water Treatment Plant experienced failure of multiple pumps essential to the plant’s operations, requiring emergency repairs and additional maintenance.
Purchase of WSSC water, $50,000 Water Fund expense increase: This winter’s higher than average level of water main breaks required the city to purchase more water than budgeted from WSSC.
Truck-mounted crash attenuator, $42,000 total, split $14,000 Water Fund expense increase, $14,000 Sewer Fund expense increase, and $14,000 Stormwater Management Fund expense increase: The attenuator will be used with an existing truck to protect workers while working in or around roadways, particularly while performing excavation. The attenuator is made to absorb impacts from vehicles, reducing the likelihood of injuries both to occupants of the vehicle as well as city staff working in or around roadways. There have been several close calls with motorists while working in the roadways, especially higher traffic roads such as Rockville Pike, Hungerford Drive, Wootton Parkway, Gude Drive, Tower Oaks Boulevard, and Maryland Avenue.
Mobile lift replacement, $35,000 Refuse Fund expense increase: One of the two mobile lifts used for the city’s heavy duty fleet has reached the end of its useful life and requires replacement. The total cost of this vehicle lift replacement is $70,000, split equally between the General Fund and the Refuse Fund. The General Fund portion is being funded by vehicle replacement savings.
Storm drain equipment trailer, $32,000 Stormwater Management Fund expense increase: This trailer will also enhance operational efficiency by allowing staff to haul a mini-excavator and skid steer to a job site simultaneously. Currently the crew must unload one piece of equipment and go back to the maintenance yard to load the other piece of equipment and transport it to the jobsite. This cycle is repeated at the end of the day to return equipment back to the yard. The stormwater crew is currently borrowing an equipment trailer from the asphalt crew which is not always available, and is too high for this equipment, which makes loading and unloading the equipment unsafe.
Replenish contingency in several enterprise funds as follows to ensure these funds can address additional emergencies, should they arise:
• $65,000 Water Fund expense increase: To date Water Fund contingency has been used to address water meter needs, pipe survey credits, and overtime related to water main breaks.
• $65,000 Sewer Fund expense increase: To date Sewer Fund contingency has been used to address emergency sewer main repairs and failed control systems at the city’s wastewater pump stations.
• $31,000 Parking Fund expense increase: To date Paring Fund contingency has been used to address credit card fees beyond what was budgeted.
Capital Improvements Program (CIP) Budget
RedGate Park Master Plan Implementation (RE23), $1,500,000 Capital Projects Fund revenue and expenditure increase: Recognize a $1.5 million Land and Water Conservation Fund grant for RedGate Park from the State of Maryland Department of Natural Resources to fund the design and construction of community gardens, meadow restoration, playground, pathways, signage, equipment (picnic tables, benches, etc.), and the infrastructure to support these amenities. This grant requires a city match, which is already available with the project’s appropriated budget.
2Q FY 2026 Financial Report
As shown on Attachment 3, the current FY26 ending unassigned fund balance equals $32.5 million, which is $9.1 million above the FY26 reserve target. While this amendment does not recommend the use of unassigned General Fund reserves, staff recommends utilizing $4 million of the available reserve balance on the next budget amendment to support the FY 2027 - FY 2031 CIP budget.
Impact Statements
Equity
There are no direct equity impacts included on this amendment.
Environment
This amendment includes funding to ensure all city facilities have at least one water bottle filling station, promoting the use of reusable water bottles over disposable plastic.
Economy
This amendment includes recognition of an economic development incentive grant to Choice Hotels, as well as additional funding for REDI.
Mayor and Council History
This is the third budget amendment for FY 2026. The FY 2026 budget was adopted by the Mayor and Council on May 5, 2025, and amended on August 4, 2025, and November 10, 2025.
Fiscal Impact
The following operating fund(s) will be adjusted if this budget amendment is adopted.
TABLE 1
|
Operating Fund |
Amended Budget |
3/9/2026 Amendment |
Amended Budget |
|
General Fund |
$122,495,286 |
$176,000 |
$122,671,286 |
|
Water Fund |
$17,385,792 |
$555,790 |
$17,941,582 |
|
Sewer Fund |
$15,982,230 |
$ - |
$15,982,230 |
|
Refuse Fund |
$9,748,447 |
$35,000 |
$9,783,447 |
|
Parking Fund |
$2,926,520 |
$ - |
$2,926,520 |
|
Stormwater Mgt. Fund |
$7,981,891 |
$46,000 |
$8,027,891 |
|
Special Act. Fund |
$2,890,749 |
$ - |
$2,890,749 |
|
CDBG Fund |
$526,000 |
$ - |
$526,000 |
|
Speed Camera Fund |
$1,380,080 |
$ - |
$1,380,080 |
|
Debt Service Fund |
$3,342,000 |
$ - |
$3,342,000 |
|
Total |
$184,658,995 |
$812,790 |
$185,471,785 |
The following Capital Improvements Program (CIP) fund(s) will be adjusted if this budget amendment is adopted:
TABLE 2
|
CIP Fund |
Amended Budget |
3/9/2026 Amendment |
Amended Budget |
|
Capital Projects Fund |
$55,277,325 |
$1,500,000 |
$56,777,325 |
|
Water Fund |
$29,428,055 |
$ - |
$29,428,055 |
|
Sewer Fund |
$15,249,173 |
$ - |
$15,249,173 |
|
Refuse Fund |
$719,618 |
$ - |
$719,618 |
|
Stormwater Mgt Fund |
$19,619,853 |
$ - |
$19,619,853 |
|
Special Activities Fund |
$1,370,286 |
$ - |
$1,370,286 |
|
Speed Camera Fund |
$ - |
$ - |
$ - |
|
Total |
$121,664,310 |
$1,500,000 |
$123,164,310 |