City of Pearsall 2022-23 budget
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Last week I discussed how the city is set up to operate financially, through administration (General Fund) and utilities.
Today, we will look at the administration, or General Fund side, which, again, takes care of streets, parks, library, police, permits etc., and is funded by sales tax and property taxes.
I’ve been curious where Pearsall stands financially as a city, compared to other towns in Texas. We have our audit up to date which is good, but taking that data and seeing how our financial capacity stacks up to other cities has interested me. The Texas Municipal League (tml.org) has a great web site with all kinds of data on Texas cities.
I collected data on 120 Texas cities from this website with populations between 1,200 and 14,000 and did some analysis using each city’s tax base, tax rate, tax revenue, city population, and total outstanding debt for 2022. I wanted a large, diverse sample and used averages to see how we look financially compared to other towns. This is a view from 40,000 feet, it is more complex than this.
The average tax rate on these cities is 48.8 cents per $100 in value. Pearsall’s rate is 86.6 cents per $100 in value. We are on the high end. To help understand why our rate is higher, I took the tax base of these cities and divided it by the population. The average tax base, per citizen, in these towns is $114,000. Pearsall’s is $24,000 per citizen, almost five times less. Doing the math, on average, those cities would generate $114k/100x$.488 = $556 in tax revenue per citizen. Pearsall’s tax revenue per citizen is $24k/100x$.866 = $207. We don’t collect taxes per citizen, it’s by real estate properties, I didn’t have data for that, but one can see our tax rate is high, because our tax base is low. We still pay less in taxes than most cities. This formula shows citizens in these other cities pay, on average, 2.70 times higher taxes.
It has helped me see and understand how other cities structure their debt and what some of the parameters are. The key to understanding our ability to structure debt lies in our capacity to make the payments. Cities can mix funds from utilities, property taxes and sales tax revenue to make debt service and in any combination. Each city is unique, so these numbers obviously don’t tell the complete story. Pearsall has a tax base of $241 million, has $13 million in debt, has $2 million in property tax revenue, and a population of 10,000 (all rounded off). The average of these cities reviewed, reflect a tax base of $627 million, total debt of $10.7 million and real estate tax revenue of $2.6 million. Even though we have, on average, less tax base, higher debt and less tax revenue, there were a number of cities in this review like ours, with a lower tax base that had similar debt and tax structures. Towns with lower tax bases, as a rule, had higher tax rates.
Some towns are completely different from ours, for example Rockport, Texas, similar only in size.
Salaries in some of these towns surpass ours, so naturally they have higher operating costs. Costs like water well repair or replacement, and road construction are similar thanks to the bid process. Seeing these numbers reflects the challenges of meeting operating and maintenance costs as well as related debt service when our tax base is low. As a taxpayer, I appreciate a low tax base, but we have to generate the necessary revenue to meet our needs. This review has shown me that we are not in terrible shape.
In progressing our city, it’s important that citizens understand the challenges of any budget cycle. Hopefully this data brings more light to the subject. More to follow.
God Bless the City of Pearsall, the County of Frio, the State of Texas, the United States of America and You.
Ben T. Briscoe
Mayor of Pearsall