Read our series on CPS Energy and SAWS, how much their executives make, how much they spend, how they see themselves in the marketplace and how it affects you as a ratepayer.
The City of San Antonio’s budget is set to grow slightly to $2.9 billion for the next fiscal year, but officials said that’s enough to make up for the growing needs of the population and other challenges, including revenue reductions stemming from State legislative action. City staff had to find additional revenue and cut costs.
One source City officials turned to was San Antonio Water System (SAWS), which could increase the portion of revenue it gives to the City for the first time since 1992, according to a draft of the fiscal year 2020 budget. That’s sustainable for a couple of years, SAWS officials said, but could lead to increased water rates in the future.
“If we were not doing this increased transfer from SAWS, we would have to be cutting the budget” for other services, said Deputy City Manager Maria Villagómez on Wednesday.
The publicly owned water utility can increase its portion of revenue transferred to the City from 2.7 percent to 4 percent, Villagómez said, providing a total of $29 million to the City’s general fund, an estimated $9.9 million more than it would have under the previous revenue transfer rate. City and SAWS officials said the boost likely will not result in water bill increases for residents in the short term.
The draft budget, which does not include a property tax rate increase, will be presented to City Council on Thursday morning. Council members will spend a month discussing the details with each other and the community ahead of a vote on Sept. 12.
Several community meetings are scheduled throughout the next month. Times and locations will be posted on the City’s SASpeakUp website. An online survey about the budget will go live next week, Villagómez said.
Among the hurdles that this budget clears, she said, are lower-than-expected CPS Energy revenues, which make up 30 percent of the City’s general fund; $7.4 million less revenue from telecommunication/cable fees; $4.5 million less interest income; and $6 million less in property tax revenue due to the recently approved local homestead exemption.
A lower state cap on the City’s revenue from property tax money increases – from 8 percent to 3.5 percent – takes effect in 2021. City staff has recommended that Council consider annual adjustments to the tax rate to manage within the state-imposed revenue cap.
“I’m extremely confident that we put together a proposed budget that meets the Council’s goals, is balanced, and prepares us for some of the uncertainty that we’ll start facing next summer with the [property tax] changes in the Legislature,” City Manager Erik Walsh said.
In the short term, the City must deal with the lost revenue from telecommunication and cable companies after the Texas Legislature approved a measure during the last session that abolished some fees they pay to use City infrastructure. Walsh said the choice was between finding a source to replace the lost revenue or cutting City services such as code enforcement, libraries, and parks.
“My preference was to look to replace that revenue and maintain those services,” Walsh said.
The increase in SAWS revenue will cover the cable fee hit and then some.
“SAWS is well financially managed and has the capability, and we worked closely with them,” Walsh said. “We wouldn’t be pursuing this if we thought we were going to be causing issues elsewhere.”
Robert Puente, SAWS president and CEO, agreed but said there could be future impacts to ratepayers if SAWS is no longer able to use this funding for large infrastructure projects.
“Short-term, it does not adversely affect [daily operations and maintenance,” Puente said. “This money would be coming out of what is essentially a savings account. … That’s why I think that SAWS can come to the assistance of the city and be a team player in this endeavor.”
Long-term, however, SAWS could feel a significant pinch, he said.
“If you have an additional $10 million expense you either have to cut services or get the revenue from somewhere,” Puente said. “There’s not a whole lot of fat [in our budget].”
SAWS has good bond ratings in part because of this savings account, therefore it’s able to get better interest rates on loans for big projects.
“We are well managed,” Puente said. “My concern has always been trying to keep rates as low as possible … [but] we will make the case if we need the rate increase.”
Future increases in water rates will be largely driven by capital projects, said Ben Gorzell, the City’s chief financial officer, such as the Environmental Protection Agency’s requirement to upgrade its sewage system, the Vista Ridge water pipeline, and others.
SAWS’ increased contribution to the City will become a cost to the utility, Gorzell said, “just like they have to recover all of their costs at some point. They’ll have to look at that.”
While the City’s fiscal year begins on Oct. 1, SAWS follows a calendar year budget. It’s unclear if the City’s change to SAWS’ revenue will become effective immediately.
Mayor Ron Nirenberg and other Council members are supportive of getting additional revenue from SAWS.
“I’m mindful that it’s being done in collaboration with the water system so that we achieve maximum benefit from the resources that are available but do not have any negative impact on rates,” Nirenberg said.
Councilman John Courage (D9) called for the contribution increase to 4 percent in a commentary published Wednesday by the Rivard Report.
The City can take up to 5 percent of SAWS’ gross revenue, according to an ordinance passed when SAWS was founded. CPS Energy, the publicly owned electricity utility, currently gives 14 percent of its revenue – the maximum allowed – to the City.
Money saved from various cost-saving tactics will be used to focus on the funding priorities of City Council – determined by a goal-setting session in June – and the community – through public engagement efforts and surveys, Villagómez said.
Council identified supporting at-risk families and children as its top issues. The proposed budget includes $1 million for prevention of domestic violence – half for educational and awareness efforts and half to implement the results of an in-progress study of the causes of and mitigation efforts for domestic violence, $600,000 for a partnership with University Health System to establish a trauma-informed care program, and $1 million for homelessness initiatives that will be funded by a 50-cent increase in tickets for river barge rides and admission to the Tower of the Americas.
The 10 new SAFFE (San Antonio Fear Free Environment) officers proposed in the San Antonio Police Department budget will be focused on following up with victims of domestic violence, Walsh said.
Officials made a heat map of where violent crime is occurring in San Antonio overlaid with incidents of domestic violence, he said. “Those are the areas where those 10 officers are going to be working.”
The 2020 budget and the last two budgets have distributed street infrastructure and other investments according to need rather than dividing them evenly among the 10 Council districts. Nirenberg’s first budget as mayor was also the first to use a so-called “equity lens” for distributing funds to areas and populations that need it most.
“We continue to focus the budget to really help those vulnerable communities that are facing challenges and make a difference in their lives,” Villagómez said.
A community survey found affordable housing was respondents’ top budget priority; it also was high on Council’s priority list.
Implementation of recommendations from the Mayor’s Housing Policy Task Force would continue under the proposed budget, totaling $34.4 million, an amount that includes federal grants and partnerships with San Antonio Housing Authority, San Antonio Housing Trust, and tax-increment reinvestment zones.
Walsh will also recommend that an existing City position be converted to a higher-level Chief Housing Officer, who would report directly to the city manager.
In addition to SAWS revenue, Villagómez said, Walsh worked with each department to find $6 million worth of budget savings.
“There’s no impact to service delivery,” Villagómez said. “Some of them are just efficiencies and things that we would be doing regardless of our financial position.”
Under the proposed budget, 50 cents would be shifted from one fee to another on utility bills to allow the City to use that money on parks.
“There’s no impact to the ratepayer,” Villagómez said, “but that allows us to move $3.6 million in general fund expenses for parks … into the parks environmental fund.”
The solid waste environmental fund is in a “pretty strong financial position” because not as many residents have taken advantage of reduced fees for smaller trash bins as anticipated, she said. Cutting the solid waste environmental fee by $2 per month for small bins is proposed to incentivize residents. These fees appear on CPS Energy bills, but they are managed by the City.
The City is close to starting contract negotiations with the firefighter’s union in arbitration sessions in which a panel of judges will have broad discretion over the cost and terms of a labor agreement. At $618 million, the fire and police union contracts make up the City’s largest budget items.
The unknowns of the fire union contract lends uncertainty to the budgeting process, Walsh said, but the City must move forward with a budget and adapt if necessary.
“The proposed budget is based on what we know,” Walsh said. “We’re not budgeting for the unknown.”
Here are some highlights of new spending proposed for fiscal year 2020:
Families and children
- Domestic violence prevention – $1 million
- Trauma-informed care aimed at increasing child resilience to trauma and improve school performance – $600,000
- Homelessness initiatives – $1 million
Affordable housing
- Federal Community Development Block Grants, HOME Investment Partnerships Program, and City’s General Fund – $23.3 million
- Partnering with local initiatives support coalition, San Antonio Housing Trust, and San Antonio Housing Authority – $4.9 million
- Potential grants from city-initiated tax increment reinvestment zones – $6.2 million
Police
- 16 new police officers (six sergeants, 10 SAFFE officers)
- $272,000 in SAPD overtime will provide two extra patrol officers in neighborhood entertainment zones (Southtown, Pearl, North and South St. Mary’s streets, etc.) in the evening
- Four parks police officers
- $2.6 million to replace laptops in all patrol vehicles, other security enhancements at substations
- $200,000 for a police facilities study for current substations and future growth
Fire
- Three firefighters for an enhanced squad at Fire Station 44 in the West Side outside Loop 410, the busiest station in San Antonio
- One uniform position for fire suppression training
- $3.4 million to keep contaminated gear away from firefighters, EMS stretchers, etc.
Streets and sidewalks
- $110 in street maintenance
- $17 million in sidewalks – $12 million from 2017 Bond, $5 million from Advanced Transportation District for a total of 41 miles of usable sidewalks
- $1 million for bike facilities and three-person micromobility team to assist the new pedestrian mobility officer
- $5.4 million for various projects for the required Congestion Mitigation and Air Quality projects; outreach initiatives, traffic signal optimization, South Texas Medical Center’s “Green Street,” and VIA Metropolitan Transit program frequency
Libraries
- $1.7 million for facility improvements, furniture, and computer replacement
Parks
- $2 million and 16 positions to support new creekways, trails, new park acreage, and amenities
Employee compensation
- Civilians: $11.9 million
- 3 percent increase for all Step Pay Plan employees
- 3 percent value equivalent for performance pay for professional and managers
- 4 percent for parks and aviation police
- No increase to health care premiums
- Uniformed police and fire: $12.8 million
- 3 percent wage increase for police, consistent with the police union’s contract
- Step pay and longevity increases for police and fire
- Increase of retiree health care rate from 11.37 percent to 12.51 percent
Development services (no fee/rate increases)
- 14 positions added to address work without permits around the city as well as short-term rental and regulations of land use surrounding military bases
Solid waste
- Decrease of $2 per month for smaller trash bins to incentivize recycling/compost
Storm water operating fund
- $8 million for six new capital projects
- Increase of fee to 2.25 percent – last of five years of increases
- The average residential increase is $1.30 per year; the non-residential rate is $8.90 per year
Parking
- $1.3 million for parking garage maintenance
- $300,000 for alternative transportation incentives for City employees
