City moves forward on 4-cent tax increase

Residents oppose hike amid storm damages

HARLINGEN — Amid residents’ opposition, city commissioners voted 3-1 yesterday to call for the first property tax increase in 14 years to help balance a proposed $46.5 million general fund budget.

Commissioners proposed a 4-cent tax hike which would boost the city’s property tax rate from 0.5888 cents to 0.63 cents per $100 valuation.

They also set public hearings for Aug. 7 and Aug. 21 to give residents an opportunity to speak up about the proposal.

“We haven’t raised rates in 14 years and the price of everything has gone up,” Commissioner Michael Mezmar said before a small audience.

“It’s necessary at this time for the city to raise rates to provide services. It’s necessary to improve the living conditions in Harlingen.”

For owners of homes appraised at $100,000, the proposed tax hike would cost an extra $41 a year, Commissioner Victor Leal said.

The proposed 4-cent increase would generate about $1.3 million to help fund “one-time” capital expenditures, including $390,000 for nine police cars, $128,166 to fund fire department equipment including 12 air packs, $87,000 for a bucket truck, $320,000 for an emergency generator for City Hall and $163,800 to fund the public library’s elevator control.

Commissioner Frank Puente cast the lone dissenting vote, arguing many residents can’t afford to pay more taxes while they try to fund repairs to flood-damaged homes.

“There are a lot of people concerned about that,” he said. “For people like me and people on fixed incomes, this is going to affect them very much.”

Puente called on commissioners to postpone plans to increase taxes until officials determine whether sales tax revenue would climb as residents buy materials to fix their homes following the June 24 storm that dumped more than 12 inches of rain in about four hours, spawning widespread flooding.

From the audience, former Commissioner Robert Leftwich told commissioners to call an election to let voters decide whether the city should increase the tax rate.

Leftwich also argued the city has raked in years of tax revenue as a result of annual increases in its assessed property values.

“It’s disingenuous to say we haven’t had a tax increase in 14 years because every year assessed value has gone up,” Leftwich told commissioners.

Taking the podium, resident Minerva Simpson argued the proposed tax increase would burden residents struggling to fund repairs to flood-damaged homes.

“This tax discussion is like being hit in the gut — me included,” Simpson, co-manager of Fairway Independent Mortgage’s local branch, told commissioners. “We have some people with a lot of loss. I believe the citizens who are owners should have a say.”

Simpson called on officials to trim their budget, describing the city’s new street maintenance fee, a monthly surcharge of about $4.50 tagged onto utility bills, as a hidden tax that comes out to about $54 a year.

“If you could just look at the budget one more time and if there’s some place you can cut, cut it,” she said. “We do it in our personal lives all the time.”

In response, City Manager Dan Serna said he’s already slashed about $7.9 million worth of department heads’ funding requests.

Cash reserves

Earlier this week, Mayor Chris Boswell said officials are not planning to pull money from cash reserves to hold off a tax hike.

The general fund budget would come with a $17.5 million cash reserve capable of funding city operations for about 135 days, more than the recommended 120 days.

During the upcoming fiscal year, he said, officials are planning to dip into cash reserves for $2 million to $3 million to fund the city’s share of an anticipated $10 million to $12 million grant aimed at drainage improvements.

Boswell also said officials are preparing to face a new state law they expect will lead to the city’s loss of about $1 million a year after it takes effect next January.

At City Hall, Serna projects Senate Bill 2 will lead the city to lose about $4.3 million during a five-year period after the law kicks in during fiscal year 2020-2021.

Senate Bill 2, passed this year, would require cities and other taxing entities to hold elections to allow voters to decide if the governments should raise tax revenue by 3.5 percent more than they collected the previous year.

Now, the state allows these taxing entities to collect as much as 8 percent more in annual tax revenue before requiring them to hold elections.

Boswell said the proposed tax increase would help the city “build some cushion” to offset projected losses in sales tax revenue.

MORE INFO

Proposed capital expenses include:

$390,000 — Nine police cars

$98,000 — 12 fire department air packs

$87,000 — Bucket truck

$320,000 — Emergency generator

$163,800 — Library’s elevator control