MISSION — For the first time since at least 2011, the city council approved a proposal to raise taxes for the next fiscal year on Monday. However, the increase, of 3.5 cents, was less than what city staff had recommended.
The measure will raise the city’s property tax rate to 0.5212 per $100 of taxable valuations. Maintaining the current tax rate or increasing it by just 1 or 2 cents, would have left the city’s general fund balance in the red, according to projections prepared by city staff.
The staff had recommended a 5.49-cent increase for a tax rate of 0.5411 per $100 of valuation, but council member Ruben Plata, who voted for the approved proposal for a 3-cent tax increase, strongly pushed for a smaller increase during a workshop held earlier that day.
“I don’t think I want no more than 3 cents,” he told the council. “I think we need to be creative in how we can come up with some money.”
He suggested perhaps holding a workshop every month to look at the budget more carefully.
“I understand the position that we’re in,” he said. “We also gotta understand that it would be a big impact for the citizens.”
Plata also noted that the city’s fund balance was going to be higher than initially projected.
“Every year we always come up with extra money,” he said. “What makes you think that this year it’s not going to happen?”
During the city council meeting Monday evening, Plata initially made a motion for a 3-cent increase; however, council member Jose Alberto Vela suggested the 3.5-cent increase, adding that the extra half cent could go toward building the city’s fund balance.
“During the year, I feel like there’s areas where we can save money in different departments, and let’s give staff an opportunity to do that,” council member Norie Gonzalez Garza said during the workshop Monday morning, explaining against why she was opposed to raising taxes higher than 3.5 cents. “At the end of the year, next year, we may show a larger fund balance with this 3-, 3-and-a-half cents.
Plata, Vela, Gonzalez Garza and council member Jessica Ortega-Ochoa voted in favor of the 3.5-cent increase. Mayor Armando O’Caña was the lone vote against.
O’Caña made it known that he favored the higher, 5.49-cent increase and reminded the council this would be the last time they would be able to raise taxes by this much without putting it to a vote by the residents.
Texas Senate Bill 2, passed into law in June, caps how much in property tax revenues that a government entity can raise to no more than a 3.5 increase from the previous year. An increase higher than that has to be approved by the voters.
Ortega-Ochoa had also favored the higher, 5.49-cent increase but suggested the city to adopt a budget that only reflected a 3-cent increase. That way, they would have excess revenues that could go towards building their fund balance.
If the city were to keep the current tax rate of 0.4862, the city would end up with a negative general fund balance of $988,869. A 1-cent increase would result in a negative balance of $600,777, while a 2-cent increase would result in a negative balance of $212,685.
Following the workshop, Ortega-Ochoa said the city’s financial burden that necessitated an increase didn’t just manifest overnight and that the city was now feeling the brunt of keeping taxes low for so long.
“I just think we were very fortunate for 10 years to not increase the taxes,” she told the council during the workshop. “For us to move forward, unfortunately, we’re going to have to make a tough decision today of raising taxes.”
She added she felt constituents would be okay with the decision as long as revenues went toward something “in the best interest of the city.”
Ultimately, the majority of the council opted for the smaller increase.
The city will hold two public hearings before the new rate is officially adopted. Those are scheduled for Sept. 9 and Sept. 16. Official adoption of the tax rate is scheduled for Sept. 23.