McALLEN — The city manager here wants to set the record straight about the city’s financial situation.
The Monitor reported Tuesday that the city commission had dealt with a $3.3 million deficit on Monday during a joint meeting with members of the Development Corporation.
The figure was listed in the agenda for Monday’s meeting. However, that shortfall is closer to $12 million, McAllen City Manager Roy Rodriguez said Wednesday.
“I don’t like bad news, believe me, I’m the worst at taking bad news, but in this case, it’s important to me that the community understand that we’re in this situation,” Rodriguez said.
He described Monday’s financial maneuvering as a “complicated conversation” and said “there were two things going on at the same time.”
During the joint meeting, two budgets were being discussed — one for the city’s general fund and the other for the development corporation’s development fund. Both of those funds needed money from their respective fund balances, or reserve monies set aside for emergencies, in order to balance both budgets.
The shortfall for the city’s general fund was initially estimated at $3.3 million.
“That was just to cover the gap,” Rodriguez said. “But in order for us to do infrastructure projects that were in our budget, we actually had to take $6.2 million from fund balance in order to balance the budget — not $3.3 million.”
In addition to that, McAllen is also launching projects that will expand Wi-Fi services throughout south McAllen and offer grants to residents and business owners affected by COVID-19. Those projects are estimated to cost more than $5 million and the money is coming from the development corporation’s general fund.
“So in order to fund those projects, I had to go to a zero fund balance in the development corporation,” Rodriguez said, indicating both reserve funds took a hit — one at $6.2 million and the other over $5 million. “It was to the tune of $12 million.”
Rodriguez said the development corporation’s investment in COVID-19 relief projects is reimbursable through CARES Act funding Hidalgo County received earlier this year.
“Otherwise I would never recommend going to zero (fund balance),” he said.
And as far as the city’s fund balance, there is still approximately $40 million left.
Still, having to take from the city’s fund balance to make ends meet is unprecedented, Rodriguez said.
“We keep hearing that word,” he said. “We’ve never done this in order to balance the budget — ever.”
And even with this financial maneuvering, the city is still not at pre-COVID-19 conditions. A freeze remains on new hires, travel and expenditures.
“Even though I took that action, we’re not back to normal. I still can’t operate on a normal basis,” he said. “That’s just this year. I still got to deal with next fiscal year, which is going to have a huge gap also.”
Rodriguez said it’s still unclear if all the COVID-19-related expenses the city made via its general fund will be reimbursed by the county. Though, he hopes county officials will see the need.
“I want the county to read this,” he said. “We keep getting ‘you’re gonna get money/you’re not gonna get money.’ It’s important that the county understand that we’re in dire straits.”