Straight From the Source

Frequently Asked Questions About the City’s Budget, Reserves, and Spending

Is the City of Kemah running a deficit?

No. The City Council adopted a balanced budget for FY 2025–26. Revenues and expenditures are aligned, and there is no structural deficit in the approved budget.

There is a deficit of $296,894, which is for the drainage project, which is the matching portion of the TDA GO Grant. The City proposed a $296,894 transfer from General Fund reserves as part of grant match percentage of 59.4% of the $500,000 grant.

Grant-funded projects often require a local match, and cities frequently use reserves for this purpose.

Did the City increase the property tax rate this year?

No. The property tax rate remained exactly the same as the previous year. There has been no tax increase tied to any project, reserve transfer, or expenditure.

Does Kemah currently have debt?

No. The City does not currently hold any debt. Kemah has followed a conservative policy of paying for projects up front, using reserves rather than borrowing.

How healthy are the City’s financial reserves?

Kemah maintains a strong “rainy day” fund to ensure stability.

• Before the proposed transfer: 188 days of operating reserves
• After the proposed transfer: 174 days of operating reserves

Both levels fall within accepted best-practice ranges for municipalities. (Note: Double-check these numbers as “after” is higher than “before.” If that is correct due to updated revenue projections, it’s worth explaining. If not, simply reverse the numbers.)

Is the City engaged in a “spending spree”?

No. The City’s budget reflects planned, transparent spending tied to specific goals, including community parks, public safety, and infrastructure. Budget decisions are made through public meetings, posted agendas, and adopted budgets—not unplanned or uncontrolled activity.

How does the City handle legal matters and potential liabilities?

The City follows formal legal processes and relies on guidance from its attorneys.

While litigation cannot be discussed in detail outside official channels, financial planning accounts for known obligations and maintaining reserves for unexpected needs.

Updates are shared through official City communications when appropriate.

What about other City projects?

KCDC continues to invest in development projects that support local businesses, tourism, and Kemah’s long-term economic strength.Its funding is dedicated sales tax revenue and does not affect the General Fund or property tax rate.

Is the Kemah Community Development Corporation (KCDC) running a deficit?

Yes, KCDC is projecting a deficit of $234K in the upcoming year, as it pursues a grant for the 57-Acre Park & Nature Area. If awarded, this grant will accelerate improvements to the park, allowing the project to move forward more efficiently and at a lower long-term cost. The estimated match requirement for the project is $775,278. KCDC is funded solely through sales tax revenues, not property taxes.

Where can I review the official financial documents myself?

Residents can access a range of public financial documents, including:

City Finances & Budget

• Tax Rate Information
• Annual Budget Documents
• Quarterly Financial Reports
• Check Registers
• Comprehensive Annual Financial Reports
• KCDC Financials
• Reserve Fund Information

How can residents stay informed?

Residents may follow updates through:

• The City’s website
• Public meetings and posted agendas
• Official City social media pages
• Budget and financial transparency portals

The City appreciates the community’s interest and remains committed to open communication.