Mission aims to raise tax rate by 3.5 cents

This article originally appeared in the Friday Aug. 30, 2019 issue of the Progress Times.

During this week’s regular meeting, the Mission city council approved a proposed tax rate of 0.5212 per $100, 3.5 cents higher than the current tax rate.

This will be the first raise in the property tax rate since 2011, but the city has held similar rates in the last 20 years. The council’s motion was against the city staff’s recommendation, which was to raise the rate to 0.5411 per $100 of taxable valuations.

As previously reported by the Progress Times, the city council has been grappling with the property tax rate and the 2019-2020 preliminary budget, meeting multiple times for workshops and special meetings in the last two months. Before this week’s regular council meeting – where the tax rate had to be voted on in order to be published by Fri. Aug. 30 – council held a workshop at city hall after meeting in pairs with City Manager Randy Perez last week to ask more detailed questions.

During the workshop, the finance department presented council with data on what funds the city has currently, the allocation of funds to different departments, comparisons between Mission and other similar/surrounding municipalities, benchmark tax rates from Hidalgo County, revenue projections, impacts to the taxpayer, 20-year historical trends in Mission and fund balance trends.

The main goal of the workshop was to come to a consensus on what they would vote on for the proposed tax rate.

Perez and the finance department compiled different possible financial scenarios based on one cent increases, from no change to the rate to the full 0.5411 proposal, with added expenditures from the group health adjustment, collaborative commitments made to the Police Department and a minimum wage increase for full-time employees from $9.50 to $10.50.

The minimum tax rate increase in order for the city to not end up in the red (or with a negative general fund balance) was at least 3 cents, with any smaller incremental changes still resulting in a negative budget.

After Perez presented, council and Mayor Armando O’caña discussed possible changes, and asked more questions about the ramifications of raising it. Council member Ruben Plata had to leave the workshop in order to make a lunch meeting, but noted that he was not going to propose anything at the council meeting higher than 3 cents.

“I think we need to be creative on how we can come up with some money,” Plata said. “Maybe we [should] have a committee or do a workshop where we review the budget on a monthly basis.”

Mayor Pro-Tem Norie Gonzalez Garza and council member Alberto Vela agreed with Plata, though Vela said he was flexible with making it 3.5 cents. Council member Jessica Ortega-Ochoa was in favor of following staff recommendations in order to positively impact the city’s financial situation.

“Unfortunately we’re going to have to make a tough decision tonight,” Ortega-Ochoa said. “I still feel the same as I did last week, that our constituents would be okay with it [raising the rate to 0.5411] as long as it goes for something in the best interest of our city.”

During the council meeting, Plata made a motion to raise the property tax rate by 3 cents before Vela made a motion to raise it by 3.5, saying the additional money could go toward the fund balance.

Plata, Vela, Gonzalez Garza and Ortega-Ochoa voted in favor of the 3.5-cent increase. O’caña voted against the motion, and made several statements during the prior workshop explaining that the city needed funds before Jan. 2020.

Senate Bill 2, which will go into effect Jan. 2020, will cap the maximum a city can increase property taxes (without an election) in one year at 3.5 percent. Cities will be able to combine yearly property tax rate increases if increases from the previous three years are not used, however this will be the last opportunity for Mission to raise the property tax rate by a maximum of 8 cents without an election.

O’caña noted that the city should have reserves in the fund balance in case of an emergency, such as the June 2018 rain that flooded several Mission homes. If the tax rate was raised at the rate recommended by the city staff, the fund balance at the end of the next fiscal year would be about $1.2 million.

At 3 cents, the ending year fund balance is estimated to be $175,407.

Council approved an increase of 3.5 cents with a 4-1 vote (O’caña voted against the council’s proposal).

Two public hearings will be held before the new rate is officially adopted, and are set for Sept. 9 and Sept. 16. Official adoption of the tax rate is scheduled for Sept. 23.