Palmview’s interim city manager told council members Tuesday the city does not have the reserves in its budget required by its city charter
During the Tuesday city council meeting, Palmview city council members saw the proposed Palmview municipal budget for the 2017-2018 fiscal year which predicts the city will end with a “tight” budget.
That’s according to Interim City Manager Leonardo Olivares who said he predicts the city will have virtually no change in its expenditures and revenues from the current fiscal year.
“We’ve been steady in terms of spending and revenues but the total proposed expenditures for all departments and total estimated revenues are $5.8 million, down from $5.9 million budgeted for the 2017 fiscal year,” Olivares said after the meeting. “This budget is based on numbers from the past so based on the year we’ve had we’ll end with a tight budget. This is not acceptable.”
With the tight budget, the city only has $22,242 in reserves, a far cry from the $290,000 needed to establish a general fund reserve so the city can have a reserve balance of 25 percent, or $1,450,000 for their 90 day reserves that is required by the city charter, Olivares told council members.
The budget proposal would have the city council approve a five-year program to reach this goal by setting aside $290,000 every year for the next five years and leaving it untouched, Olivares said.
“The good news is that we have a balanced budget that does not call for a property tax increase, the budget complies with all the requirements of the charter and the budget allows us to expand the fire department service to provide medical services. It will be a point of pride for Palmview,” Olivares said.
However, Olivares said that because of the tight budget, no money has been set aside for the two interlocal agreements the city has been discussing with the Agua Special Utility District as part of the Palmview Wastewater Collection System Project.
The projects involve a street paving and providing sewer line connections to vacant lots in the city. Olivares said the both projects are worth $1.2 million in capital funds.
Because of the restriction in the budget, Olivares also said the budget does not provide any additional benefits to city employees such as raises or funds to create the position of a personnel director for the city.
During the meeting, city council members questioned Olivares and the city finance director on the city’s existing debt which totals more than $3 million, most of which includes outstanding liabilities, accounts payable and payroll taxes.
A summary of the city’s existing debt shows that since 2004, the city has taken out six different forms of debt instruments that ranged from notes, leases, bonds and grants, most of which the city will have until 2029 to finish paying.
The first note made in 2004 totaled over $1 million and was to help build the city’s multipurpose center. A bond was made in 2008 to pay for “outstanding liabilities” for $1,319,566 but refinanced the following year for $924,198 at 7.25 percent interest.
Rachel Chapa, the city’s financial director, said she had no information on what the “outstanding liabilities” were but told council members she could prepare an updated report with that information for a later meeting.
Another note released in 2014 valued at more than $621,000 was made to pay for “payroll taxes” and “accounts payable.” According to Chapa, this was because the city is still paying off penalties from the federal government for withholding an undetermined amount of payroll taxes for “some time.”
The debt instruments were taken out under Ramon Segovia and John Alaniz, who were city managers at the time. Neither of them responded to interview requests as of press time.
“The concern here is we’re trying to move forward but we can’t because of this past,” Council Member Joel Garcia said. “The city overspent $300,000 per year for 10 years and what do we have to show for it? More stuff that our residents have to pay for.”