SAN BENITO — For 10 years, the city’s property tax rate has stood at 72 cents per $100 valuation.
Now, some city commissioners are working to try to squeeze out a tax cut.
But their proposed $15.8 million general fund budget might be too tight.
“I’m not saying it’s on the table or it’s off the table,” Mayor Rick Guerra said Wednesday. “We need to look at everything. We’re trying to make it better for San Benito. Anybody would love to lower it a cent or two to 70. If there’s any way we can do that, hell yes. But there are a lot of needs.”
Meanwhile, Commissioner Rene Garcia said expenses are too high for a tax cut.
“This year, I believe we should stay the way we are,” he said, referring to the tax rate. “There is still a lot of need. We can look at that in the future. Next year, maybe it’s a possibility.”
During a workshop Tuesday, Commissioner Pete Galvan proposed trimming the tax rate by one to two cents.
“I want to find some cost savings,” he said. “But the budget is barely balanced. I feel like the increase in property values and sales tax revenue will help stabilize the budget.”
The budget
As part of the proposed budget, City Manager Manuel De La Rosa is planning $15.8 million worth of expenditures.
Meanwhile, the proposed budget, planned with a fund balance of about $4.5 million, includes about $6.1 million in unassigned funds, Garcia said.
Like this year, De La Rosa’s projecting $5 million in sales tax revenue.
Boosting street program
For the upcoming fiscal year, commissioners are considering boosting the city’s $1 million street program to $1.5 million, aiming to target major streets such as McCullough and La Palma, Galvan said.
“My priority in the budget is increasing street repairs,” Garcia said.
Call for capital improvements plan
As part of the proposed budget, De La Rosa is calling for a $3.5 million capital improvements plan targeting major purchases.
“It’s a wish list,” Galvan said, adding officials are planning to tap the city’s $9 million share of the American Rescue Plan Act to fund the program.
Meanwhile, officials are trying to cover $1.5 million worth of equipment purchases earmarked for the street department, Guerra said.
Commercial water rate hike
The new fiscal year will mark the kick-off of a series of water rate hikes aimed at pulling the city’s utility system out of the red.
For years, previous city administrations held off on raising rates, leading the utility system’s annual deficits to swell to $2.8 million.
To offset annual shortfalls, officials have been dipping into the city’s general fund budget.
After months of debate, in June commissioners set commercial water rates to climb by 8.3 percent to as much as 9.8 percent each year over five years, based on water usage, starting in October.
Despite the higher rates’ revenue stream, officials are planning to pull $1.5 million from the city’s American Rescue Plan account to help cover the water department’s shortfall while dipping into the big federal stimulus check for $643,000 to help bail out the sewer department, Galvan said.
Meanwhile, households are getting a two-year break before their rates start climbing by 10 percent over a five-year period starting October 2024.
Rising fuel, chemical costs
Rising costs are eating into the proposed budget.
For the police department, projected fuel costs are jumping from $86,905 to $121,000, Galvan said in an earlier interview.
As part of the overall proposed budget, De La Rosa is projecting the cost of chemicals used to treat water at the city’s old water plant to jump from $177,080 to $407,000, he said.
At the new water plant, Galvan said, chemical costs are projected to climb from $177,080 to $474,000.
