Hidalgo County commissioners agreed to cut the tax rate by a half cent Tuesday during budget workshop No. 7.
Precinct 2 Commissioner Eddie Cantu had been pushing the commissioners court to decrease the tax rate by 1 cent, but losing about $3.5 million in revenue did not seem like something his colleagues wanted to do.
So on Tuesday, as county officials were working to finalize last-minute adjustments, Cantu asked once again about a tax reduction.
“Our revenues keep going up. I think we should at least do a half cent,” he said. “I mean, I want a cent (reduction), but I can work with the rest of the commission on half a cent.”
Cantu’s proposal would take the tax rate from 58 cents per $100 valuation to 57.5 cents, or a rate of 0.575. The proposed rate would also be less than the effective tax rate, 0.5788.
Precinct 1 Commissioner David Fuentes initially appeared skeptical about the cut.
“I’m not concerned about the half cent for this year,” Fuentes said. “I’m concerned as we move forward that we’re not going to be able to fund what we need to fund — in year two, three, four and five — without raising taxes. Because the plan that he showed us last week seemed to have a shortfall or a deficit … much larger than what we’re used to.”
Fuentes was referring to Sergio Cruz, the county budget officer, who estimated the county will have a budget shortfall of about $9 million in fiscal year 2022 and $8 million in 2023 and 2024.
That estimate, however, does not include lapsed salaries and an additional $7.5 million in annual revenue the county typically generates. Once those figures are taken into account, the county would be left with an estimated shortfall of about $1.5 million in 2022 and about half-a-million-dollars in 2023 and 2024, Cruz estimated, calling it a “modest deficit.”
“If you don’t cut taxes when you’re in the middle of the strongest economic growth that we’ve had probably in the history … well, except for (2006)… you’ll never be able to cut them,” Cantu said, adding that revenues have increased about $30 million since he first took office in 2015.
“We have to tighten the way we run this ship at some point,” he said. “We have to. We have to be efficient.”
Property valuations also continue to rise, he said.
“In our personal homes, we used to get appraisals every four years. Now it seems like every year it’s up 10%, 10%, 10%,” he said. “And I hear it from the community everywhere you go, ‘the appraisals are up again.’”
Hidalgo County Judge Richard Cortez noted that the county is in the middle of a large undertaking.
“We still don’t know what the courthouse is going to cost us,” he said. “We haven’t finished it, you know?”
Cruz also took the opportunity to highlight another factor that could impact future budgetary decisions.
“Next year we do have a different rollback rate, as well,” he said of the state’s new restrictions on raising property taxes. “Just want to remind the court about that.”
By this time, Fuentes had already sided with Cantu’s proposal to reduce the rate by half-a-cent.
“Want to put it to a vote, judge?” Cantu asked Cortez.
“What do the commissioners on the west side like to do,” Cortez asked Precinct 4 Commissioner Ellie Torres and Precinct 3 Commissioner Joe Flores.
The question sparked laughter from the bunch, and Flores ultimately sided with Cantu and Fuentes. The court then directed Cruz to make the necessary changes to the budget to reflect the reduction.
Cruz told the court he expected the half-cent cut will equal a $1.3 million revenue loss.
Also on Tuesday, commissioners agreed to go with option B, which adds one new constable deputy to Precincts 2, 3, 4 and 5, instead of option A, which only funded one new deputy for Precinct 5.
They also granted a $5,000 increase in car allowances to seven justices of the peace in Precincts 1, 3, 4 and 5, bringing their total yearly allowance from $10,000 to $15,000. The other two justices of the peace in Precinct 2 already receive a $15,000 car allowance.