SAN ANTONIO – The San Antonio City Council is currently grappling with a significant budget deficit, projected to reach $131 million over the next two years. During a recent budget discussion, city staff proposed considering a tax hike as a potential solution to this financial challenge.
City officials have suggested that council members contemplate maxing out the property tax rate in the upcoming fiscal year to help bridge the budget gap. However, this approach would still necessitate spending cuts to achieve a balanced budget. The debate around this proposal has sparked differing opinions among council members.
Councilman Marc Whyte (D10) firmly opposed the tax increase, stating, “This is an absolutely non-starter for me. Under no circumstances should we be raising the property tax rate on our citizens right now.” In contrast, Councilwoman Phyllis Viagran (D3) emphasized the need for a comprehensive approach, urging her colleagues to clarify what cuts they are willing to make to avoid a tax increase.
Understanding the Budget Crisis
Property taxes contribute approximately 28% of the revenue for the city’s general fund, which is essential for funding various city services, including police, fire departments, libraries, and parks. However, the city anticipates a decline in overall taxable values this year, which could result in reduced revenue unless the tax rate is increased.
According to state law, cities are generally restricted from raising more than 3.5% additional revenue from existing properties for maintenance and operations without voter approval. However, San Antonio may have leeway to exceed this cap due to not consistently reaching it in previous years.
If the city decides to max out the tax rate, it would increase the current rate of $0.54159 per $100 of valuation by nearly 3.5 cents, bringing it to $0.57648—the highest rate since FY 2007. At this new rate, the average San Antonio homeowner would pay an additional $81, on top of their current annual city tax bill of $1,074.
It’s important to note that nearly 46% of homesteads in San Antonio are owned by seniors or individuals with disabilities, who have their city property taxes frozen and would not be affected by this proposed tax increase.
Justifying the Need for a Tax Increase
City staff have attempted to connect the proposed tax increase to rising costs associated with police and fire services, which are often prioritized by residents. The anticipated increase in costs for police and fire services, due to collective bargaining agreements, benefits, and operational expenses, is projected to reach an additional $77.2 million in the next budget cycle.
While maxing out the property tax rate could generate an estimated $53.8 million in revenue, it would not fully resolve the city’s budget shortfall. A proposed scenario indicates that the city would still need to implement $15.6 million in spending reductions over the next two years, adding to the $10.6 million and 30 positions previously identified for cuts based on prior budget discussions.
Despite the pressing need for budget cuts, council members have been hesitant to specify which programs should be eliminated. Even Councilman Whyte, who advocates for scrutinizing city spending, acknowledged the difficulty in pinpointing exact cuts, stating, “I bet you there’s millions of dollars just in these three pages that we could find.”
Exploring Alternative Solutions
Mayor Gina Ortiz Jones has called for identifying new revenue opportunities and addressing inefficiencies within the budget. She also suggested the possibility of securing funds from Spurs Sports and Entertainment through contract penalties related to their failure to obtain a Major League Soccer franchise.
“I’m open to it,” Jones said regarding the potential tax increase, “but I need to be able to explain to folks, ‘Hey, we’ve done all of our due diligence,’ and we’re just not there yet.”
Next Steps in the Budget Process
City staff are expected to present a “trial budget” on June 18, which will incorporate the discussions from the recent meeting. Although this presentation typically provides a high-level overview of the next budget, City Manager Erik Walsh indicated that it would include more detailed information on potential reductions.
Walsh expressed the need to explore additional revenue sources that could be tapped beyond traditional means. He stated, “What you didn’t really see a lot of in there was other revenue sources we could tap. We really need to do a little more work in those areas.”
A full draft budget will be presented in August, with council members scheduled to finalize the spending plan and tax rate in September. As the city navigates these challenging financial waters, ongoing discussions and deliberations will be crucial in determining the best path forward for San Antonio’s budget and the services it provides to residents.
