San Antonio’s budget writers say slowing revenue growth will soon demand tightening the belt on city spending.
At current estimates, City Manager Erik Walsh told reporters Wednesday, the city needs to cut about $10.6 million in planned spending over the next two years to avoid raising the tax rate — which San Antonio hasn’t done in 31 years.
Walsh said he’s asking City Council and city department leaders to look for “efficiencies and reductions in controlling our spending.”
On Wednesday, the City Council heard staff’s first stab at a budget for the 2025-2026 fiscal year, which will be finalized in September.
In the past two years that briefing has included exciting news for the council, as high revenue from property taxes, sales tax, CPS Energy revenue and federal pandemic relief helped fund new policy priorities, and budget writers increased property tax exemptions to keep revenue under the state’s growth cap.
This year, the council got word that existing programs could be on the chopping block as the city looks to expand public safety spending, or they could have to explore collecting additional revenue.
The city is still on track to meet the 3.5% revenue growth allowed by state law, but it’s not seeking new ways to forgo revenue like past years, and it’s not pulling in as high of revenue from new builds and improvements made to existing properties, which aren’t subject to the cap, according to a presentation from Budget Director Justina Tate.
Single-family home values increased an average of 2.4% this year, the lowest year-over-year change in more than a decade, according to the Bexar Appraisal District.
“Property tax values are up slightly, but not anywhere near where they’ve been last couple years,” Walsh told reporters before the council discussion.
“We know we’re going to be looking at some reductions in spending, maybe redirecting spending in some higher-priority areas,” he said. “One of the other options is raising revenue.”
At the same time, federal pandemic relief is coming to an end, accounting for just $4.4 million of this budget, compared to $16.5 million last year.
“As we started to recover from Covid, our revenue growth is starting to slow down,” said Tate. “As a result, we also need to slow down our expenditure growth as well.”
Where to cut and how
The so-called “trial budget” is intended to give City Council a look at how city finances are matching up with the projects they want to fund.
The city is still on track to add 130 police officers over the next two years, plans for which were laid out last year, according to the trial budget.
Its leaders are also in the midst of negotiating a new contract with firefighters, which Walsh called one of the biggest “unknowns” in the budget. The city’s proposal and the union’s asks are about $363 million dollars apart over five years, he said.
Council members sounded highly interested in ensuring firefighters’ raises Wednesday, though the trial budget was already showing a $10.6 million deficit based on the city’s proposal.
“If you want to see those numbers move, you’ve got to tell staff where to cut,” Mayor Ron Nirenberg told the council.
After the meeting, council members Melissa Cabello Havrda (D6), Marina Alderete Gavito (D7), Teri Castillo (D5), Jalen McKee-Rodriguez (D2) and Marc Whyte (D10) signed a memo calling for council to meet and discuss the fire union negotiations in executive session.
Public safety accounts for about 60% of the roughly $1.6 billion general fund.
Other places the city still plans to expand services are in the Solid Waste Management Department, which is expected to add a crew to help clean up illegal dumping. The trial budget included an increase to solid waste fees on medium and large bins. The city is also in the midst of boosting staff and funding for Animal Care Services.
But Walsh said the city will need to either scale back those plans, make cuts elsewhere in the budget or consider raising taxes.
Overall, staff salaries and equipment, including police and fire, account for more than 90% of the general fund budget, he said.
The budget proposal included 3.1% raises for non-uniformed city staff for fiscal years 2025 and 2026, and 4% raises for police, said Budget Director Justina Tate.
Budget plans don’t currently include plans for personnel cuts, and the city is not in a hiring freeze, according to Walsh.
