McALLEN — After months of work and weeks of workshops, the McAllen city commissioners are set to approve a city budget of the next fiscal year that amounts to more than half a billion dollars.
The prepared budget for the 2021-22 fiscal year totals $519,394,182, up from the approximately $475 million budget approved for the current year.
While last year’s budget was a prediction of how badly the COVID-19 pandemic would affect city finances, this year’s budget is a prediction of how quickly the city can recover from the losses they did experience, according to City Manager Roel “Roy” Rodriguez.
“Last year we did a good job of becoming very, very conservative in revenues — saying ‘you know what, we’re going to be short by a lot, the question is how much’ — and then trying to cut back on expenses,” Rodriguez said. “And this year, it was trying to be optimistic … but you don’t want to over-emphasize that optimism.”
Mayor Javier Villalobos said that, like last year, they tried to be conservative.
“We knew that no matter what, it had to be a tight budget,” Villalobos said, “and even though we had some federal funds that we could allocate in different ways, of course we had to do that smart thing.”
One of the objectives in working on this budget was maintaining the momentum when it came to construction.
Last year, in light of the pandemic, the city wanted to take advantage of decrease in traffic by moving forward with street and drainage improvements. Those projects were either funded through the 2018 bond election or through certificates of obligation the city issued a few years ago.
Currently, the city has 50 projects in the works which Rodriguez said were easier to pursue when they didn’t have to worry about inconveniencing as many residents as usual.
“When you realize that you had maybe 20% of the usual cars out on the streets, we took advantage of that,” Rodriguez said.
For this next budget, one of their goals was to keep that going.
“We’re in construction mode, we have been now for over two years, and we’re going to be for the next three and that’s something that McAllen is really known for, is that we just never stop improving infrastructure,” Rodriguez said.
Another factor in the new budget was the result of a compensation study that was completed earlier this year.
The study resulted in salary adjustments for staff, outside of their fire and police departments, that cost more than $3 million.
Increases to fire and police personnel, that were a of result collective bargaining agreements with each department, cost an additional $1 million.
Of the city’s nearly 100 different funds, the general fund is their largest, totaling approximately $120 million for this next fiscal year. But out of the entire $520 million budget, the general fund makes up only about 25% of that.
This year, the federal government allocated approximately $42 million through the American Rescue Plan act, of which the city received half in May.
Many of those funds will be used for capital improvements, according to Villalobos.
“With the federal funds we received, we’re trying to do some capital improvement projects, kind of catch up on things that were in the back-burner in the previous year,” he said.
“We took a look at, for example, the conditions of our streets and they’re still in pretty fair condition but one of the things we’re looking at is trying to make sure that we allocate sufficient amount of funds so that our streets here in McAllen continue to be the best in the Valley,” Villalobos said.
The total amount for capital improvements came out to about $111 million.
Some of the losses the city saw from the COVID-19 pandemic were from the McAllen-Hidalgo International Bridge and from sales tax revenues.
For the 2019-20 fiscal year, the bridge transferred $5.2 million to the city’s general fund and for the current year, that dropped to $3.4 million. For next year, though, they’re projecting $4.8 million from the bridge.
As for sales taxes, the city received $45.6 million for the 2019-20 fiscal year, which Rodriguez pointed out was already dip from the previous year since because the effects of the pandemic had already been felt during that time.
For the current fiscal year, they city projected an even lower amount — a total of $42.9 million — however, they’re now estimating that they’re going to bring in $50.4 million.
In the 2021-2022 fiscal year, the city is projecting the upward trend will continue with $51.9 million.
“The optimism here is real and it should be because the bridges are still closed,” Rodriguez noted. “The numbers that we’re showing that look very favorable do not include our friends and families that can’t come across the bridge that are a big part of our economy so there’s reason to be optimistic.”
Villalobos reiterated that it was a tight budget but that the city would do whatever they could to provide the same level of services or better.
“With this budget, we should be able to,” he said. “The tax rate, of course, was not increased; we’ve tried to cover as much as we could without straining our tax payers even more because that has been difficult.”
“It’s difficult all over so us, here in the city, don’t want to make it even more difficult for anybody else,” Villalobos said.
The city commissioners are scheduled to vote on the budget during a city commissioners meeting on Sept. 27.