MERCEDES — After weeks of budget workshops, the Mercedes City Commission on Saturday morning passed a balanced budget with an $11.5 million general fund.
“I think we finally came out with something that’s manageable, reasonable and that will be very helpful for a lot of the people that have been here,” Mercedes City Manager Sergio Zavala said after the weekend mid-morning meeting.
City leaders here held budget workshops as late as last Wednesday in order to finalize details ahead of the state budgetary deadline. Public safety, infrastructure, staffing and the future of a utility fee were among the chief conversation points throughout the slate of workshops.
The city’s $11.5 million general fund has grown by more than $233,000 over last year’s adopted budget, according to figures from a draft 2019-20 budget. To help compensate for the increase in expenditures, the commission also voted Saturday to approve a tax rate that will generate some 2.5% more revenue than last year.
Mercedes residents will see their property taxed at a rate of $0.7450 per $100 valuation. It’s the same rate at which properties were taxed this year; however, the rate will generate approximately $116,490 in additional revenue due to higher property appraisals.
The effective tax rate — the rate which would have generated the same amount of revenue as the current year — was $0.7262 per $100 valuation.
New construction will also grow the city’s tax base by approximately $49,000, according to the draft budget’s coversheet.
Public safety departments saw some of the largest increases compared to last year, budget figures show.
The police department budget will increase by more than $410,000 in the new fiscal year, which began Tuesday. The majority of that increase will go towards the department’s $2.8 million payroll expenditures.
The fire department budget saw a similar increase — just over $320,000. Like the police department, the majority of fire department costs are due to payroll, which account for $1.08 million of the department’s approximately $1.25 million budget.
Mercedes also established its own independent EMS service earlier this year. Though it’s too early to tell how that department’s balance sheet will look, budget figures project the department to break even at $950,000.
The city is also in the midst of making numerous changes in its public safety departments, from the creation of the EMS service, to the grant-aided addition of four firefighters, to the purchase of nine new vehicles for the police department. Plans are also underway to revamp the public works building into a new public safety building.
Too, leadership has changed in the police department, at the position of fire marshal and others.
“They really wanted to … improve that aspect of it. Not just in staffing, but in equipment, in vehicles and things of that sort,” Zavala said of the city commission’s commitment to improving the public safety departments.
The commission also ensured that several longtime employees whose wages had been stagnant — sometimes for decades — received salary increases. “I think the city commission was compassionate in trying to … in improving their working conditions by increasing their pay a little bit,” Zavala said.
However, it was a long process before staff configured a balance budget. When talks first began in August, the budget included what the city manager characterized as “wish list” requests, such as requests to hire a purchasing agent or a planning director.
After each department head presented their own individual budgets, complete with “wish list” requests, the budget was short by more than $348,000, Zavala said. Thus began a tedious process to trim the budget, in some cases just $500 at a time.
“I went line item by line item for each department and see if that could be done,” Zavala said.
Allocations for office supplies and furniture were slashed. So, too, were requests to fill positions that have remained vacant for some time, such as a request by the finance department for a procurement agent. “That’s not gonna be done this fiscal year,” Zavala said. “Those tasks and duties will be met, but spread out and we’ll manage as best we can this fiscal year.”
The city also achieved some cost savings from decreased payroll costs after employees earning significant longevity pay, such as the city secretary and others, left the city this year,.
In all, the trimming and cutbacks resulted in a small surplus. “There’s savings across the board in many departments. So, we found a way to actually, not just find ($348,000) to shave off, but actually to have about $3,000 in surplus,” Zavala said.
However, questions linger about one source of revenue: a $2 fee that has been assessed on residents’ utility bills monthly since the passage of an ordinance in 2004. The fee, which was originally to be assessed for approximately 18 months to fund certain capital improvement projects, continues to be collected to this day.
It has undergone a name change and a redefinition of its purpose, but in recent city meetings, several residents have wondered why it’s still being collected. An agenda item from a Sept. 17 meeting to possibly repeal the fee was tabled and was instead slated for discussion at Tuesday’s meeting.
Zavala has cautioned the commission that abolishing the fee would result in a $100,000 shortfall in the budget. “It isn’t a matter of just dismissing it because if it’s removed then … the utility fund will be out of balance. There has to be a way to compensate for the loss or the difference,” Zavala said.