Cotulla sets $2.9M budget

By Marc Robertson - Editor | October 4, 2023

Tax rate remains at 70 cents

Property owners in Cotulla will not see a rate hike in their taxes for the next fiscal year, following a council decision Wednesday evening, September 27, as part of a balanced budget of $2.968 million.
Councilors balked at raising the tax rate despite some utility service shortfalls in revenues over the past year, notably in solid waste collection, which has depended on general fund subsidy by an accumulated two million dollars over the past several years.
Councilors’ public hearings on the budget and discussions on the proposed tax rate were held in front of empty chairs during the past two months, as no local residents attended to provide input or make inquiries.
The city’s property tax rate has been pegged at 70 cents per $100 of taxable value; homeowners will continue to take homestead and veterans’ exemptions as before.
According to city finance director Ernesto Garcia III, property tax revenues should earn an estimated $507,000 for Cotulla’s general fund. The remainder of the city’s revenues include $78,000 in delinquent tax payments, and more than $2.46 million in sales tax revenues from local stores.
Hotel occupancy taxes generate more than $1.5 million to the city but may only be used for projects that further tourism and economic development, such as downtown attractions, city beautification, festivals and other public events. Long-term projects funded by the special account include the Plaza Florita restoration and purchase of historic buildings for repurposing as municipal facilities for public events.
As much as 25 percent of the sales tax revenues channeled into the city’s general fund are earmarked for economic development, and those projects include utility service improvements or extensions in portions of the community that are targeted for commercial growth.
Equipment purchases anticipated for 2024 include three service trucks and a street sweeping machine, according to City Administrator David Wright, who told councilors last week that the trucks may be bought for a total of $165,000, but that a street sweeper costing nearly a quarter million dollars may be financed over a three-year term.
The motion to set the budget was made by Councilor Eloy Zertuche, seconded by Councilor Manuel Rodriguez and supported unanimously. The council decision to continue the same property tax rate was made on a motion by Councilor Tanis Lopez, seconded by Zertuche and likewise supported unanimously.
Wright told councilors last week that he expects the city’s debt service amounts to decrease by three percent in the coming year and that the amount will enable the city to put more funds into its operating budget. The fluctuation falls within the acceptable range for a council decision without requiring an election.
“We have to meet rising expenses at City Hall,” the city administrator said last week. “With the amount of money that we anticipate collecting, based on the same tax rate and with these sales tax revenues, we have to find a way to pay for equipment, supplies, employee salaries, insurance, and daily operations, which are all going up.”
Garcia confirmed last week that the decrease in debt service is due to the city having paid off two short-term loans during 2022-23. Four large loans remain, he said, and are related to the city’s ongoing infrastructure improvements, notably in water and sewer services.
Both Garcia and Wright said in a Friday interview that a long-term overview of city expenses supports data that indicates inflation has increased by 16 percent over three years, affecting the city’s purchasing power and new construction.
The city administrator said he is confident that Cotulla will fulfill its budget obligations based on the anticipated revenues. Wright said Cotulla has experienced property tax collection rates as high as 98 percent in recent years, due in large part to the work of Ronald Rocha, contracted by Cotulla to pursue delinquent payments.
Wright acknowledged, however, that Cotulla faces a hurdle in its ability to launch new projects with its revenues because a large portion of the city’s sales tax revenues must be committed to supporting municipal departments that fail to break even.
Councilors agreed earlier in September to contract Capex Consulting for a utility rate study that Wright describes as long overdue.
“Our utility rates have not gone up in years, and an increase that had been set for 2018 never took place,” the city administrator said. “All of our utility departments are now being subsidized by the general fund, and that was never the council’s intent.
“Each department should be operating independently, with its own revenues meeting expenditures,” Wright said. “Unfortunately, we are not at that point yet. A rate study will tell us if and where we might earn more, and this in turn will help us use our general fund revenues for the projects that the citizens demand.”