The City of San Antonio will restore all of the cuts made to its budget during the coronavirus pandemic last year, City Manager Erik Walsh said Wednesday.
That includes street maintenance, economic development programs and incentives, and eliminating furlough days for civilian employees. The draft budget presented to City Council Wednesday also includes a pay raise for civilian employees and scales back the current hiring freeze, although some of that will stay in place, Walsh said.
“Our revenue figures improved pretty dramatically over the last six weeks,” he said.
Though San Antonio had been preparing for deep shortfalls in its general fund and hotel occupancy tax fund, both of them have improved this year compared to 2020. Over the past six weeks, the City has seen increased revenue from sales tax and the hotel occupancy tax. Both are still below 2019 levels but can now help bolster the next fiscal year’s budget beyond what staff had originally anticipated.
“This time last year, we had a very different situation, with revenues falling; we were unsure where the bottom was at. … [Now] we’re on an upswing,” Walsh said. “It’s the exact opposite.”
That revenue increase comes with uncertainty, however, Walsh added: “How long is the upswing going on? Where is the ceiling? Is this a three-month deal, is this a six-month deal?”
City staff presented a “trial” budget to the newly installed City Council on Wednesday as a preview of what the fiscal year 2022 budget could look like. Council will have a broader goal-setting session on June 25, where members can list their individual priorities. Find the trial budget presentation here.
Before then, the draft budget shows council members a framework, Walsh explained, highlighting strategic areas that the city wants to focus on: housing, homelessness, mental health, domestic violence, and of course, public health. In that vein, the San Antonio Metropolitan Health District has already begun reevaluating its strategic plan for the next five years, Walsh said.
City staff expects to fund the fiscal year 2022 budget with some help from federal coronavirus recovery dollars under the American Rescue Plan Act (ARPA). While the City expects to receive a total of $465 million, $326 million allocated for “fiscal recovery,” which Walsh said means ensuring financial stability, recovering revenue loss, and addressing the immediate needs that arose from the coronavirus pandemic.
The rest will be dedicated to specific programs, such as emergency housing assistance and airport operations. San Antonio already received its first tranche of ARPA funding and City Council is scheduled to formally accept that money on Thursday.
The City lost about $97 million in revenue in 2020 — $46.5 million from the general fund and $51 million from hotel occupancy taxes. That loss can be offset by federal coronavirus recovery dollars, and the plan to do so is included in the trial budget.
The City should also prepare for the possibility of recovering even faster than expected this year, Walsh said. Because revenue loss has to be documented to use ARPA funding, the budget department has to “operate in parallel universes” — one where the City’s revenue follows a predicted path, the other where a larger increase triggers the need to find other ways to spend federal dollars.
“If we recover faster, we have to shift to using that money for eligible expenses, which is tighter,” Walsh said.
ARPA funds must be committed by the end of 2024 and spent by the end of 2026.
Federal coronavirus recovery dollars will also allow San Antonio to extend its Emergency Housing Assistance Program, Deputy City Manager María Villagómez said Wednesday. Before, the City estimated it would run out of funding for the program in July. With $49.7 million from the federal government dedicated to rental assistance, rent relief will be available through the end of the year.
“We’re still seeing demand for it,” Walsh said. “I think that is probably going to be part of a larger conversation with the Council this summer, about how do we swing back to affordable housing and away from emergency assistance? Because unless Congress passes something else, I don’t see anymore $40 million, $50 million allotments [for that].”
Currently, next year’s draft general fund budget sits at a total of $1.35 billion; the adopted general fund budget for fiscal year 2021 was almost $1.3 billion, Villagómez said. The value of budget cuts restored is $37.2 million, she said. That does not mean compensating for past cuts, just restoring the budget to pre-reduction levels, she said.
City staff will present a budget proposal to council on Aug. 12 and the budget is scheduled to be adopted in September. Residents can continue to provide feedback and comments on the fiscal year 2022 budget until June 21. Take the survey online here.