In a split vote, the Kingsville City Commission approved its first tax increase in nine years and approved the budget for the 2019-20 fiscal year.
From 2010 to 2017, the commission approved the same rate each year, set at $0.8422 per $100 valuation. Last year, the commission lowered that rate to $0.83. On Monday, the commission adopted a tax rate of $0.85304, which is expected to bring in an additional $428,475 in the next year.
The tax rate was approved in a 3-2 split, with Mayor Sam Fugate, Commissioner Dianne Leubert and Commissioner Art Pecos voting in favor, and Mayor Pro Tem Edna Lopez and Commissioner Hector Hinojosa voting against.
Along the same voting lines, the commission approved a $46,533,961 budget, which is an increase over the $45.76 million 2018-19 budget.
Prior to the vote on the budget, Lopez read a short statement.
“I cannot support this budget that is so negative toward the citizens and our employees,” Lopez said.
Before the vote to adopt the tax rate, Leubert said an increase was necessary to provide services for the city.
“If you want safety, if you want things to do for your family, if you want good streets, if you want clean water and sewer — if you want these things, you have to pay for it,” Leubert said. “We’re making hard choices here. We’re not making choices we want to make. We don’t want to increase the budget and increase the tax rate, but sometimes you have to do that for our citizens.”
In an interview Tuesday, Interim City Manager Deborah Balli said the decision to increase the tax rate was largely based on a recent law passed by the Texas Legislature that limits how much a city may increase its tax rate annually. Previously, cities could increase their tax rates by as much as 8 percent before triggering a rollback election that would require voter approval. Those rules were changed by the legislature recently, and now limit cities to 3.5 percent of an increase each year before requiring a rollback election. That lower amount hinders a city’s ability to respond to unexpected needs, Balli said. The additional revenue that will be brought in by the proposed tax increase, anticipated to be $192,000, will be placed in a special fund that could be used in the future for projects or programs initiated by the commission or the next city manager, Balli said.
The budget adopted by the commission Monday includes a 1 percent cost of living adjustment for all employees, plus an additional incentive.
Balli said the initial proposal in budget meetings was for a 2 percent cost of living increase for all employees, in addition to the regular increases given through the city’s compensation plan based on length of time with the city. That proposal proved too expensive, however, so the commission ultimately approved a 1 percent cost of living adjustment and a separate payment of $2 for every month served, per year. Under that plan, an employee who had worked for the city for 10 years would receive a $240 increase.
“We were trying to say, ‘Let’s see how we can structure it to where we could honor those people who have been here for a long time, because that’s what we want, we want to help in retention of the employees,” Balli said. “So in the end, the people who have been here for a long time, they got a bigger piece of the longevity than someone who’s been here for five years.”
Although employees were given a pay increase, rising costs of health insurance required the city to raise the amount of employee premiums by 15 percent.
“We have a great health insurance plan, and just like everything else, the costs are going up,” Balli said. “So we’re just, we’re trying to figure out how we can both take care of our employees and how we can do the things that we need to on the city side for the citizens.”
The commission also introduced two items to increase fees in the city’s water and sewer rates. The proposed increases would increase water rates in the city by 1 percent, and sewer rates by 8 percent.
Balli said that proposal is in line with a water rate study conducted by an outside firm hired by the city several years ago. The consultants recommended a 2 percent increase in rates this year, but the increase that will be voted on by the commission in its next meeting is for 1 percent. Balli said the 1 percent increase is anticipated to bring in an additional $45,000 to the Utility Fund in the next year.
The consultants recommended a 16 percent increase in the city’s sewer rates, but the commission ultimately decided on an 8 percent increase.
“I think any budget is just really difficult to work with, because you have so many services that you’re trying to continue to provide for the citizens, and you have employees and you’re trying to also provide for them,” Balli said. “And so there just comes a time that you just have to find that balancing act.”