Like many other municipalities, the city of Weslaco has had to rethink its finances in the wake of COVID-19; however, despite the unexpected expenses wrought by the pandemic, city officials are proposing a leaner budget for the coming fiscal year.
Even as many of the city’s departments have made smaller budget requests for fiscal year 2020-21, the city has managed to grow its operational reserve, position itself to retire debt, and maintain its workforce amid a public health emergency that has seen unemployment rates skyrocket to historic levels.
City Manager Mike Perez attributed Weslaco’s robust financial outlook in large part to the city’s staff and an ongoing run of political stability.
“It’s not just myself, and the mayor and commission, but it’s the staff also. All the department heads watching the bottom line,” Perez said.
“In the last few years, we’ve been pretty politically stable. Business likes stability politically, and we’ve had the same mayor for a while now. We have two commissioners that are running unopposed,” he added a few moments later.
Overall, total revenues are expected to shrink by nearly $1.5 million — from $30.8 million in revenues for the current year, to just under $29.4 million projected for the coming fiscal year, according to figures listed in the city’s 2020-21 proposed budget.
Despite that, the 157-page document also projects Weslaco will have enough operating funds in reserve to run the city for four full months, or 120 days, thanks to an $8.6 million unreserved fund balance — an increase of 17 days compared to the previous year.
Most municipalities aim to maintain a minimum operational reserve of 90 days.
Modest growth throughout the city limits will also add more than $553,000 in new property tax revenues, the budget shows. In all, the proposed budget will generate $684,700 in additional property tax revenue compared to FY 2019-20.
But, as the pandemic continues, the city is maintaining a cautious approach to its revenue projections. Perez said a moment early in his career taught him a hard lesson about being overly optimistic about incoming revenues.
“I got a little over-aggressive on our revenues, and we ended up having to lay off employees. So, ever since then, I always like to be a little more conservative on revenues,” he said.
That fiscal strategy has trickled down to the city’s various departments, many of which saw either decreased budget asks this year compared to last, or very modest increases.
Public safety accounts for more than half the total budget — 53% — with the police and fire departments expected to expend $8.8 million and $6.3 million, respectively, in the coming year.
The proposed police department budget represents a 1% increase in expenditures compared to this year, after factoring in how COVID-19 increased expenditures.
Similarly, COVID-19 has impacted the fire department, which is proposing growing its budget by 1.3% compared to last year’s adopted budget.
That $6.3 million figure proposed for FY 2020-21, however, is $112,000 less than the department is projecting to have actually spent by the time the current fiscal year ends on Sept. 30, the budget shows.
Overtime and the purchase of cleaning supplies account for the majority of unexpected expenses in the city’s public safety departments, Perez said. The police department alone tacked on $100,000 more in overtime costs than what had been budgeted.
“I had 22 firefighters out at one time, and 15 police officers out at one time,” Perez said of pandemic-fueled personnel issues.
“But we were able to compensate,” he said.
And it’s those same public safety departments that will serve as both the city’s biggest challenges and its brightest reasons for optimism, the city manager said.
Weslaco has big plans in the works for those departments, as well as its public library, its street improvement plan, a park expansion, and ongoing drainage infrastructure improvement projects.
“I think one (challenge) is being able to build the police and fire station with the limitations we have and not affect the tax rate,” Perez said when asked what the city’s biggest challenges will be in the coming year.
“I think the other thing is managing employees’ expenses,” he said, referring to both payroll and the cost of training new employees.
As far as the city’s north side park project, it’s currently over budget. The project has been put out for new bids in an attempt to lower costs, and more funding should become available through some $8 million in certificates of obligation once the city retires some of its debt over the next few years, Perez said.
“We have debt that’s going to be rolling off in a couple of years, so we’re going to be borrowing money on that so we can keep the tax rate flat,” he said.
Much of the city’s outlook will depend on the pandemic, though, Perez said. “We don’t know what’s gonna happen and how long Covid is gonna be here, so the idea is… to tighten the belt a little bit,” he said.
“We’re not cutting personnel. We’re not eliminating any positions. But it’s just tightening the belt a little bit,” he said.