By Karen Gleason
The 830 Times
City administrators will recommend an increase in the city’s property tax rate for the coming year, along with increases in some fees, city council members learned during a recent work session.
The city council listened to a lengthy presentation on the city’s general fund during a special work session on Aug. 6.
Before the presentation, Interim City Manager Manuel Chavez spoke to the council about the proposed general fund budget.
Chavez first noted that in the evening’s presentation on the city’s general fund, city council members would see a deficit in the general fund balance. He said the council would receive the complete proposed Fiscal Year 2024-2025 budget during its next meeting on Tuesday. He said the general fund budget in the final proposal will be “more balanced.”
Chavez next spoke about the city’s property tax rate, according to surveys performed every other year by the Texas Municipal League (TML).
Chavez showed a slide depicting a 20-plus-year history of the city’s property tax rate.
He said the city’s property tax rate has increased about one cent per year (per $100 of property value) over the past 21 years.
Chavez also explained the total property tax rate is divided into the maintenance and operation (M&O) rate, which goes into the general fund, and the interest and sinking (I&S) rate, which is used to pay off city debt.
He reminded council members the M&O portion of the tax rate needs to keep up with the city’s operational expenses.
“The I&S rate, there’s nothing we can do. We have to adopt an I&S rate based on the rate you need to pay off your debt. The M&O rate is the rate that suffers whenever there’s an adjustment to the overall tax rate and a reminder to everybody, that’s the amount that goes into the general fund,” Chavez said.
He said there is an increase in overall general fund expenditures and noted that the highest recurring expenses were in salaries
“The highest reoccurring expenditure is salaries, and as we continue to go up in salaries, if we’re not going up in reoccurring revenues, we’re going to get to a point where we’re going to have to make cuts elsewhere, and usually those cuts results in supplies, contractual. We’re going to have to make a decision on the revenues, establishing different revenues or looking at the existing revenues and making a recommendation for increases,” Chavez said.
The interim city manager then told the council staff will be recommending an increase in the city’s property tax rate, as well as increases in some city fees.
“When we present the proposed budget, one thing we are going to recommend – just putting it out there – is recommending a tax rate increase so we can add to that M&O rate to try and cut through the deficit we’ll see here tonight,” Chavez said.
He added, “Also, we’re going to have to look at increasing other fees that most likely haven’t been touched in more than a decade, and although those would be very minimal, those are required to keep up with the operating expenses that we have year in and year out.”
Chavez said city staff and council will also have to address the deficit presented in the general fund.
When Chavez asked if there were any questions, Councilwoman Carmen Gutierrez asked about the deficit in the proposal and Chavez said the current deficit in the general fund is just over $2.3 million.
“At the end of the presentation, I will address how we can tackle that,” Chavez said.
Assistant Finance Director Roxy Soto then took to the podium and went over the general fund in detail, starting with an overview of the fund’s revenues and expenses.
Soto noted property taxes make up 19.82 percent of the city’s general fund revenues and is one of the largest revenue sources for the general fund.
“The sales tax makes up 29.78 percent of general fund revenues. Current trends demonstrate a 3 to 4 percent growth over the next five years. The sales tax (revenues) are budgeted at $9 million, an increase of $77,200 or .49 percent compared to the adopted budget,” Soto said, also reminding the council that one-eighth of a cent of the city’s sales tax is allocated to the city’s economic development corporation.
She also went over other general fund revenues, including service charges, most of which she said were remaining “flat with minimal change.”
“And as Mr. Chavez mentioned, the plan is to update the existing fee schedule to reflect these that are contributing to our operating expenses,” Soto said.
Soto also went over personnel expenses.
“We have 315 full-time and part-time budgeted positions, 27 are seasonal and seven is our city council. . .This budget has a 2 percent cost-of-living adjustment (COLA) for non-civil, hourly and salaried positions. This is across the board, including department heads,” Soto said.
Soto then spent some time reviewing in detail the budgets for each of the individual divisions that make up the city’s general fund. The divisions include some of the city’s largest, such as police, fire, community services, public works and engineering, human resources, parks, recreation and streets and drainage.
The general fund is budgeted with a total of $32,537,800 in expenditures and a total of $30,219,500 in revenues.
Following the presentation, Gutierrez asked if the proposed budget included pay increases for the city’s civil service workers in the police and fire departments.
“I understand that there’s going to be a new civil service contract negotiated this year?” Gutierrez asked.
Chavez replied, “In the current presentation, it does. One of my recommendations, since at this point we’re about to get to the table to start negotiating with both (police and fire) associations, it doesn’t seem like we’ll get a deal done before Sept. 30, it’ll be in the next fiscal year, and one recommendation I will make so we can have a balanced budget is to exclude that until an agreement is reached and at the time, the administration has to provide a plan to cover the reoccurring expense with reoccurring revenue.”
The writer can be reached at delriomagnoliafan@gmail.com.
