Donna budget grew despite pandemic hiccups

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DONNA — The COVID-19 pandemic continues to cause mixed repercussions across the Rio Grande Valley, and Donna is no different.

Despite precipitous drops in its international bridge revenues, the city is on track to continue a growth trend in the new fiscal year, which begins Friday. This after city leaders approved a $13.4 million budget and a 1 cent decrease in the property tax rate late last week.

While the pandemic has caused revenue decreases across some sectors of the city, it has also resulted in increases in others, such as the sales tax revenues, which saw a 9% increase.

At the same time, property valuations have continued to rise despite any pandemic-induced economic slowdowns. In Donna, those valuations rose by about 8% over the last year, according to Finance Director David Vasquez.

That means the city will generate more revenue this fiscal year, despite reducing the ad valorem tax rate by 1 cent.

BUDGET OVERVIEW

Overall, the city’s budget for fiscal year 2021-22 grew by 7.6% compared to last year, according to figures laid out in the budget approved by the Donna City Council last Thursday.

The $13.4 million approved budget increased by about $952,000 compared to the budget the council approved in fiscal year 2020-21.

Personnel costs account for the majority of that growth, though budget figures show the city will also be investing heavily in equipment and infrastructure over the coming year.

Federal COVID-19 relief funds are also contributing to that growth, allowing the city to purchase vehicles and give its 151 employees some $4,000 in premium pay.

“It’s another typical budget year. We minimized our expenditures as much as we could. We’re trying to be very frugal with our budget, very conservative,” Vasquez said.

Ongoing development of a new retail center promises to add to Donna’s sales tax coffers in the coming year, as well.

The city has partnered with a developer to build a shopping center that will house stores such as Burlington and Ross. While the commercial developer constructs the retail plaza, located along Farm-to-Market Road 493, the city has been pitching in by building the roads surrounding it, City Manager Carlos Yerena explained.

“We were able to work together with the developer to bring the developer and highlight our property and have him build the improvements. The city is assisting in helping build some of the infrastructure,” Yerena said of the shopping plaza, which is called the Shops at 493.

With the retail center slated to open in February, Yerena expects it will push Donna past the 9% growth in sales tax revenues the city projects to collect this fiscal year.

TOLLS AND TAXES

Though there are definite bright spots in the city’s budget, Donna has also had to struggle with revenue declines over the last year. Those issues will continue to affect it in the coming year, the budget shows.

Last year, city leaders projected to collect some $2 million in revenue from the Donna-Rio Bravo International Bridge; however, those revenues fell nearly half-a-million dollars short, the budget shows.

Overall, the international bridge fund finished the fiscal year short by about $881,000. That was due in large part to a complete absence of commercial traffic, and also an increase in some operating costs.

That, in turn, forced the city to step in to meet the deficit, the finance director explained.

“Our city runs an international bridge. With COVID-19 occurring, the pandemic, the revenues have gone like this,” Vasquez said, making a downward motion with his hand.

In 2019, Donna embarked on a plan to add commercial truck lanes to the international bridge.

The city built two southbound lanes, but has yet to fund or construct the two complementary northbound lanes for trucks entering the U.S.

Donna financed the current construction via some $35 million in certificates of obligation, and plans to finance the northbound lanes via revenue bonds, the city manager said.

When workshopping the fiscal budget last year, city leaders expected to generate $545,000 in commercial traffic tolls. However, the budget shows the city collected zero dollars in such tolls.

With pandemic-induced traffic disruptions expected to continue this fiscal year, those leaders lowered their expectations for FY 2021-22 by projecting to collect just $130,000 in commercial tolls.

“Since the bridge revenues are decreasing, it forced the city to dip into our reserves to ensure that the bonds were paid on time. And to this date, all bond payments have been made on time,” Vasquez said.

Vasquez was referring to the $1 million the city expects to pump into the bridge fund this year, according to budget figures.

The city’s two economic development corporations — the 4A and 4B —  also contributed some $126,000 each to the bridge fund, the budget shows.

Then there’s the city’s tax rate.

The council unanimously approved a one penny decrease to the city’s property tax rate — dropping it to 0.778538 per $100 valuation compared to last year’s rate of 0.778855 per $100 valuation.

However, with property valuations rising so high, most residents will find that their tax bills are higher this year — effectively, their taxes are increasing.

“We’re still generating more revenue because the assessed value did go up, but our tax (rate) did go down,” Vasquez, the finance director said.

According to the city’s own calculations, in order for the city to generate the same amount of revenue as last year, the tax rate would have had to decrease to 0.719619 per $100.

That’s what’s known as the “no new revenue” tax rate, which was previously known as the “effective tax rate” before state lawmakers passed revenue cap legislation in 2019.

Instead, the council approved the 0.778538 rate, which will generate an additional $300,000 to $400,000 in revenues, Vasquez said.

THE BREAKDOWN

Departments related to public safety and law enforcement saw the biggest budget increases in the FY 2021-22 budget, but so did infrastructure, and the parks and recreation department.

The following are some of the most significant budget changes for FY 2021-22:

>> The police department budget increased by 31%, from $3.3 million last year to $4.4 million in FY 2021-22. Federal grants account for a portion of that bigger budget, with the department earning larger allocations from the Operation Stone Garden and Border Security, as well as other grants.

>> The fire department budget is similarly growing by 36%. Personnel costs make up the majority of that growth, with salaries and wages more than doubling from just over $49,000 last year to a projected $110,000 for FY 2021-22, the budget shows.

>> The Streets and Roadway department budget has increased by 209%, from a mere $405,000 allocated to that department last year to $1.3 million allocated this year. That’s due in large part to the city’s partnership with the Shops at 493 development.

>> The Parks and Recreation department budget was increased by more than 300% — from about $145,000 last year to more than $451,000 in FY 2021-22. As with the fire department, the bulk of that increase is due to personnel costs.

>> Donna didn’t budget any expenditures for “community events” last year due to the COVID-19 pandemic, however, budget actuals show the city wound up spending some $229,000 for such events throughout 2021.

>> The city distributed some $157,500 in small business grants over the last year.

>> Donna generated $740,000 in rent from a facility leased by U.S. Customs and Border Protection to house migrants. The city expects to generate an additional $751,000 in rent over the course of FY 2021-22, the budget shows.

Donna also expects to receive just over $2 million in federal COVID-19 relief funds via the American Rescue Plan. It plans to use those monies for payroll and equipment.

According to a breakdown of the city’s planned uses for the money, each of the city’s 151 employees will receive $4,000 in “premium” pay. The city will also spend nearly $815,000 on four new vehicles — a backhoe, a “combo” vacuum truck, and two Ford F-250 pickup trucks.

Other expenditures include partial salary offsets in the police and fire departments, the purchase of personal protective equipment, and $115,000 slated for “water distribution maintenance.”


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