San Marcos City Councilmember Chris Jones, left, makes a point during city council budget discussions. City Attorney Michael Cosentino is on Jones’ left. Photo by Sean Batura.
By SEAN BATURA
The San Marcos city budget that took effect last month projects that the city’s expenditures will increase by $7.6 million (5.4 percent), while revenues will increase by $8.7 million (6.5 percent).
The $147.8 million budget keeps the property tax rate at 53.02 cents per $100 of taxable valuation for the fiscal year.
The budget includes $350,000 in raises for city employees, including a one percent cost of living increase for all staff, plus merit-based raises, and salary compression solutions. The raises do not include police officers and fire fighters, who will receive pay increases through meet and confer agreements negotiated between the city and the fire and police professional associations.
San Marcos Finance Director Steve Parker said the civil service meet and confer agreements will cost the city $328,000 in FY 2011.
Compensation for city councilmembers did not increase in the FY 2011 budget. The budget provides $500 per month for councilmembers and $750 per month for the mayor.
The FY 2011 budget includes drainage and electric utility rate increases.
The last drainage utility rate increase was in FY 2007, according to the city. The residential drainage utility rate increase is $1.04 per month more for lots 6,000 square feet or less, $1.66 more per month for lots 6,001 square feet to 12,000 square feet, and $1.90 more per month for lots larger than 12,000 square feet. The commercial drainage utility rate will increase from $3.96 to $5.62 per equivalent residential unit (ERU) per month. According to the city, one ERU for commercial land use is 2,250 square feet of impervious cover.
The electric utility rate will increase 1.4 percent for residential and commercial users. The change in the electric utility rate will result in an additional cost of $1.85 more per average residential customer per month, according to city staff. San Marcos Director of Public Services Tom Taggart said the average residential electric bill in the city is about $125. Taggart did not offer an estimate of the electric rate increase’s affect on commercial users, as their activities are too various to make generalizations, he said.
The electric utility fee increase represents about $540,000 in revenue, Parker said. About $570,000 in electric utility revenues for economic development incentives ($360,000), and lobbying ($210,000). Parker said the city has been using a portion of electric utility revenues for economic development incentives since before 2005.
In discussions leading up to the budget adoption in September, Councilmember Chris Jones disagreed with using part of the utility revenues for economic development incentives, and said the rate increase would not be necessary if the city had found a different way to fund them. Jones said he would not support raising the utility rate on that basis, and he cast the sole vote against the item.
Parker said a recent rate study indicates the need for future electric utility rate increases of about 1.4 percent.
“As we grow our fund balance, then we can use some of that to offset future rate increases, but we always do balance that at the same time,” Parker said. “It’s just to the point now where we’ve actually used our fund balance significantly where we’re down to our 25 percent, or 90-day (operations) level. And so if we don’t get the revenue we say we’re going to get, we could actually dip below that, which affects our bond ratings and our interest rates as we pay for debt.”
In response to the council’s request to explain why the city needed to raise electric utility rates, said Interim City Manager Laurie Moyer: “In five years since the last city increase to the electric rate, the number of customers has grown by 13.5 percent. The peak amount of electricity delivered has increased by 16 percent. The consumer price index, which is the buying power of a dollar, has increased by eight percent. The producer price index for the electric power industry in the southwest United States has increased by 9.9 percent. Material costs have increased by 18.75 percent. The city has increased energy efficiency services and incentives such as smart metering, energy audits, and energy rebates. And to contain costs, we have decreased the number of employees in electric utility by four percent. You are approving a 1.4 percent increase tonight. This increase will support a fund balance in conformance with council’s financial policies, system reliability through infrastructure improvements, and aesthetics for pole replacements, underground electric, and new street lighting.”
Included in the FY 2011 budget is $360,000 for the Greater San Marcos Economic Development Corporation (GSMEDC), or Partners for Progress. GSMEDC is a recently-formed, nonprofit entity tasked with implementing the five-year Greater San Marcos Plan in Hays and Caldwell Counties. The plan is intended to increase wages, reduce unemployment and poverty, provide affordable housing, and protect the environment.
Notable increases in city revenue in the FY 2011 budget include sales taxes of $365,347 more at $18,632,663, franchise taxes and other fees of $183,540 more at $7,249,533, “reimbursement from other agencies” of $110,351 more at $485,420, and “other revenue” of $94,434 more at $659,831. Property taxes constitute the only revenue source projected to decrease from this fiscal year.
The city in FY 2011 will raise 1.2 percent less property tax revenue than this year, or $64,658 less, according to city officials. New property added to the roll this year will generate $139,786 in property taxes, according to city officials.
Moyer told councilmembers that the city avoided having to borrow about $3 million by approving $1 million for general fund projects, just more than $1 million in wastewater projects, $684,000 for water projects, and $324,000 in drainage projects, per the advice of Parker.
Jones supported striking $207,000 in hotel occupancy (HOT) funding in marketing assistance for Premium Outlets, formerly Prime Outlets. Jones made the proposal after Parker said Premium Outlets expressed a willingness to preserve the cooperative relationship and match the award.
“I’m more than willing to work with them, just as long as they’re up front and honest with us, and I kind of felt like they weren’t, initially,” Jones said.
Jones said Premium Outlets did not call him back after he attempted to engage the company in discussion about use of the city’s HOT funds.
Parker said representatives of Premium Outlets expressed a need for more time to review the city’s agreement with the mall’s previous owners and create a marketing plan for use of the HOT and matching funds. The council opted to keep reserve $207,000 in the HOT fund and offer the money to Premium Outlets after the company presents a satisfactory marketing plan and the parties negotiate a new contract.
The FY 2010 beginning fund balance was $50,433,117, and the FY 2011 beginning fund balance is $43,833,519. The FY 2011 ending fund balance is expected to be $38,371,436.Email | Print