EL PASO, Texas -- The city's proposed tax rate — though slightly lower than last year's rate — will result in tax relief for few, if any, El Pasoans because it doesn't offset a sharp rise in property valuations.
Under the city’s proposed budget and tax rate, the city's portion of a tax bill on an average-value home — now appraised at more than $172,000 — would increase by $193 this year, according to preliminary valuation figures from the El Paso Central Appraisal District.
The city’s total preliminary budget is about $1.2 billion — a 9% increase over last year. That includes $21.4 million more in revenue collected from property owners over last year.
Chief Financial Officer Robert Cortinas said the majority of the increase in the city’s budget will go toward city personnel – including bolstering the police and fire departments and staffing new projects such as the children’s museum. Lowering the proposed budget and tax rate would likely require cutting personnel or their proposed salaries, he said.
“That’s the reduction we would really have to do,” Cortinas said in an interview with El Paso Matters. “Instead, we're talking about increasing wages, providing more compensation to ensure we’re being competitive. The labor market is a very, very difficult challenge right now for a lot of our city departments to continue providing services, so we have to get more aggressive to be able to hire.”
Lower tax rates, higher tax bills
To achieve that, the city is considering a tax rate of 90 cents per $100 in property valuation, down three-fourths of a penny from the current 90.7-cent rate.
However, because the proposed tax rate decrease doesn't offset the rise in valuations, most property owners will still see a significant increase in the city’s portion of their property tax bill.
And that’s not the only increase taxpayers will likely see: Property owners in the El Paso city limits generally pay property taxes to five governmental entities — the city, the county, the school district in which they live, the hospital district that operates University Medical Center and El Paso Community College, all of whom in the coming weeks will deliberate over proposed budgets and tax rates.
But the city has been the main driver of rising property tax bills since 2012 – accounting for half to almost two-thirds of the total tax increase for average value homes depending on the school district in which a home is located, an El Paso Matters analysis shows.
Where the money’s going
The potential increase to taxpayers comes during a time of economic uncertainty, including the ongoing challenges brought on by the COVID-19 pandemic, rising costs of fuel and goods and labor shortages.
City Manager Tommy Gonzalez, during a recent budget overview to City Council, said the city has been grappling with how to balance providing services and remaining competitive.
“It’s an issue across America, but we have been very strategic,” Gonzalez said.
The city increased the minimum wage for city employees and recently implemented sign-on bonuses of $1,000 to help attract workers for various departments facing shortages, including those in the quality-of-life sector.
The proposed budget includes an additional 75 cents per hour for civilian employees that will kick in May 2023; lump-sum payments of $175 or $250 based on performance evaluation ratings; and larger service-time pay increases for every five years of service to compensate long-term employees.
Public safety, which accounts for about 60% of the next fiscal year’s budget, will include two police and fire academies, continued funding for the crisis intervention teams, and information technology equipment and staff support for the body-worn camera program.
Quality of life, which will make up about 12% of the budget, includes $4.5 million more to operate new bond projects such as La Nube children’s museum and the zoo’s penguin’s exhibit; $300,000 more for water costs; and $390,000 more for park maintenance new parks are built or expanded across the city.
Infrastructure, which includes streets and maintenance, will make up 10% of the budget and allocates $300,000 to the Neighborhood Traffic Management Plan; $1.8 million for intersection safety such as traffic lights and Americans with Disabilities Act accessibility; and an additional $1.2 million for the median maintenance crew, which Cortinas said includes the new Montana Avenue freeway in East El Paso. Although the six-lane freeway with frontage roads is a state project, the city is charged with upkeep of its medians.
Gonzalez said to leverage tax dollars, the city has also used state and federal grants to pay for everything from additional firefighters and police resources and grants from the Centers for Disease Control and Prevention to address health needs.
City officials expect to receive the certified tax roll from the Central Appraisal District July 25, which will help determine its final tax rate. A public hearing is set for Aug. 9. The budget and tax rate are set to be adopted on Aug. 23 ahead of the Sept. 1 start of the fiscal year.