As property value declined this year, Bexar County is among the many taxing entities projecting less revenue than the year before.
But unlike the City of San Antonio and other municipalities, which are calling for big tax hikes to bridge the gap, county leaders say they expect to keep their tax rate the same — and avoid major cuts to services.
County leaders say they’re able to do that because they put away money during the years when property values were going up, and used borrowed money for more projects when interest rates were low.
Now that property tax revenue has slowed, they’ve stopped issuing new bonds while working to pay down old debt, and they have enough cash reserves to carry them through.
“We look at a long-range financial forecast, and right now we’re pretty healthy, so we don’t have a recommendation to increase taxes,” said Bexar County Budget and Finance Director Tanya Gaitan. “It’s really because of the decisions the county commissioners made.”
That doesn’t mean Bexar County is out of the woods this budget season, however.
During the COVID-19 pandemic the county budget grew by $1 billion dollars — from about $1.8 billion in the 2020 fiscal year to nearly $3 billion by fiscal year 2023 — as Bexar County took in roughly $389 million in federal pandemic relief dollars at the same time property tax revenue was rising.
Now property values have cooled at the same time federal pandemic relief dollars are dwindling, leaving leaders at an inflection point as they proceed with this year’s budget.
Commissioners have been passing progressively smaller budgets in an attempt to scale back, but their spending is still outpacing their revenue.
Two years ago they applied the last of their uncommitted American Rescue Plan Act (ARPA) dollars to shore up a deficit, but property tax revenue has only worsened since then, with County Manager David Smith telling commissioners in April that they’re headed for the worst year since the 2008 financial crash.
Budget writers are exploring changes like a hiring freeze and adjustments to employee health benefits to rein in spending for the short-term.
“This year we’re not looking to cut, we’re just looking to slow down, because we had some pretty big growth the last couple of years,” Gaitan said.
But a shortfall once predicted would reach about $28 million by the 2028-2029 fiscal year has been adjusted to about $145 million, and some elected officials say they’ll soon have to reconcile whether several years of slowed growth is an anomaly or the new normal.
“The simple answer [to why Bexar County can avoid a tax increase] is that we have reserve funds that the other [taxing] entities probably don’t have, which allow us the flexibility to be able to cover any deficit this year, maybe even next year,” said Commissioner Grant Moody (Pct. 3).
“…But ultimately we’re just going to have to make some tough decisions, and I still don’t think that the court’s prepared for that.”
‘Balancing the budget on the backs of nonprofits’Even if the county avoids big cuts to its own budget, the network of providers supporting some of the most at-risk community members could still feel a major squeeze.
Previous Bexar County leaders used much of their ARPA money to fund public health initiatives, aimed at mitigating the physical and emotional tolls of the pandemic.
Some of those programs were always intended to be a Band-Aid on an immediate problem, while others were clearly intended to be long-term investments.
In both cases, the funding is ending without clear plans to move the projects over into the county’s now already strained budget.
Bexar County used ARPA money to launch an entire Public Health Department aimed at addressing health disparities in the county’s unincorporated parts, and started an emergency response team that can be deployed to people experiencing a mental health crisis, called the SMART initiative.
While the court considers both initiatives a major success, Bexar County Judge Peter Sakai said deciding whether to keep them going will be among the court’s biggest challenges this fall.
“We are now going through a review and analysis of all the ARPA positions, and one of the difficult discussions that will be had in this time period is what positions will remain,” Sakai said in a July 1 interview.
“Public Health is actually a brand new department that [then-Judge Nelson Wolff] and the previous court created, and we’re having the discussion in regards to what delivery of services we want our Public Health Department to focus on.”
Outside of the county budget, many ARPA-funded programs helped residents through some tough times in recent years, but also seem unlikely to be added to the regular budget when their contracts expire at the end of the year.
The county gave roughly $20 million to the local school districts to start their own campus mental health programs, which is on track to sunset at the end of the year.
Other recipients of the county’s federal pandemic relief include nonprofits like the Children’s Bereavement Center of South Texas, SAMMinistries and Haven for Hope.
Sakai said that at a time when many household budgets are under even more stress than during the pandemic, “I don’t want to balance the budget on the backs of our nonprofits.”
But nonprofit leaders have been warned that the funds were one-time only, and much of the spending will automatically wind down if it’s not added to the regular budget.
“The majority of the money [was for] contracts that are ending this year, so those probably will not be [continued],” Gaitan said.