We have a budget! We mangled it at the last second, and now we’re stuck with it. Read how we shot ourselves in the foot here.
Here we go!
Hours 0:00 – 3:25: The budget and tax rates. I may have gotten a wee bit cranky about how this went…
Bonus! 3 pm workshops: Very quick updates on the Tenants Right to Organize policy and police car rental policy, and an update to the Airport Master Plan.
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One final note: The last few weeks have obviously been pretty dicey, politically. Clearly the First Amendment protections on political speech are slipping. I don’t yet know what this means for me, and for the blog. For now, I’m taking a wait-and-see approach.
They live in our lovely river, but nowhere else. It could be catastrophic if there was a crash on I-35 over the river, and a bunch of hazardous chemical were spilled into their habitat.
What cities do in this situation is design a Hazmat route. Here’s what we’re proposing:
That’s along FM 150. So you’d cross the San Marcos river well east of the habitats of those critters, if you were driving a truck full of something nasty.
A few notes:
This is only for thru-traffic. If you’re delivering somewhere in San Marcos, you can head there.
This is going to be a long process – it’s gotta go back and forth with TxDOT a few times.
We also have a lot of trains crossing our river! I doubt you can re-route trains quite so easily, but I wonder how environmentalists think about and plan for these risks.
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Items 23-25: The budget and the tax rate
I’m sorry, this item gave me whiplash. This went off the rails. Not the good kind of roller coaster.
We need a fair amount of backstory. The drama on Tuesday unfolded so fast that it will be incoherent, unless I bring you up to speed, first.
I’ll try to keep it zippy!
Background
First thing to know: we have not raised our property tax rate since 2022.
Politicians genuinely hate raising taxes. Politicians like being liked! They like being elected. I don’t know where we got this idea* that they rub their palms together and cackle about bilking tax-payers, but they don’t do this.
Polititians love short-term easy decisions that make tax-payers happy! Raising taxes is the opposite of that.
*It was Reagan.
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The budget process
1. January-February-March-etc: they hold some giant two day workshops. Councilmembers develop their priorities for the next year. More workshops. Very slow grind.
2. May-June: The first tax estimates come in: we’re in a budget crisis. We can squeak by this year, but we’re facing a budget cliff.
Our property taxes are down (because home prices are declining)
Inflation is up.
We are as lean as we can go. We have already cut $100K from departments.
We’ve got some big expenses looming. (Covid money ending.)
The state government is trying to strangle cities.
Here’s the graphic that they showed:
It was a big Come to Jesus Moment. Council went to Jesus. They gave direction that they wanted to go with the Structurally Balanced side of that road.
Bottom line: “Structurally Balanced” means raising the tax rate modestly over multiple years (instead of one big crazy future hike.) All of council agrees with it.
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June: In June, staff comes back with some Structurally Balanced tax estimates:
Here’s what everyone said they wanted:
Ok, great! We’re getting somewhere.
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August: Real numbers come in. (June was just an estimate.)
By law, council has to set their own upper bound, in August. It’s a weird quirk.
So staff lays out these possibilities:
That’s in the afternoon, at the 3 pm workshop.
Matthew and Saul are all willing to go up to the middle column now. The gravity of the budget crisis is evident to everyone.
The Lorenzo changes things up: “I want to go between 64.96¢ and 70.49¢. I want to land on the number that gives a $0 in that last row. Neither a surplus or a deficit forecast for 2027.”
Everyone is intrigued by this idea. He ends up successfully getting everyone on board with this! What careful planning we’re demonstrating!
That night, at the 6 pm meeting, they vote on the tax rate cap:
So we go with the 67.69¢.
This is our max: the final tax rate cannot be higher than 67.69¢.
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Note: In August, they also mentioned something about an EMS study. It was another potential looming cost. This is going to become a very big deal, but it didn’t jump out at me then.
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Last background month! We’re now to September.
September 2nd meeting:
They take the first official vote on the 67.69¢ tax rate:
Now you’re all caught up.
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This current meeting!
Here are the three scenarios we need to have on hand for this conversation:
What would home owners actually have to pay, if we raised rates in these categories?
The “No New Revenue” rate, 62.78¢. (NNR) Your tax bill goes up $0.
Option 1: 64.96¢. The average tax bill goes up $72.46 per year, or $6.03 per month.
Option 2: 67.69¢. The average tax bill goes up $163.21 per year, or $13.60 per month.
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Sidenote: Those amounts are based on an average house worth $347,398 (and $15K homestead exemption).
Most of San Marcos rents! But for those who own homes, home value varies a lot.
Here’s the average home price by neighborhood in San Marcos:
The last column is the monthly increase, under 67.69¢.
That chart has 40 rows. Only the last eight rows exceed the average home value! (Blanco Vista and Kissing Tree are both way bigger than they seem.)
Point being: most neighborhoods would see smaller tax increases under these proposed hikes.
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The public outcry:
<crickets> …. <crickets>
There was none. I mean, I’m sure Council got phone calls. But I’ve watched these meetings for years now – compared to other years, this is nothing.
Two people showed up to talk about the budget during the public hearing. They both made nuanced points about the good parts and bad parts of the budget.
People show up when they’re mad. This ain’t that. This is the wind at Council’s back, pushing them to make the responsible decision.
And then suddenly there is a big curve ball: EMS.
This came up in August, but it was uncertain. Now it’s certain.
So, there’s something called the San Marcos-Hays EMS. This is who you call when you need an ambulance. It used to be a lot bigger. Over time, Wimberly left. Then Buda left. Then Dripping Springs left.
Since the August meeting, it’s now official: Kyle and everyone else is leaving. So it’s just San Marcos. (The cheese stands alone)
This is a big problem! We don’t have a city-run EMS. We’ve got fire fighters who may be trained paramedics, but they can’t take you to the hospital. We don’t have ambulances. We don’t have a facility to store ambulances. We don’t have the infrastructure to run another department. But because this partnership is dissolving, we’re going to have to figure it out.
This is going to cost about $2 million. This will start getting dealt with in November.
Bottom line: those tax rates all need to increase by about 2.4¢ to cover EMS.
Council Discussion
Council asked a lot of questions about the EMS situation. They also were asking about Council priorities – what had to be decided on Tuesday, and what stayed flexible. It was not a very long conversation.
Lorenzo keeps acting squirrelly.
Finally he says: “I don’t like the 67.96¢ anymore. The State legislature didn’t pass those crazy laws after all. We should have more economic development! I want to go back to 64.96¢.”
Well, shit!
A few things:
1. “Economic Development”: I erased a big rant about this. It’s not a magic bullet.
This is like walking out onto the NFL sideline and telling the coach, “Hey, you should try to score more points than the other team! Then you’d win!” City staff really does know about economic development. They are always working on it.
2. The State legislature will definitely do Abbott’s bidding, and Abbott wants those laws. If not 2025, then watch for them in the next session.
3. The 64.96¢ isn’t an option anymore! It doesn’t include EMS!
The City Manager responds with alarm: “Please, please don’t go with 64.96¢. That won’t even cover EMS. We need at least 65.15¢.”
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Listen: The rug just got yanked, suddenly, and nobody is prepared. Nobody has the presence of mind to call a time-out and fix all the numbers.
Confusion reigns.
But look how helpful I am! I made you a chart!
This is what I think city staff would have put on a slide, if anyone had had advance warning.
Here’s my theory: I think Lorenzo intended to go from the 3rd row to the 2nd row. After all, he said “64.96¢”. But since we now have an EMS crisis, he didn’t even cover the first row. The City Manager is asking him to please at least get to 65.15¢ in the first row.
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We’ve suddenly rolled back all the careful planning for the budget cliff. The budget cliff is still coming! We still did all the planning! But instead, we’re about to do this:
I’m especially flabbergasted because Lorenzo himself was the one who promoted the 67.69¢. He literally picked it to leave us with a balanced budget in 2027 – neither deficit, nor surplus.
Saul, Shane, and Matthew were always barely willing to make a difficult vote. So as soon as Lorenzo gives them permission, the coalition for 67.69¢ falls apart.
The vote on 67.69¢:
Yeah.
Let’s have a time lapse:
(Technically, I’m combining two separate votes in that last column. First they vote for 67.69, and it fails. Then separately, they vote for 62.78+EMS. This passes.)
Anyway, that’s the whole saga! We had the wind at our backs, and instead we shot ourselves in the foot. It felt like someone whispered in Lorenzo’s ear at the 11th hour, and the whole thing unraveled.
Honestly, I’m kinda salty about the whole thing. .
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One final note: $2 million for EMS is a bargain. That works out to 2 cents. By law, Emergency services is allowed to charge a special tax of up to 10 cents. That would bring in about $8.5 million.
Nobody is trying to shake down tax payers here. They just want an ambulance to show up when your grandmother has a heart attack.
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Item 4-5: Electric and Water Rates.
The next discussion is even goofier, if you can believe it. (But less destructive.)
Your electric bill comes in two parts:
a base rate ($14.31)
a usage rate. (Based on how much electricity you use.)
Usage rates are going up. (Discussed here before.)
Shane Scott speaks up:”Let’s just cancel the base rate!” He wants everyone’s bill automatically lower by $14.31 every month.
You can practically hear staff’s hearts all plummet through the floor as they try to grapple with this craziness. (Ten minutes ago, we tanked the budget over whether to raise taxes by $6 or $12 a month. And now Shane wants to throw away another $14?!)
The director of utilities tactfully explains that this would blow a $3.4 million hole in our budget. The city manager gently mentions our bond rating and debt service coverage. We could get sued by bond holders.
Shane withdraws his motion.
The vote on electric rates:
A little later, we have the vote on water rates:
So water rates will not change.
Listen: this is totally irresponsible. This is lazy, wishful thinking.
The city is not turning a profit on water. You have to cover the costs of your water utility.
If you want to save people money on their water bill, help them conserve water. Don’t strangle the department that has to fix the pipes and pay for the water rights.
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That’s basically it for the meeting. I know barely anyone cares, but this was super big bullshit.
This came up before here. Now we’re workshopping it.
The basic idea is that tenants should be able to meet up and talk about their landlord, or their living conditions, without fear of getting evicted.
This is the type of behavior that is protected:
Great!
And here’s the type of thing a Landlord is not allowed to do:
Sounds reasonable.
On the other hand, landlords also have some rights:
Seems reasonable.
Finally, you still have to abide by your lease.
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My main question is about Rent-By-the Bedroom. We had a fantastic presentation on these, last year.
RBB complexes skirt rules by avoiding certain legal terms. Tenants don’t sign a “lease”, they sign an “installment contract”. So a lot of laws about tenants and landlords don’t apply to them.
Since that’s their game – swap out magic words to avoid legal status – we need to make very sure that our language is broad enough to include them.
I’m looking at the definitions section from the proposal:
“Dwelling” and “landlord” don’t seem broad enough to include “Installment Contracts”.
(Also: the definition of “Lease” uses the word “Landlord”, and the definition of “Landlord” uses the word “Lease” so things are getting circular here.)
Other than that, this is a great step forward!
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Workshop #2: SMPD Vehicle rental policy:
This has also been in the works – literally for years. Here’s where they’re landing:
Great!
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Workshop #3: Update to the Airport Master Plan:
We have an Airport Master Plan that was approved in 2021.
(Honestly, I’m kind of guessing what they said, based on the slides. I was distracted. Sorry about that!)
This runway is going to get a glow up:
And it sounds like there will some day be a passenger terminal out front:
This will come around for approval during a regular council meeting.
Short meeting this week! It’s budget season. Your taxes are going up, but in the mildest, most responsible way possible.
Let me tell you all the weedy details:
Hours 0:00 – 3:04: Mostly the tax rate and the budget, plus one little rezoning, just north of campus.
That’s all, folks!
(There was a very short, 15 minute workshop on the Capital Improvement Projects for the new budget, but I’ll just point you to the video and the slides, etc, here.)
Some years, citizens get fired up and angry at the budget. This year was the opposite.
Three people spoke on the budget, and they all praised council for increasing funding for the Human Services Advisory Board. (HSAB grants are how the city helps fund all the nonprofits that help kids, people in poverty, vets, the elderly, etc.)
It was pretty short!
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Items 20-24: Welcome to our $371 million dollar budget!
We’re bringing in less money from sales tax and property tax.
Sales tax peaked in 2023 and hasn’t returned. Property taxes have been flat. Actually, they’ve gone down on existing properties, but they’ve been propped up by new builds.
City department budgets were flat two years ago. This past year, they cut $100K collectively. But everything is getting more expensive, so even holding things flat means you have less purchasing power.
The State Legislature is always, always trying to knee-cap cities:
This past session it was House Bill 73 and Senate Bill 10. City staff implied that there were a few others. All of these cap city spending or cap city taxes.
The concept isn’t new – we already have caps on tax hikes. But these new bills are brutal in their severity.
All these bills were still up in the air last Tuesday, when city council met. Since then, the special legislative session ended. As far as I can tell, none of these passed? But Abbott could always call a 3rd session, or these could return in 2027. So this is always looming.
(Can you imagine how relaxing it would be if our state government wasn’t so hellbent on wrecking Texas cities?)
We’ve got three apartment complexes that were purchased by HFCs, and we’re losing about $630K in tax revenue from them. (They’re tied up in lawsuit appeals, so it could still tip our way.)
There are almost $4 million worth of new expenses that are kicking in soon, over the next 1-2 years.
The ones with the checkmarks were funded from federal Covid money, which is expiring next year.
6. Council also has some new priorities, which cost money:
Increasing HSAB funding by $200,000
Increased funding for tenants rights and tenants legal support
Start an office of community support and resource navigation.
Probably more that I’m not remembering
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Because of all this, tax rates are going up.
I mean, we don’t really have a choice, right?
If you own a $365K house, here’s how it affects you:
If you own a smaller house – say $200K assessed value – then you’d pay like so:
Last year: $1,115 per year, or $93 per month. This year: $1,252 per year, or $104 per month.
We always focus on home owners here, because it’s easy to compute their tax costs. But rest assured: landlords cover the cost of property taxes by passing it on to their renters.
My back-of-envelope estimate is that an average renter pays about half as much: $640 per year towards their landlord’s property tax bill, or $53 per month.
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Your utilities are also going up:
This is mostly based on CUAB recommendations. CUAB stands for Citizens Utility Advisory Boards.
Basically, if you don’t raise rates for a few years, you’ll get into a big financial hole. Then your bond ratings tank and it gets more expensive to borrow money, and you’re in even bigger financial trouble. To get out of it, you’d have to shock the community with a giant rate hike in order to right the ship.
So the idea is that it’s better to nudge prices up gently every year, to keep up with inflation. CUAB is the one that has to figure out the new rates. This is that.
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One funny detail: The goal is to stabilize our budget going forward. We could have scrapped by this year, but then we’d be in a big hole next year. The looming expenses will kick in, and we’d have to raise taxes a lot, or cut services significantly, to handle it.
But because we’re being proactive, we actually will have $1.3 million of breathing room in the meantime.
City staff went to all the city departments, and asked about things like deferred maintenance projects or other ongoing needs. Here’s some possible ways to spend the money:
Council will hash this out later.
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Finally: my yearly rant about taxes.
Taxes are good! This is how we can take care of our most vulnerable people. This is how we can solve collective problems, without someone trying to extract as much profit as possible.
We do this in order to prove a point, or something? The feds can’t force us to feed our kids or get medical care when we’re sick, dadgum. )
Look, the United States can easily afford for every person to have a safe home, free healthcare, and access to healthy food and education. This country is extremely wealthy. Collectively, we can afford to lift everyone out of basic poverty. We just choose not to.
Stop electing Republicans who are in the pocket of extremely wealthy Texans.
(End of rant. Thanks for playing along!)
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Back to council. How did the votes go?
The votes on the tax rate and the budget:
Lock step, baby!
The votes on the various utility funds:
That’s the votes on Trash & Recycling rates, Electric Utility rates, and Water and Wastewater rates, respectively.
The votes are dropping like flies! Hang in there, councilmembers! They all passed, though.
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Saul asked some interesting questions about our water supply:
Q: How much water do we sell to other cities? A: We sell to Kyle, to County Line, and we sell reclaimed water to Buda and others.
(I don’t know what “County Line” means, and when I try to google it, I just get a bunch of BBQ joints and maps of counties. ¯\_(ツ)_/¯ )
Q: What happens if they don’t use the water they buy? A: Our contracts are “50% take or pay”. So they have to pay for at least 50% of the water we’re setting aside for them, even if they don’t use it.
Q: Were we ever in danger of not getting our water from Canyon Lake, due to drought? A: Both Canyon and Edwards water have tiered drought restrictions. So we always get some water, but they require us to use less water during a drought. Before the July floods, Canyon Lake was Stage 4, but now they’re Stage 1. Edwards Aquifer has been between Stages 3 – 5 all year long. They’re about to tip into Stage 5 again.
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That’s all of the budget talk for today! The official, final vote will be at the September 16th meeting.
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Item 25: Just one tiny rezoning!
This is 906 Chesnut St:
From the street, it looks like so:
That’s if you’re standing on Chesnut looking back towards LBJ. Vie Lofts is on the right.
The developer wants to rezone it as CD-4. (Basically, they want to tear it down and build small apartments.)
Everyone says okay.
I’m okay letting it go, as long as we take a moment to pour one out for this wallpaper:
I mean:
I’m not made of stone, people.
Also this window treatment:
and maybe this pink trim:
ok, and this built-in cabinetry and paneling:
I take it back! Save this house! It’s too pure for this fallen world.
Honestly, the rest of the meeting was pretty zippy. A few quick items:
postponing the new development by the high school
funding for the new water reclamation facility
funding for CARTS
setting some dates for elections and city council meetings next year.
On CARTS, we pay about $621K, and the federal and state government combined pay about $1.75 million. That’s great! Redistribution of wealth at work.
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One last detail: Executive Session
Finally, Council discussed this land in executive session:
That’s the land that SMCISD is selling. There’s a big petition and movement in the community for the city to purchase the land, so that they can dedicate it towards the Mexican American and Indigenous Heritage and Cultural District.
So I don’t know what happened in Executive Session (obviously), but afterwards Council directed city staff to ask SMCISD about delaying the deadline of the sale, so that the city can get its ducks in a row.
I think it all comes down to timing:
Can the city speed up enough to meet SMCISD’s budget crisis timeline?
Can SMCISD delay long enough to accommodate the city’s due diligence and bureaucracy?
Also Hays county is somewhere in the mix, too. We’ll find out the details eventually!
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