City drops tax rate by a penny

MERCEDES — The city expects to take a small hit to its finances in order to help save money for local property owners.

City leaders recently voted to reduce homeowner’s tax rate by one cent.

Homeowners with an appraised value of $150,000 could see about a $10 reduction in property taxes in 2017 if the value on the home remains the same.

For the city, the new tax rate is estimated at a $50,000 loss in revenue.

The tax rate was at 75 cents per $100 and now it’s 74 cents per $100.

Mayor Henry Hinojosa said he would have liked to have cut the tax rate by two cents.

“As more businesses come in, we will be lowering the taxes even further,” Hinojosa said.

City Manager Richard Garcia said the recent devaluation of the Mexican peso shows the move to lower the tax rate proves the city is in good shape, even with the loss of revenue.

Garcia said the city has lost about $430,000 in sales taxes in the current fiscal year.

“But we feel confident it’s going to bounce back,” said Armando Lopez, Mercedes commissioner. “With that loss in revenue, we have to juggle the budget.”

Lopez noted over the years, the city has never had a negative fund balance.

He praised the city manager’s work in keeping a balanced budget throughout his tenure.

Lopez said the city can make up the property tax loss by balancing the budget.

“No budget is written in stone,” Lopez said. “We can change the items if we have over budgeted and we can move some monies around.”

Lopez said any city is going to look at the budget half way through the fiscal year and see what’s happening or where monies can be moved to pay for services.

“We lowered the tax rate in good faith,” Lopez said. “The city needs revenue to provide services to its citizens.”

He said we might not have the lowest tax rate in the county but it’s not the highest, either.

Lopez said the bottom line is the city of Mercedes is in pretty good shape.

“Everybody is concerned about streets,” Lopez said. “Well we are going to keep doing street improvements.”

In December, the tax incentive agreement with the Mercedes Premium Outlets will expire.

The city of Mercedes will soon be raking in all the sales tax revenue from the shopping center’s sales.

The city agreed to split the sales tax revenue for 10 years with the Chelsea Group who developed the outlet mall.

In the first year, the shopping center tallied nearly $188 million in sales. The city saw $2.5 million in tax revenue that year.

“We’re doing okay,” Hinojosa said.