San Marcos City Council Approves FY 2021 Budget, Ratifies 2020 Tax Rate

On Tuesday, the San Marcos City Council approved the Fiscal Year 2021 Budget and ratified the 2020 Tax Rate.

Both items were approved unanimously with Councilmember Jocabed Marquez absent. Marquez left the meeting due to feeling under the weather. The council adopted a budget of $258,741,410.

General Fund additions include:

• $500K to sworn Fire and Police as agreed upon in the FY19 Meet & Confer
• Personnel funding allocation for all non-civil service employees effective Oct. 1st
• EMS annual funding and expansion of service increase of $533K
• Annual contracted services increase
• Economic development incentive and TIRZ payments increase $7.9M
• $5.7M for 75% of sales taxes generated by the Best Buy call center.
• Three Captains and one Firefighter to complete staffing of new station No.6 funded by voter
• approved bond proceeds
• Planner
• Historic Preservation Officer 100% dedicated with existing staff
• Two Community Enhancement Technicians and Horticultural Specialist funded by Community
• Enhancement Fee
• HVAC Service Technician
• Financial Analyst

Electric Fund additions include:

• Complex Meter Technician
• Senior Electrical Engineer
• Electrical Engineering Technician
• Utility Financial Analyst
• Contract Services
• Additional vehicles lease and equipment for new positions
• Professional Development
• Bucket Truck
• Transformer and substation test equipment

Water/Wastewater Fund additions include:

• Water Collection Crew Leader
• Conservation Irrigation Inspector
• Contract Services
• Additional vehicle lease for new positions
• SCAD system upgrades and maintenance
• Tilt camera
• Maintenance skid
• Jet/vacuum truck
• Hydro excavator

Stormwater Fund additions include:

• Street sweeper
• Dump truck
• Track hoe

The proposed budget includes rate adjustments of 5% for Water, 3% for Wastewater, 6.5% for Stormwater, and 3% for Solid Waste and Recycling.

Mayor Jane Hughson offered an amendment to the FY 2021 budget, which would require the City Manager to notify the council via email when an adjustment to the annual budget is made.

All amendments were made to Section 3. The full language of the amendments can be read below.

Section 3: The City Manager is authorized to make the following adjustments to the 2020-2021 Annual Budget without further approval from the City Council:

(a) Transfers of funds among the accounts within each department;

(b) Transfers of funds within an operating fund;

(c) Transfers of funds for construction projects and equipment purchases from operating accounts to Capital Improvements Program Accounts; with notification to the City Council when Complete;

(d) Reclassification of positions within each department; with notification to City Council when complete; and

(e) Decreases in operating accounts in response to decreases in City Revenues or other circumstances, where the decreases do not result in a transfer of funds to another account with notification to City Council when complete.

The amendment passed 6-0 with Marquez absent.

Melissa Neel, assistant director of finance, provided the council with a brief presentation on the tax rate.

Tax rate of $.5930 is 4.9% higher than the no new revenue tax rate of $.5650. The no new revenue tax rate is the rate that effectively generates the same amount of revenue on the same properties as last tax year. Tax rate of $.5930 will generate 7.9% more revenue than last year or $2.7M, of that $1.5M was from new property.

Last year, property appraisals in San Marcos totaled approximately $5.64 million; in 2021, the property appraisal total rose to $6.272 million.

Despite growing property taxes, sales tax remains the largest single revenue source supporting general governmental services in San Marcos.

In FY 2020, sales taxes represented 44.4 percent of the total general fund revenue projected for the year’s budget.

During budget workshops, the city council aimed to reduce costs by $5.5 million and make up a remaining $900,000 through a utility fee increase to cover revenue shortages caused by the COVID-19 pandemic.

Since March, the city of San Marcos has seen an increase in sales tax revenue.

For Sept. 2020, the city received approximately $4.04 million compared to Sept. 2019’s $2.7 million, a 49.53% increase.

In August 2020, sales tax revenue redistributed to the city was 52.81% higher than August 2019 with $4.9 million.

And the city saw an increase of 63.03% in sales tax revenue for July 2020 compared to July 2019.

However, it is uncertain whether the recent trend will continue into next year.

The FY 2021 budget will take effect beginning Oct. 1, 2020, with an end date of Sept. 30, 2021.