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“People are still recovering…”
Despite a $13 million dip in the city’s overall property values, Pearsall city councilors have decided not to raise taxes.
A week after talks began on raising the tax rate by eight cents per $100 of appraised value to meet budget expectations, councilors expressed their desire to keep the tax rate at 86 cents.
According to City Manager Federico Reyes, documents filed at the county appraiser’s office show the collective appraised values of homes in Pearsall at $317 million, which represents a $13 million decrease from the previous year.
During a Tuesday, August 3, meeting, councilors learned the proposed balanced budget was based on the ‘no new revenue’ rate of 91 cents.
The eight-cent increase would equate to an additional $114,000 in revenue for the city.
Councilor James Leal was opposed to the tax increase, citing the recent pandemic.
“Just got through with a pandemic and people are still recovering and we want to raise taxes,” Councilor Leal said.
According to Reyes, the interest and sinking rate for debt services equates to $1.2 million in expenses this fiscal year.
Santos Alarcon, former finance director for the city, explained the budget in detail to councilors, saying that 30 percent of the revenue was attributed to ad valorem taxes, 15 percent was sales tax and 22 percent was from the PILOT agreement with South Texas Electrical Cooperative.
During the recent annexation, STEC opted to enter a PILOT agreement with the city in lieu of annexation.
The sales tax is down fifteen percent from prior years,” the former finance director said. “We are anticipating steady amounts, but again that is unknown.”
Alarcon said the city could plan street projects with $1.2 million that the city would receive this year and next year from the federal government.
“This will help the city move forward,” he said. “That extra money will help secure funding we need for infrastructure projects.”
Alarcon warned that the city has not had an increase in ad-valorem taxes in two or three years and the city has seen a steady decline in sales tax revenues with an increase in expenditures.
Reyes told councilors on Aug. 10 that if they decide to keep the same tax rate, they would need cut the budget by $110,000.
“If we decrease the budget to go back to no new revenue, we go down by $70,000, and we would also add an increase for a municipal judge salary and budget by $40,000; we will have to make cuts,” Reyes said. “I would ask that we use some of the remaining bond money to do street improvements.”
Reyes is proposing to add $250,000 from the bond monies to the $300,000 street budget and asks that the city pay for the master drainage study with federal rescue funds.
Alarcon reiterated that keeping the tax rate the same still accounts for 43 cents in interest in sinking.
“Right now the city is in a unique position with ARP money,” he said. “but it does not last. It is some flexibility but it is a one-time deal. If you decide to not raise the taxes, it will correspond with the city’s history not to increase taxes but does affect the upcoming years, and with that mentality as you embark on more projects, it will increase the debt service as you float more bonds.”
Councilor Davina Rodriguez expressed her concerns over raising taxes and the possibility of the pandemic affecting the economy again.
“We are getting 1.3 million,” Rodriguez said. “That money is to put the people at ease, help us through a pandemic. We have a lot of positions that are not filled. What I am asking the council to do, and think about this: people lost their jobs. And this money that our government gave us was to keep us afloat for two years. We got to not do this. Just because some of us don’t wear masks, it is not over.”
Councilor Julian Hernandez agreed the tax rate should remain the same for this fiscal year.
“I say we leave it at 86 because I would like to see the employees get on track with the new salary scale,” Hernandez said.