HARLINGEN — Are there options to a proposed 4-cent property rate increase?
Later today during a public hearing, residents will get a chance to speak up about the City Commission’s plan to raise the tax rate from about 58 cents per $100 valuation to 63 cents to generate an additional $1.35 million a year.
Last month, City Manager Dan Serna recommended the city’s first tax increase in 14 years to help balance a $46.5 million general fund budget that comes with a $1.3 million shortfall.
The proposed budget would also come with a $17.5 million cash reserve capable of funding city operations for about 135 days, more than the recommended 120 days.
Serna proposed the tax increase to help fund “one-time” capital improvements including $390,000 for nine police cars, $128,166 to fund fire department equipment including 12 air packs, $87,000 for a bucket truck, $320,000 for an emergency generator for City Hall and $163,800 to fund the public library’s elevator control.
Yesterday, Mayor Chris Boswell said proposed expenditures also include as much as about $5 million for drainage improvements.
“I don’t want to do it,” Boswell said of the proposed tax increase.
June 24’s big storm spurred flooding that has led officials to take on more drainage projects.
“It appears the public wants us to accelerate these drainage improvements,” Boswell said.
Last month, Boswell said officials are also preparing to face a new state law they expect will lead to the city’s loss of about $1 million a year after it takes effect next January.
At City Hall, Serna projects Senate Bill 2 will lead the city to lose about $4.3 million during a five-year period after the law kicks in during fiscal year 2020-2021.
Senate Bill 2, passed this year, would require cities and other taxing entities to hold elections to allow voters to decide if the governments should raise tax revenue by 3.5 percent more than they collected the previous year.
Now, the state allows these taxing entities to collect as much as 8 percent more in annual tax revenue before requiring them to hold elections.
The proposed tax increase would help the city “build some cushion” to offset projected losses in sales tax revenue, Boswell said.
Last month, Boswell also said officials are not planning to pull money from cash reserves to hold off a tax hike.
During the upcoming fiscal year, he said, officials are planning to dip into cash reserves for $2 million to $3 million to fund the city’s share of an anticipated $10 million to $12 million grant aimed at drainage improvements.
However, Commissioner Frank Puente, who cast the lone dissenting vote against the tax hike last month, argued officials should tap into the city’s cash reserves rather than raise taxes.
“We have all these reserves that belong to the city — why dig into our own pockets when we can use what the community has already invested in?” Puente asked. “If we can use reserves for one-time expenditures for capital improvements, let’s not place the burden on my constituents.”
Puente also questioned the city’s proposed capital expenditures.
“Can they be postponed to the coming year?” he asked.
Last month, former Commissioner Robert Leftwich called it “disingenuous” to state the city has not raised its tax rate in 14 years, citing steady annual increases in the city’s assessed property values that significantly boost revenues.
In 2009, the city’s total assessed property value stood at $2.86 billion.
This year, the Cameron County Appraisal District’s preliminary figures showed the city’s total assessed property value reached $3.87 billion.
