SAN BENITO — A utility management company might be helping the city offset a shortfall in water production revenue as officials get ready to dip into their new budget for the upcoming fiscal year.
Earlier this week, city commissioners passed the first reading of an ordinance calling for a $14.9 million general fund budget coming with $4.5 million in cash reserves while boasting a $1.5 million boost in sales tax revenue.
While officials plan to launch a $2 million street paving project, they’re also focusing on upgrading sewer lift stations as part of a state-mandated program facing a March 2023 deadline, Mayor Rick Guerra said Wednesday.
During the upcoming fiscal year, commissioners are also expected to consider reviewing the city’s water rates while working to offset a shortfall in water production revenue.
“The budget is healthy,” Guerra said, adding officials plan to set aside cash to cover the city’s share of grants.
“We have finances we can move around to match grants,” he said, adding the city’s started working with a grant writer. “Hopefully, we can stretch our finances to help out the city — what the city needs.”
Meanwhile, City Manager Manuel De La Rosa is boosting sales tax revenue projections to $5 million, up from $3.5 million in the city’s current $14.1 million general fund budget.
The new overall budget might include a management company’s operation of the city’s two water plants along with its sewer plant, City Commissioner Rene Garcia said.
During a meeting Tuesday, commissioners discussed hiring a company to more efficiently run the plants, including a $17 million water plant officials reopened late last year after a previous administration shut it down in 2014, arguing it didn’t properly operate.
In March, De La Rosa proposed hiring a utility management company months after discussing an $800,000 shortfall in the city’s water production fund which led him to consider boosting water rates that stand as some of the Rio Grande Valley’s highest.
“That’s probably not changed all that much,” Garcia said, referring to the deficit.
Garcia, who said reserves are helping to offset the shortfall, said water production revenues would fund a management company’s operations.
“We have to make our water system self-sufficient,” he said. “We do need help — these people are experts in what they do. We’ve had problems with the water plant. We want to turn things around. We feel we need the assistance of a water management company.”
Meanwhile, Don Gonzalez, the city’s financial advisor with Estrada Hinojosa & Company in San Antonio, recommended officials consider a water rate hike to help fund last year’s $9 million bond issue largely aimed at overhauling the city’s sewer system to comply with a 2012 Texas Commission on Environmental Quality order requiring the city meet a March 2023 deadline or face severe fines and corrective action.
Earlier this year, commissioners called for a $30,000 study to determine whether consultants would recommend a water rate hike.
“We’re going to be looking over our water revenue and see if it needs adjustment,” Garcia said. “It’s something we definitely have to consider. It costs money to produce water.”
Every year, officials set aside about $450,000 to fund street repairs.
But for the upcoming fiscal year, they’re planning to launch a $2 million street paving project, Guerra said.
“There’s more money in it,” he said, noting this year officials funded a nearly $1 million project. “The citizens deserve it. It’s about time we do something about it. The citizens are hammering us.”
Meanwhile, Garcia said he’s reviewing a list of 76 streets.
“We’re doing 10 streets a year and as we go through the year, we’re going to add to that,” he said.
After driving through town, Guerra said he’s added 46 streets to the big list.
“We still need some more. I’ll be adding some to it. From there we’re going to pick and choose,” he said. “We’re going subdivision by subdivision, section by section. What I’m looking at is, ‘What are the most damaged streets? Is it so broken up you can see the caliche?’”
Across the city, streets carrying students to school are a top priority, Guerra said.
“Some of them have buses with handicapped kids and to be bounced around in the bus — I’m going to see what we can do,” he said.
Meanwhile, officials plan to tap part of the city’s $9.6 million share of the American Rescue Plan Act to fund drainage upgrades weeks after widespread rains flooded some streets.
“That’s what we’re depending on,” Garcia said.
The city’s low-lying subdivisions include Liberty Estates, he said.
“I’ve had numerous calls from that area,” he said. “It’s a maintenance issue. We need to make sure the flow of rainwater is clear.”