Sweetwater mayor warns of financial crisis if city property-tax rate isn’t increased

Sweetwater commissioners have proposed keeping the same property-tax rate for the upcoming fiscal year, even though the mayor said it would leave the city in a financial crisis.

“Based on the decision they took yesterday, the city might have to declare a state of financial crisis,” Mayor Orlando Lopez said Thursday. “The only option we have left is to cut back on expenses within the city and start laying off city employees.”

The proposal

During a special commission meeting Wednesday night, officials amended the mayor’s original proposal to raise the property-tax rate and instead proposed a rate of $2.75 per $1,000 of assessed property value.

Impact on taxpayers

Under the proposed rate, the owner of a median home valued at about $86,000 (taken from the median assessed value from the property appraiser) would pay about $101 in property taxes.

This would be about a $2 increase from last year, assuming the owner qualified for the standard homestead exemption and the home’s assessed value increased by 0.8 percent, the maximum allowed by law this year for owner-occupied home. The slightly higher tax bill is the result of increasing property values in Sweetwater, which experienced 9.5 percent growth.

The city will likely not raise that rate any higher as the budget season goes on, but it can be lowered or remain the same.

Impact on services

Lopez originally proposed a tax rate of $4.50 per $1,000 of assessed property value, which would have been about a $66 increase on the tax bill of the average homeowner.

At the meeting, Lopez, the city finance director and the city auditor, warned commissioners that the city will incur more expenses next year because of pension plans and union agreements that were approved in previous administrations.

Finance Director Ricardo Mendez said that with the same tax rate as last year, the city would be short about $2 million in next year’s budget.

Raising taxes would allow the city to abide by the contracts, balance the city budget and replenish the city’s reserve fund, which Lopez said is way below the minimum required by law.

If the rate is set the same as last year, Lopez said, he would have to declare the city in financial crisis and call the governor to take over the city’s administration.

After the vote passed, Lopez left the meeting.

What the finance director says

“If you were to go along with the same [tax rate] as last year, then we would be short about $2 million. One of the reasons — among many — is the city has pension contractual obligations and union contractual obligations that were agreed upon from previous administrations and were not budgeted because those increases would be due this new fiscal year that is coming up.” — Ricardo Mendez

Public hearings

▪ When: 8:00 p.m. Sept. 8 for first hearing.

This story was originally published July 30, 2015 at 4:39 PM with the headline "Sweetwater mayor warns of financial crisis if city property-tax rate isn’t increased."