City of Eagle Pass now considering a 3.8 Cents Tax Rate Increase instead of 6 Cents
By: Jose G. Landa, Eagle Pass Business Journal, Inc.
The Eagle Pass City Council held a special meeting on Tuesday, August 25, 2015 in which they held their first public hearing on the proposed property tax rate increase for the 2015-2016 tax year and announce the date to adopt the 2015-2016 tax rate for the City of Eagle Pass. The City Council and City Administration have been thoroughly reviewing the City’s proposed 2015-2016 operating budget and have come up with a slightly smaller tax rate increase of 3.8 cents per $100 valuation instead of the previously announced six cents per $100 valuation.
During the tax rate public hearing, City Financial Director San Juana Garza presented detailed information to council and the public on the proposed tax rate increase and also an alternate proposal which would only have an increase on the INS side of the tax levy and not on the MNO side of it. In other words, the 3.8 cents per $100 valuation proposal.
“The ordinance was increasing the MNO rate $0.14/100 valuation from the effective rate. Being with all the discussion that we’ve had the MNO rate, we can adopt or choose not to adopt. The rate for the INS which is for the payment of principal of the long term debt is the number that we have to go with. The option is in the MNO rate,” said Garza.
Garza presented numbers from a graph from the budget workshop documents that detailed an option to be considered under the decrease of the MNO rate which would be set at a lower level than the 2014 MNO rate. But it would come with an increase to the INS rate but would cut at least 2 cents from the original proposed tax rate increase.
Councilwoman Gloria E. Hernandez asked Garza if the city could pay their debt and other expenses without having to increase the taxes.
“When we go out for long term debt, the documents have several covenants, one of the covenants is that we will maintain a healthy general fund, another one is that we will secure the payments with taxes, and as you look at the table of the budget, you can see that rate has been going up slowly as we have gone out and borrowed additional monies. One of the covenants that we have signed says that it will be guaranteed with property taxes, that’s why that rate has to go up by $0.485 cents,” replied Garza.
In other words, if the City does not borrow money there is no need for tax increases.
“The guarantee of property taxes, whatever comes in that’s our guarantee, but my question is are we not able to maintain a healthy balance without raising taxes?” asked Hernandez.
“Under certain payments that must be made in the next fiscal year including the $787,000 and if we don’t increase the MNO it’s going to cost the city about $358,000 in additional taxes that we would not have to run the day to day operations of the city and in addition to that we would also have to come up with additional funding to make the $787,000 payments on the loans and we don’t have the ability to do that,” replied Garza.
Garza noted the detailed presentation under the budget workshop would explain this fact.
Garza then stated that if the MNO rate was not increased that would live the tax rate increase at close to $0.38/$100 valuation on the INS side taking into account the $0.1 cent non-raising of the MNO.
Garza then stated that city council had two choices which included the original tax rate increase of six cents per $100 valuation or the alternate that would spare the proposed tax rate increase on the MNO side of the rate with only a 3.8 cents tax rate increase per $100 valuation.
Eagle Pass Mayor Ramsey English Cantu stated that he believed that one of the concerns of the City Council at the last meeting held was the justification and assuring the actual need for the MNO rate increase in order for the city to pay for existing debt.
Mayor Cantu stated: “When we went out for bonds this year, we all approved that we would be looking at this increase which is reflective and has been on the INS side of the rate for the improvements that the community has seen through the CIP projects whether it has been through street reconstruction projects within the parks that we’ve had, those have all been to pay for those specific projects, which have had an automatic return to the citizens on those particular projects.”
Cantu recognized the fiscal responsibility that city administration is balancing and also acknowledged the concerns of the taxpaying citizen on tax increases and the importance of providing justification to the use of such funds to the citizen.
“In my opinion there is certification of justification in not increasing the MNO side of the tax rate.” said Mayor Cantu.
Cantu then gave a rundown of the services that the City of Eagle Pass provides such as street paving, repair and maintenance, parks, municipal waste management and other important services needed in the community.
“We need to maintain ourselves responsible in order to avoid any future issues. I think we’ve been able to maintain a very healthy fund balance that has been able to keep us together in order to assure that our interest rates are low when we’re going out for these bonds to meet the demands of the community,” said Mayor Cantu.
Cantu added that with the growth a lot comes with it.
“I feel that the council has had strong leadership in the past and will continue to have that same leadership in order for us to move this city forward as we’ve done so in these past years.” Said Cantu.
Garza stated that by the City of Eagle Pass having a healthy general fund balance it has had a good rating from Standard and Poor’s of AA.
Council, Garza and Chavez continued to discuss certain issues in regards to the setting of a tax rate for the City of Eagle Pass including the alternate proposal as presented by Garza.
“The current rate is at $0.51/$100 and we would be going to an overall rate of $0.546/$100 valuation basically an increase of $0.38/$100. We would be increasing the INS but decreasing the MNO proposed rate.” said Garza.
Chavez stated that the city can go and set a tax rate without the MNO proposed tax increase of $0.1 /$100 but that it would leave the city short approximately $350,000 from reaching a balanced budget and that the city is looking at increasing certain fees to offset that shortage assuring a balanced budget for the beginning of fiscal year 2015/2016.
“Right now we’re currently at $350,000 that we still are short from balancing the budget. The last time, I believe it was at $1.5 million that we were still off,” said Chavez.
Council and Chavez discussed certain measures that are to be taken in order to decrease the burden on balancing the budget including departments keeping the same budget from last year with minimal increases if any.
“We’re still short $350,000, we’re not in a deficit (shortage) we just still have to balance it and we’re going to have to go back and see what can be done so that we can balance the budget.“ said Chavez.
Council and Chavez further discussed the shortage in balancing the budget and how it was being looked at to be balanced before the beginning of the new fiscal year while clarifying a difference between a deficit and a shortage during the budget setting process.
“Even then we’re still short $350,000 and we need to figure out where to get more funds.” Said Chavez.
“One of the things that we’re going to look at is the current fees that we have. We haven’t increased them for the last 5 to 10 years that we haven’t seen an increase to some of those fees. We are going to propose some fee increases. We are not going to do it at this point. We do want to balance the budget. We do not want to go pass the effective MNO tax rate.” Added Chavez. City fees are expected to be increased this coming year.
Chavez also explained how the debt owed by the city has covered work that had not been previously done and is now being done such as street repair, drainage improvements, and maintenance and other services needed in the community.
Mayor Cantu then asked if anyone in the audience would like to comment on the proposed tax rate and proposals. No one in the audience commented on the proposed tax rate increase.
Mayor Cantu announced the date set to adopt the city’s 2015-2016 tax rate and budget as being September 15, 2015 at a meeting to be held at the Eagle Pass City Council Chambers. Mayor Cantu then proceeded to close the City of Eagle Pass tax rate public hearing.
