Property values have dropped in Peñitas, so if the city maintains its current tax rate, the 2015-2016 budget will have to shrink.
The current tax rate is 45.9 cents per $100 property valuation, and budget officers estimated if they maintained it, the city would collect $853,381, more than $86,000 less than the current fiscal year, which had a total budget of more than $3.1 million.
But Municipal Court Judge Jesse Lerma, who presented the proposed budget to the city council in a workshop this week, emphasized revenue also comes from other areas of the city, like sales tax. The city budgeted for $680,000 in sales tax revenue and already has collected $576,571, Lerma said. There should be no issue meeting the budget over the last two months of the fiscal year, he said.
Essentially, Lerma said, the proposed budget mirrors the current fiscal year. To make up for the lost property tax revenue, Interim City Manager Roel Bermea said they made cuts from places where the budget wasn’t spent. For example, he said, the city had budgeted for a finance director, a position that was never filled.
“Budgets, mayor, are not set in stone,” Lerma said. “It’s just a guide to help you for the next fiscal year. It doesn’t mean you can’t change it. It doesn’t mean you can’t amend it in any way throughout the year.”
The city also must make payments on the debt incurred from the sewer system project. Lerma said $200,000 would be paid through the 10.76-cent interest and sinking tax rate. Another $71,397 will have to come from either the sewer or general fund, he said.
And the municipal court already has surpassed the $200,000 that was budgeted this fiscal year. It’s at $208,000 and averages about $20,000 a month, Lerma said.
The effective tax rate, the rate the city would need to adopt to bring in the same amount of revenue as the current fiscal year, is 50.6 cents per $100 valuation. The rollback rate, the highest tax rate the city could adopt without holding an election, is 55.6 cents per $100 valuation, and it would bring in $93,974 more than this year.
But Lerma said Bermea and his staff are recommending maintaining the current tax rate.
A public hearing on the tax rate is scheduled for Sept. 2 and a second hearing, if needed, is scheduled for Sept. 11. The city council is scheduled to adopt the tax rate at a Sept. 29 meeting.