San Antonio’s Deputy Chief Financial Officer Troy Elliott is recommending utilizing banked tax revenue to fund additional law enforcement officers in the coming fiscal year, among other budget priorities.
Last month an outside consultant recommended the San Antonio Police Department hire 360 new patrol officers over the next several years, including 100 in 2024, at an estimated cost of $12.4 million. The goal is to improve response times and reduce crime by giving officers more time to proactively patrol, according to the consultant.
In order to pay for hiring additional officers, Elliott has suggested using provisions of a 2019 Texas law that says local governments can increase their property tax revenue by a maximum of 3.5%, excluding taxes from new construction, or risk triggering a vote on the tax rate. If a government doesn’t meet that revenue cap, it can carry over the unused increment for use in a future year, up to three years.
The city has banked unused property tax revenue increases in the past two fiscal years, Elliott told reporters Wednesday, amid rapidly rising valuations, high inflation and several tranches of federal pandemic relief.
This year Elliott is calling for the city to use a portion of the banked increases, from fiscal year 2021-22, allowing the city to collect an additional $8.2 million in property tax revenue.
“We want to add 100 officers,” City Manager Erik Walsh told reporters Wednesday ahead of City Council’s review of a draft budget. “That unused increment is the relief valve that the Legislature gave municipalities” to fund such priorities.
Texas law restricts local governments from reducing law enforcing spending from the previous year, causing some municipalities to exercise extreme caution in their budgeting process.
For example, Bexar County commissioners discussed last month whether to keep unfilled law enforcement positions out of the budget until candidates are lined up to fill them. The commissioners court agreed to release a small number of positions at a time, while Sheriff Javier Salazar pushed for more flexibility to increase hiring competitiveness.
San Antonio, whose voters soundly rejected a proposed charter amendment aimed at police reform, known as Proposition A, on Saturday, appears headed the opposite direction.
The city hopes to receive a federal grant to partially fund 50 of the proposed patrol officer positions. Walsh said Wednesday, however, that the city has not received money from that grant program since fiscal year 2020.
Last year Houston was the only major Texas city to receive the grant, Walsh said. San Antonio has not received feedback about why its more recent applications were rejected.
“We’re going to have to make the case to the Department of Justice why it’s important to us,” Walsh said.
If the city does not receive the grant, which would provide the city with an additional $3.7 million next year, “we’re still going to add 100 officers,” said Walsh. “Hopefully, we get the pull of the federal government to help offset some of those costs.”
Separate from the additional patrol officers, council is also slated to solidify and expand a pilot initiative that deploys a specialized team to nonviolent 911 calls that involve mental health issues. The San Antonio CORE program, which currently only operates in the central service area, will expand citywide after two teams are added.
During their review of the preliminary budget on Wednesday, council members supported the nearly $3.5 million expansion over the next two years.
Wednesday’s budget presentation suggested the city is in an overall positive financial position.
Walsh said sales tax revenue is about 5.8% ahead of last year. Hotel occupancy tax revenue was below budget, he said, but projected to go above budget over the summer months.
The city estimates enplanements at the San Antonio International Airport for 2023 will nearly match what they were before the pandemic, creating a positive outlook for airport revenue.
On Thursday, the city will launch a statistical survey of residents to collect feedback on spending priorities. City officials will return to the council in June to provide a report on that survey and more accurately estimate what the budget will look like next year as property tax values are finalized. Last year’s budget totaled $3.4 billion.
Council is slated to vote on the budget on Sept. 14.
Property taxes
When property tax revenue is projected to exceed what the city is allowed to collect, it makes adjustments to the tax rate and to exemptions the state allows that reduce the amount of revenue the city is taking in.
Last year that meant increasing the city’s homestead exemption, increasing exemptions for disabled people and people aged 65, as well as reducing the overall tax rate.
“Last year, when we did the 10% homestead [exemption], it was so that we could reduce the rate more, which affects everybody … it helps commercial and multifamily [property owners],” Walsh said.
This year commercial appraisals are up 13.3%, Walsh said, while multifamily appraisals are up 17.9%.
“If the council chooses to do more residential homestead, then that helps homestead taxpayers, but there won’t be any impact on commercial or multifamily,” Walsh said.
Mayor Ron Nirenberg said the city should consider increasing the homestead exemption anyway, to guarantee the relief makes it to individuals versus landlords.
“With the commercial and multifamily rollback, we would be dependent upon those multifamily property owners for that to trickle down to the renter,” Nirenberg said. “That’s not always guaranteed, and in fact, probably very little of that actually goes into rent relief for folks.”
San Antonio is currently the only major Texas city that hasn’t set its homestead exemption to the maximum 20%, choosing instead to offer more property tax relief to homeowners over the age of 65.
“I’m inclined to increase that homestead [exemption], and perhaps even to max it out … given the fact that that it’s really families that are still struggling with the burden of rising costs [and] rising inflation,” Nirenberg said.
Solid waste
While most of the city’s operating funds are projected to be balanced over the next five years, one worrisome point is the Solid Waste Operating and Maintenance Fund.
“Costs have gone up 15% [over] the last five years and revenue has only gone up 6%, so it is not structurally sustainable,” Walsh said.
City staff flagged the growing problem in February, citing increased costs for labor, landfills and equipment.
Later this summer they will present the council with a range of options to increase fees, Walsh said.
Potential boost for Animal Care Services
City staff recommended reserving $848,000 in funds from the 2023 budget to start work on its Animal Care Services’ strategic plan.
The department has received increased attention after a deadly dog attack in February that killed an 81-year-old man.
While most council members expressed support for the plan — which, among other things, would increase staff and the city’s capacity to spay and neuter animals and expand the hours of facilities — several council members had ideas of their own for how to spend that money.
Councilmen John Courage (D9) and Mario Bravo (D1) suggested it could be used to fund the fledgling San Antonio Philharmonic, which formed after the San Antonio Symphony dissolved and declared bankruptcy in June 2022.
Courage also suggested the money could be spent on drainage issues and street maintenance.
This article has been updated to correctly identify Troy Elliott, the city’s deputy chief financial officer. An earlier version of this story incorrectly attributed the budget forecasts to Chief Financial Officer Ben Gorzell.
