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HARLINGEN — A proposed $57.8 million general fund budget with $30 million in cash reserves is coming with a 6-cent cut in the property tax rate amid one of the Cameron County Appraisal District’s sharpest spikes in appraised property value increases in the area’s history.
Earlier this week, city commissioners began reviewing City Manager Gabriel Gonzalez’s proposed budget, aiming to fund big increases in police officer pay along with boosts in employee wages, with officials setting aside money to form a crew to tackle drainage upgrades while facing a nearly 5% increase in employee health insurance coverage.
Across the city, the appraisal district’s new re-appraisals spurred the city’s total appraised property values to soar to $4.7 billion, up from $3.9 billion last year, leading to a total $780 million increase, with new construction accounting for $55.1 million of the hike, Kareem Abdullah, the city’s deputy finance director, said in an interview.
Proposing 6-cent tax cut
During an Aug. 10 meeting, Gonzalez proposed commissioners cut 6 cents off the city’s property tax rate of 61 cents per $100 valuation.
The proposed 6-cent cut would set the new tax rate at about 54 cents per $100 valuation, equal to the rate under the so-called voter-approved tax rate.
As they consider setting the new tax rate, commissioners will decide whether they’ll adopt the voter-approved tax rate, which caps the amount of revenue the city could collect in property tax revenue at 3.5%, or the so-called no-new-revenue tax rate.
Under the voter-approved tax rate, the city would collect about $21.6 million in revenue, while the no-new-revenue tax rate would generate $20.4 million, Abdullah said.
If commissioners pass the voter-approved tax rate, the city would collect about $1.2 million in property tax revenue, he said.
Bracing for tax increases
At the city’s downtown, property owner Bill Debrooke said the appraisal district’s new re-appraisals are sparking the sharpest increase in appraised property values he’s seen during more than 30 years in the Jackson Street business district.
For many property owners across town, the steep increases in appraised value will spur property tax increases, he said in an interview.
This year, under the no-new-revenue tax rate, property owners with homes valued at $100,000 would pay $519 more in city taxes, while under the voter-approved tax rate, a $100,000 home would pay $555 in city taxes, Abdullah said.
Based on the city’s proposed 6-cent tax cut, the owner of a $100,000 home would save $60 a year, Gonzalez said.
Facing big funding requests
As they review the proposed budget, commissioners are facing big funding requests.
As a result of a new collective bargaining contract with the local police officers’ union, the city’s agreed to pay officers $1.3 million during the next three years, while Gonzalez is proposing the city pay about $500,000 this year.
Based on a consulting firm’s recommendation to raise low city employee wages to market levels, officials have agreed to fund a $487,000 package over a three-year period, aiming to boost 133 employees’ salaries, Gonzalez said.
Now, officials are considering options, including paying about $120,000 this year or stretching out payments over a two-year period, he said.
Meanwhile, commissioners are facing a $389,519 increase in employee health insurance premiums after United Health Care raised its rate 4.9%, with total costs jumping to $8.17 million, up from $7.7 million last year.
As part of the proposed budget, officials are also planning to set aside $1.6 million to launch a crew charged with tackling drainage upgrades, Gonzalez said.
To launch the operation, officials are planning to hire more workers while funding $1.2 million in equipment purchases, including a $365,000 excavator, a lowboy semi-trailer, a backhoe and a front-end loader, he said.
