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Peñitas to keep property tax rate the same

According to city leadership, the budget for Peñitas is “right on the number.”

Last Friday, Sept. 6, members of the Peñitas city commission and budget committee, along with the mayor, police chief and fire chief met for a budget workshop to discuss the preliminary budget for the 2019-2020 fiscal year. City Manager Omar Romero presented an overall view of the budget and how the city is doing.

City of Penitas logo“We do a lot with the revenue that we have,” Romero said. “And I think that as we continue to grow we will be able to provide more services.”

The city is planning on keeping the property tax rate the same as last year, at 0.5562. Romero said council recommended it stay the same.

“The TIRZ [tax increment reinvestment zone] rate shrank,” Romero said. “That was mostly attributed to some land in the TIRZ that was acquired by the state, it became non-taxable property.”

Revenue overall should increase about about $17,000 if the rate stays the same, Romero said, from $1.25 million to $1.27 million. He added that the county recommended they take an effective tax rate at four cents higher than the current rate, saying they would be losing revenue if they do not.

“The tax rate doesn’t take into account delinquent collections, it doesn’t take into account people who have contested their taxes, any lawsuits pending or litigation,” Romero said. “We budget for the number that the county gives us that is the anticipated collections.”

Budget committee member John Womack was present at the workshop, and said that no resident wants higher taxes.

“But by the same token, and what I’ve been able to observe, if there’s any kind of bump in the road, you don’t have much of a cushion,” Womack said. “You’ve been very successful in running the city thus far with the assets you have.”

Womack said that since Mayor Rigo Lopez has been in office, the fire and police departments have expanded, the library has been kept in “tip-top shape” and there are good employees and staff working on the streets.

“Moving forward, you’ve done a lot of great things,” Womack said. “If there’s any kind of a hiccup… you may want to go out there and throw a couple of pennies to give yourself a little bit of breathing room. But you don’t have much of a reserve.”

In terms of the debt service fund, Peñitas has $271,397 (in cents, it’s $0.13 from the property tax income) owed for the sewer plant. Lopez asked about this amount, wondering why the ad valorem is at the rate it is.

“That’s what Mayor [Marcos] Ochoa committed us to with the sewer plant,” Romero responded. “Since taking office you [Lopez] raised it ten cents. The reason it was raised is because when the sewer plant was put into operation, the prior council never raised the ad valorem to meet the ad valorem commitment that was made to USDA to pay for the note.”

Romero said the sewer plant was the only ad valorem the city has currently. Lopez clarified that because of the ad valorem, Peñitas has been running on about 0.42 cents in property taxes.

Romero said that in terms of sales tax, Peñitas has seen a five percent sales tax increase every year for a few years.

“We’re going to forecast the same five percent increase,” Romero said. “I know we have a couple of different economic development entities coming into the area, obviously we will try to adjust [the rate] once we know what their sales are, but we feel a five percent increase is a good number to stay at.”

Romero said the franchise tax collections will be staying the same, but Peñitas expects an increase in the next fiscal year because of Las Alturas de Peñitas, a skilled-nursing and long-term care retirement community that is currently being built in the city (and expected to open in early 2020) that should create 150 jobs.

The total city budget for 2019-2020 is expected to be $3.54 million, with a variance of about $18.

“It is a draft budget, we still are going through and tracking things down,” Romero said.

“I think you guys are right on the number,” Womack added. “That’s the line, and you’re there. You guys have indicated in some of the discussions that you want to scrub the budget a little bit, but there’s some money to be found. The west, here, now is the time for expansion and growth, and you’re seizing the moment. The city is investing in itself, and that’s a good sign for someone coming in.”

This article originally appeared in the Friday Sept. 13, 2019 issue of the Progress Times.

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