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City approves $801 million budget, increases tax rate by 2 cents

Police force to grow under new budget

by Alberto Tomas Halpern // August 22, 2013 // Government

  • City new budget1

    Mayor Oscar Leeser and his Chief of Staff, Taylor Moreno, review documents before the city's meeting on Tuesday. (Alberto Tomas Halpern/Newspaper Tree)

  • City new budget2

    Chief Budget Officer Lynly Leeper describes the budget and tax rate to city representatives. (Alberto Tomas Halpern/Newspaper Tree)

  • City new budget3

    City Manager Joyce Wilson discusses the budget with city officials. (Alberto Tomas Halpern/Newspaper Tree)

  • City new budget4

    Representative Carl Robinson questions city staff about the debt the city owes. (Alberto Tomas Halpern/Newspaper Tree)

  • City layoff list web ready

    A list of city layoffs as of early August. (City of El Paso)

The City of El Paso adopted a new budget and a property tax rate increase for fiscal year 2014 at its regular city council meeting on Tuesday, August 20.

Representatives approved an $801 million budget, which is a $44.6 million or 5.9 percent increase over the current budget. City officials also authorized a $0.68 per $100 valuation property tax rate, up from the current rate of $0.66. Lastly, the city passed an ordinance levying the new tax rate.

The adopted general fund budget for fiscal year 2014 is $351 million, a $15.7 million or 4.7 increase from the current general fund budget. According to the city, “[g]overnmental funds consist of the general fund, debt service, capital projects and grant funds.” The general fund is the city’s primary operating fund and accounts for all financial resources, except those required to be accounted for in another fund.

Budget priorities

Chief budget officer Lynly Leeper explained to representatives that a major source of new funding needs was associated with collective bargaining agreements with the police and fire departments. Those costs alone increased the budget by $10 million.

Leeper told Newspaper Tree this week that the new budget also deleted 150 positions in the police department. Those positions were unfunded vacancies that had been left on the manning table since 2005, when a grant that funded them expired. She added that the new budget created 28 police officer positions for graduating cadets, 29 positions for police trainees, one assistant police chief, one detective, and one lieutenant.

Leeper added that the police force will grow by the end of the next fiscal year as the police department anticipates adding 69 officers through two academies that will graduate cadets in October 2013 and January 2014. Other academies are scheduled to begin in February and June of 2014, each with about 30 cadets.

“Allowing for the uncertainties related to the number of recruits they can attract, the number of cadets they can graduate, and the number of officers they lose through attrition, etc., they should be able to add at least 100 officers to the force by the end of 2014,” Leeper wrote in an email.

The police department’s total budget for fiscal year 2014 is $122.5 million, up $5.9 million or 5.07 percent from the current budget.

The fire department’s new budget is $98.1 million. That’s a 4.32 percent or $4.1 million increase.

The city also eliminated 81 vacant general fund positions and 102 vacant positions from other funds. The city laid off 10 employees, including a general services worker in the Zoo Department, four Engineering Department positions, an Aviation Department administrative assistant, a Financial Services accountant, a Fire Department administrative assistant, and two strategic budget advisors in the City Manager’s office.

Leeper also said the city will no longer fund the Downtown Management District (DMD) executive director’s salary, but, “we will increase DMD’s funding for downtown cleanup by $120,000 from the environmental fee increase.” During a budget wrap-up session, representatives increased the residential environmental fee for garbage collection from $3 to $5 a month. The new environmental fee allows the city to move expenses from the general fund, reducing its burden.

In addition to the added police and fire costs, the city had to address debt associated with transportation reinvestment zone (TRZ) projects. TRZs are underdeveloped zones designated by the city for infrastructure improvement projects. TRZ projects are financed through property tax revenues that are collected within the zone. The city’s retiree health insurance costs also increased.

Further, the city has to address $5.9 million in debt issued from public projects that were financed through property taxes.

Department adjustments

Noted adjustments to city departments include:

• $413,378 decrease in the city attorney’s budget;
• $1.9 million increase for city development;
• $126,828 increase to the city manager’s office;
• $1.2 million reduction to community and human development;
• $1.7 million increase to the department of transportation;
• $1.4 million increase to engineering; and
• $18.2 million increase to human resources

Revenues, taxes and debt

Describing the city’s revenues, Leeper explained that property taxes and sales taxes combined were up 4.06 and that franchise taxes were also up by 2.09 percent. New revenue generated by raising the residential environmental fee will help increase operational revenues by 9.7 percent. Non-operating revenues will see a 48.3 percent increase, which is due to reimbursed expenditures and by requiring the various enterprise funds to help pay for projects, such as a new digital communications system for the police department.

“Now to the nitty gritty,” Leeper said, introducing the new property tax rate increase. Of the new $0.68 property tax rate, $0.23 goes to the city’s debt service and the remaining $0.45 goes to operations and maintenance. The new rate means that a homeowner with an average net taxable home, valued at $124,090, will have to pay $841.80 in property taxes.

“With growth comes growing pains and no one wants to increase taxes by any means, but we are doing it by a nominal amount,” Representative Cortney Niland said.

Representative Lily Limon asked what the city’s debt currently is. Leeper responded that the city has $893 million in property tax supported debt.

Displeased with the figure, Limon questioned, “Have we done everything within our power to make cuts in the budget for what we’re doing today? Have we looked at every single possible way that cuts could have been made to not raise this tax?”

Leeper told her that the budget staff had worked diligently to budget departments as tight as possible, while taking into account the city’s obligations.

Still concerned, Limon said it would be difficult for her to support the budget and tax rate increase given the sizeable amount of debt the city owes.

“I know that we want to have lots of good things, but it’s very hard. It’s just a hard process for me to vote on and to agree,” Limon said.

Seeking clarification, Representative Robinson asked for the city’s total debt, including enterprise fund debt. Leeper said the city’s total debt is $1.1 billion, adding that the enterprise funds generally cover their own debt.

City Manager Joyce Wilson asked representatives to keep in mind that the city has an operating budget of almost $1 billion each year. She said the debt, compared to the operating budget, isn’t so significant. “This is a billion dollar corporation,” Wilson said.

Robinson persisted, “I’m struggling with where we are and where we need to go.”

Niland said that cities have an obligation to provide expensive services to its citizens, including police, fire, and mass transportation. As a result of those services, Niland said, cities simply have to issue debt to keep the city and its various programs and institutions moving forward.

“To only have $893 million in property tax-backed debt in a billion dollar corporation is very conservative,” Niland added.

Holguin said he wasn’t going to say much during the budget discussion, because he believed that his colleagues already knew his position on the budget and tax rate. He only said, “What sticks in my mind, when you make a comment like, ‘a billion dollars is ok to be in debt,’ or when council members say that $893 million in debt is ‘ok,’ we speak as if millions of dollars is nothing around here. I hope to never lose the concept of money.”

He asked council members and city staff to give respect to the citizens who have to pay off the city’s debt through tax increases. He implored representatives to not refer to such large figures of money as though it had no value. “To some people, it has a lot of value,” Holguin said.

Three separate votes were taken to approve the city budget and tax rate for the next fiscal year.

On the motion to adopt the budget, representatives Ann Morgan Lilly, Larry Romero, Michiel Noe and Niland voted in favor. Voting against were representatives Emma Acosta, Robinson, Holguin and Limon. Mayor Oscar Leeser broke the tie with a vote in favor.

On the motion to authorize the property tax increase, Lilly, Romero, Acosta, Noe and Niland voted in favor, with Holguin, Robinson and Limon voting against.

On the motion to levy the new tax rate, a rate approved in the previous vote, Lilly, Romero, Noe and Niland voted in favor, with Holguin, Robinson, Limon and Acosta voting against. Mayor Leeser broke the tie with a vote in favor.

Acosta was the only member to support the new tax rate, but vote against levying it. When asked to explain her vote, she said, “When you ratify it (the tax rate), it means you are accepting the tax rolls from the Central Appraisal District. You can’t use anything else.”

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