Property tax bill increase would double under latest El Paso City Council proposal

Elida S. Perez | El Paso Times

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The city is considering doubling a projected increase in property taxes on the average El Paso home. It also is proposing adding a utility sales tax to natural gas and electricity bills for residential customers.

Earlier this month, the city's proposed rate and average home estimate would have meant that the average El Paso homeowner was paying $1,006 a year in city property taxes — an increase of about $50 over last year, with the $5,000 homestead exemption.

The proposal Monday means the average El Paso homeowner would pay $1,059 a year in city property taxes — an increase of about $100 over last year.

The increase comes from a higher proposed rate from the city, as well as increased property valuation estimates from the Central Appraisal District.

The CAD average value of an El Paso home presented Monday had increased 4.5 percent, from $124,299 to $129,915. The city also decided to increase its proposed tax rate about a half-cent per $100 of property valuation.

Earlier this month, the city proposed a 4-cent increase over its 2018 fiscal year tax rate of 80 cents per $100 valuation. The latest proposal, which would increase the tax rate by a total of nearly 5 cents, would raise property taxes on the average home just under 5.5 percent, which is just below the threshold that would require voter approval.

The City Council has a proposed fiscal year 2019 budget of $983 million. The figures presented Monday would add $4.4 million to that amount.

The City Council unanimously approved introducing the "rollback rate," which is the maximum tax rate allowed by law without voter approval — about 85 cents per $100 property valuation in El Paso. City Rep. Cassandra Hernandez was not at the meeting.

The council was initially considering a tax-rate increase of about 84 cents per $100 valuation, but officials said they opted to introduce the slightly higher rollback rate so that additional budget requests from city representatives and constituents could be considered.

Mayor Dee Margo said that he does not think the city will need to adopt the rollback rate, but that it will depend on how many additional requests City Council approves.

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“There are lots of needs in this community," Margo said. "Unfortunately, in the past we had what I consider a short-term, myopic viewpoint when it came to making decisions.”

He cited previous councils' decisions not to fund police vehicles, for instance, and underfund bond projects.

City representatives' total budget requests are already about $86 million over the $983 million budget proposal. The requests include funding for street improvement projects, dog parks, lighting in neighborhoods, additional staff for city representatives and more family museum events.

City Rep. Claudia Ordaz Perez said she would vote against all of the extra requests.

“At this point, with the understanding that we know there’s going to be an increase every year, I think we should just focus on the needs as of right now, the basics,” Ordaz Perez said.

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El Paso Chief Financial Officer Robert Cortinas said property valuation increases accounted for about $3.2 million of the extra $4.4 million. The proposed half-cent increase to the new tax rate made up the additional $1.2 million.

“For the last five years, the average value home hadn’t increased, It essentially remained flat. The home values have been pretty stagnant,” Cortinas said. “It was nice to see some actual growth in the values.”

With the increased potential funding, the council can decide which extra projects, if any, to approve.

“City Council wanted to have maximum flexibility as we go through the next few weeks before we actually adopt the tax rate in order to give them time to consider the requests,” Cortinas said. “If they want to add into the budget they can do that now by introducing the rollback rate. They can always go lower but they can’t go higher.”

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The city is also considering introducing an ordinance that will allow for a utility sales tax on natural gas and electricity.

In 1978, the state Legislature gave cities the option to repeal the utility sales tax, which El Paso did that year. But now, Cortinas said, El Paso and San Antonio, which owns its utilities, are the only two large Texas cities that do not impose the tax.

Cities that adopted local sales taxes effective Oct. 1, 1979, cannot tax residential use of gas and electricity, but cities that had imposed the tax before that date can reimpose it, according to the state comptroller’s website.

Cortinas said reimposing the tax would generate about $3 million for El Paso that would go toward funding Fire Department equipment and vehicle replacement.

"We thought this was the right opportunity to make sure we don’t fall behind on replacing our fire equipment," Cortinas said.

The impact to ratepayers was not available Monday. Cortinas said it will likely be presented to council on Aug. 7.

The public can comment about the budget and proposed tax rates at two public hearings, Aug. 7 and 14. The city is set to adopt the final budget and tax rate Aug. 21.

Elida S. Perez may be reached at 546-6137; eperez@elpasotimes.com; @ElidaSPerezEPT on Twitter.