McAllen, McAllen City Commission, budget workshop, Fiscal Year 2026-2027, Champion Lakes Golf Course
Staff Report
McAllen TX - The McAllen City Commission will hold a budget workshop on Wednesday, Aug. 12, 2026, at 4 p.m. at Champion Lakes Golf Course, 2701 S. Ware Road.
The workshop agenda includes a discussion of the Fiscal Year 2026-2027 City of McAllen budget. The commission may also convene in executive session to discuss economic development matters, real property, personnel matters, and legal aspects of contracts.
City Manager Isaac J. Tawil presented a proposed $622 million budget for Fiscal Year 2026-2027 to the McAllen City Commission during two days of budget workshops held Aug. 4 and Aug. 5, 2026, at Champion Lakes Golf Course. The proposed budget represents an increase from last year’s $578 million budget and includes a recommended three-cent increase to the property tax rate, $240 million in capital projects, and five new positions in the general fund with additional enterprise positions under consideration.
Overall Budget and Tax Rate
General fund revenues are projected at $170 million against expenses of $169 million, leaving revenues over expenses of $1.6 million. The general fund ending balance is estimated at $110 million, representing 242 days of working capital, well above the city’s required minimum of 140 days. Each day of working capital equals approximately $465,000 in daily operating costs.
The proposed three-cent property tax rate increase returns the rate closer to pre-CARES Act levels, though still below historical highs. Tawil attributed the need for the increase to state legislative changes that reduced property valuations and expanded exemptions, resulting in a projected year-over-year decrease in revenue — the first such decrease in some time.
Sales tax accounts for approximately 43% of general fund revenue, with total estimated sales tax collections of $103 million. Property tax accounts for approximately 36%. Tawil noted that McAllen’s share of the regional sales tax has declined from approximately 50% in 2006 to about 37% in 2026, though the dollar value of collections has grown significantly over the same period.
Tawil emphasized the budget’s guiding principle of fiscal discipline, noting that the city holds a AA+ credit rating from Fitch, which affirmed the rating this year without requiring an interview.
“McAllen’s budget is our annual declaration of our fiscal discipline, preserves flexibility to invest in our people, our infrastructure and our future,” Tawil said.
The city carries approximately $100 million in debt with an annual debt service obligation of roughly $5 million, which Tawil described as very low relative to the size of the budget.
The proposed operating budget, exclusive of a cost-of-living adjustment, increases by 3.8%. A recommended 3% COLA, if approved, would bring the increase to 4.8%. Departments submitted $21.89 million in requests for additional appropriations; staff recommends $9.1 million as essential. Departments submitted requests for 31 new positions in the general fund; staff recommends five.
Capital Projects
Proposed capital projects total $240 million across all funds, up from $221 million last year. A long-term capital financing plan presentation has been rescheduled to Wednesday, Aug. 12, at Champion Lakes Golf Course at 4 p.m. Downtown investment strategy is not yet budgeted, with the city awaiting consultant recommendations. An FTA grant application of approximately $12 million is in process for downtown sidewalk improvements and related infrastructure.
Public Safety
Approximately 50% of general fund expenditures are dedicated to public safety. The police department budget includes a 3% pay increase per the collective bargaining agreement, a $530,000 IT server upgrade, and additional intersection cameras. The city manager noted the department does not use the Flock license plate reader system. An assessment of sidearms and long-gun upgrades is planned for mid-year.
The fire department faces a significant apparatus replacement challenge, with potentially four to seven trucks requiring replacement within a two-year period at approximately $1 million each. A Section 108 loan will fund one fire apparatus designated to a qualifying area, freeing up depreciation funds to accelerate replacement of additional units. A new fire station south of the city is in planning, with a staffing plan for bifurcation of Station 4 under development.
Fire Chief Juan Gloria addressed the commission on the department’s long-term planning.
“We have come up with a predictive plan for how often and when and what are for replacement and we’re starting to look at other alternative funding sources that we can potentially utilize into the future,” Gloria said.
EMS coverage is expanding from seven units during peak hours to eight, and from four overnight units to five, to address identified gaps in early morning service. Peak demand hours run approximately 5 a.m. to 8 or 9 p.m.
Golf Course
Champion Lakes Golf Course is trending toward another strong financial year. Construction documents for the new golf course are expected within two to four weeks. Phase one will not include a clubhouse, with a two-story building featuring a full-service restaurant planned for phase two. A temporary facility will be used when the course opens to avoid delaying operations.
Convention Center, Performing Arts Center, and Center for Urban Ecology
The convention center carries working capital of $10.66 million against annual expenses of $6.9 million, representing 564 days of operating reserves. The department manages more than 500 events per year across four venues, with more than 30% of attendees traveling 50 miles or more to attend. A new facilities maintenance position is proposed to oversee landscaping and infrastructure across all four venues.
For the Center for Urban Ecology, known as the Q, the budget includes $1.255 million in revenue, approximately $900,000 in appropriations, and five new employees. Opening is expected within the next couple of months. One real estate matter related to the Q was discussed in executive session.
Airport
Miller International Airport is on pace to reach one million passengers for a third consecutive year, the only Rio Grande Valley airport to achieve that milestone. The airport faced challenges this year including cancellation of the Mexico City route, Allegiant’s exit from the LAX market, rising fuel costs, and a 13% reduction in available seats. New routes to Phoenix on American Airlines, launched in June with a 90% load factor in the first month, and to Monterrey partially offset those losses. Airport operating activity is down approximately 8% year-over-year, with the budget request increasing only 1%.
Sanitation
Approximately $400,000 in additional equipment is recommended for the sanitation department, including dumpsters, recycling bins, rolloff containers, and facility improvements at the public works building. The department absorbed growth without adding new positions through software investment and route restructuring.
Budget Calendar
Capital projects and long-term financing plan presentation: Wednesday, Aug. 12, 4 p.m., Champion Lakes Golf Course
Budget wrap-up: Aug. 18
Public hearing: Sept. 14
Budget and tax rate adoption: Sept. 28
Source - City of McAllen