City of El Paso: Revenue not keeping with expenses

The El Paso City Council received a sobering report showing the City’s revenue is not keeping up with its expenditures.

“All of these costs are growing at a fast pace while our revenues aren’t growing at the same rate”, said Robert Cortinas, with the City’s budget office, who made the presentation to Council.

Last fiscal year, the City collected about $149 million total in property taxes from residents. That’s not even enough to cover the costs of the Police and Fire Department, which totaled more than $212 million.

The city makes up the rest with sales tax, which totaled about $82 million last fiscal year and additional revenue from things like inspections and fees.

Cortinas said there are several “cost drivers” significantly impacting the budget such as quality of life bond projects approved by voters which will cost the City $800,000 this year and tax breaks for companies bringing jobs which total $3.8 million, rising health insurance costs at the tune of $1 million, $9.6 million worth of debt service, a ballpark subsidy estimated at $800,000 and property tax exemptions for the elderly and disabled which are expected to cost the City an additional $2.8 million.

“We’ve made some cuts but the costs keep coming, said City Manager Tommy Gonzalez who added the City has slashed $500,000 from the budget but still has mounting economic challenges. Gonzalez said he wanted to be realistic with the Council to prevent City departments from having to make cuts a quarter into the fiscal year as in years past because of economic over projections. “That was very dysfunctional… we want to be upfront with you about these impacts”

City Representatives characterized the problem as less dire.

“But you’re not taking into consideration any growth in property tax, sales tax. This is just based on last year and what we would be looking at so this is basically the worst case scenario without any improvement,” said Mayor Oscar Leeser.

City Rep. Cortney Niland also touted some progress. “We’ve seen $53 million in new revenue in just downtown to the general fund. We’ve seen 3500 new jobs, some of the highest hotel occupancy taxes in the state we’ve ever had, $243 million of growth throughout the entire city.”

But Gonzalez said revenue growth was simply not keeping up. “You look at your revenue growth, it’s a percent and a half, that’s what your history shows. It’s meager.”

Last fiscal year, a homeowner with an average El Paso home worth $124,000 paid about $869 dollars a year in city property taxes.

It’s too early to tell how exactly this will affect city tax bills because these numbers are all preliminary and some things, such as the ballpark subsidy may eventually be less.

Another major cost driver is the collective bargaining agreement with the Fire Fighters union that will determine the cost of a medical plan and pay. The most expensive plan with the union could cost the City $12.2 million over a four year period. Cortinas presented that figure in his projections for next year, instead of phasing it into the next four years — a move Leeser called “misleading.”

“That’s a scare tactic and I didn’t like it,” Leeser told city employees.