WESLACO — After a month’s worth of workshops, city leaders here have hammered out a budget proposal for fiscal year 2019-20 — one that includes a 2% pay bump for non-unionized city staff, and 2.5% for police officers, who are unionized.
“We ended up, I think, better than I thought we would,” Weslaco City Manager Mike Perez said after the city’s budget workshop wrap-up session last week.
“We were expecting our tax revenue to be much lower than it is because of all the flooding, but we had a lot of construction in town in the last 12 months, so that’s really helped,” he said.
Not only has new construction grown the city’s taxable base, Weslaco has also seen sales tax revenues increase by approximately $1.2 million, Perez said. That combined increase in the city’s revenue base should allow it to keep pace with a nearly $2.3 million increase in expenditures expected in the coming year.
City staff are proposing a $58 million total budget for FY 2019-20. Approximately half of that figure represents the city’s debt service, internal services, as well as public utilities and public infrastructure funds, such as wastewater, sanitation and drainage, Perez explained.
The other half represents the city’s general fund, from which the city pays its operating expenses. Weslaco is expected to generate approximately $29.1 million in revenues next year — just $1,311 ahead of the $29,116,829 in expected expenditures.
It’s a narrow margin; however, a draft version of the proposed budget shows the city’s unreserved fund balance looking healthy, with enough money to fund 103 days of operations.
“You’re supposed to have 90 days, so, we have 103,” Perez said, referring to the conventional wisdom that holds that financially sound government entities maintain at least a 90-day operating reserve.
“Considering that we’ve gone through three kind of tough floods, not bad,” Perez said.
At the start of the budgeting process that operational reserve was slightly higher at 109 days. That figure decreased after adjusting the proposed budget to accommodate requests from department heads, as well as additional line item cuts.
For instance, a $10,000 request for office furniture by the planning and code enforcement department was negotiated to $4,000, while the police department successfully lobbied for an additional $10,000 to fund vehicle maintenance.
At more than $14.8 million combined, the police and fire department budgets account for approximately 55% of the proposed budget, Perez said. The planning department, at an expected $1.3 million, and streets, at an expected $1.27 million, are the next highest expenditures.
Perez described the city’s fiscal policy — both his as a city manager, and the commission’s as a governing body — as conservative. The commission is frugal with expenses, as well as the size of the city’s workforce, he said.
About 300 people work for the city. “For the size of the community and the amount of service that we provide, we do a lot for the amount of employees,” Perez said.
Despite that fiscal conservatism, the 2019-20 proposed budget includes some provisions that have not been seen over the last few years, including offering pay raises to both civil service and non-civil service employees.
A 2% pay raise for the city’s non-civil service employees represents the first pay increase city staffers will have seen in four years, the city manager explained.
After several rounds of collaborative bargaining between the city and the Weslaco Municipal Police Union, officers will see a 2.5% pay increase this coming year.
Together, the pay raises will add an additional $400,000 in expenditures to the budget, Perez said.
There are other signs of healthy growth, as well. In 2019-20, the city plans to begin tackling a laundry list of public safety-related capital outlay expenses, starting with the purchase of five Chevy Impalas destined to become new police patrol units.
The police department will also be adding to its ranks with the help of the local school district, which will help pay for the placement of school resource officers, Perez said.
As part of its five-year plan, the city plans to add more firefighters to that department, as well as replace fire trucks, ambulances and other vehicles to update its aging public safety fleet.
For all the positive strides the city is making, there are still some noticeable struggles it continues to deal with, and that will continue to affect it for years to come.
The city’s $50 million in outstanding debt, and the servicing of that debt, is a burden that will hamper Weslaco’s financial flexibility until at least 2024, when some of the city’s debt obligations will be paid off, Perez said.
“We made some decisions that were not very good as it relates to the water plant, and so we’re strapped with a ton of debt,” Perez said, noting how that debt has resulted in Weslaco residents paying some of the highest water and sewer rates in the state.
“We’re gonna have to work through that,” Perez said.
Too, in the wake of the June 2018 flood, the city issued $4 million in certificates of obligation to fund drainage improvements. And another $10 million in debt approved by voters in May’s bond election will start being issued before the end of the year.
A portion of the water plant debt is self-sustaining by revenues generated from utility usage. The city-owned Mid Valley Airport, however, has been operating at a deficit for several years, city records show.
According to the draft budget proposal, the airport is expected to have generated just $562,668 when the current fiscal year ends on Sept. 30. By contrast, its expenditures will exceed those revenues by $110,406.
Airport expenditures are expected to exceed revenues by nearly $109,000 next year, too.
The city commission is slated to hold the first of two budget hearings this Tuesday at 5:30 p.m. The city must adopt a budget before the state mandated Sept. 30 deadline.