San Antonio’s financial state has only worsened since city leaders first floated the idea of raising taxes earlier this year.
Rather than bumping up the tax rate as high as they can, however, city staff is now pitching bigger budget cuts and financial restructuring that will offer more wiggle room if the economy doesn’t turn around in the next few years.
Their budget proposal on Thursday called for a 3.9% increase to the city property tax rate — amounting to about $36 more per year for the average San Antonio home with a taxable value of $231,356.
None of the changes are final until debated and approved by City Council in the coming weeks, but the proposed $4.4 billion fiscal year 2027 budget eliminates more than 100 civilian positions, consolidates city departments and defunds several senior nutrition centers, among other cuts.
It doesn’t add a single new police officer, but it raises fees the city collects on everything from Alamodome parking to trash carts and missing library books.
“What we’re feeling is probably the same thing that other tax entities in Bexar County are feeling,” City Manager Erik Walsh told reporters in a media briefing Wednesday. “So we felt like we needed to be conservative.”
As of this week, city leaders say San Antonio’s net taxable value is down about 2.7% — worse than projections issued earlier this year — due to slowed economic growth and new tax exemptions for business property and homeowners.
Sales tax is also coming in below expected levels, as is revenue that the city anticipated bringing in from CPS Energy selling energy onto the Texas grid in the hot summer months.
Walsh said they’ve beefed up budget cuts to help bridge the gap, choosing programs they didn’t think were getting much use and wouldn’t be particularly disruptive to residents.
The senior nutrition centers they’re closing, for example, were serving very few people per year, he said.
“I don’t think there’s any major reductions to services that people feel,” Walsh said. “We have our comprehensive budget reviews … [and] we are making recommendations in terms of reductions based on efficiencies.
Originally, the city had plans to max out property tax revenue this year to avoid cuts to avoid major cuts.
But Walsh said they backed off that approach so they’ll have room to grow in the coming fiscal year, while staying within the state’s revenue cap.
Texas caps the amount of property tax revenue cities can collect at 3.5% over the previous year but also allows them to roll some of that growth forward if they don’t max out, in what’s known as the “unused increment.”
San Antonio has some unused increment from rosier years that it will roll over this time, Walsh told reporters Wednesday, and it will avoid hitting the 3.5% cap in fiscal year 2027, so that it can do the same again next year if needed.
City leaders are also planning to build in a larger cash reserve than normal, putting away the usual 15%, plus another $48 million that could be used to cushion a future budget in case revenues dip even further.
“We’re projecting that in fiscal year 2028 — taking into account new improvements — there will be zero taxable value growth,” Walsh said. “We’ll see what happens as we go as we move closer next spring and late early summer.”
San Antonio’s fiscal year runs Oct. 1 through Sept. 30.
The staff presentation is just the start of a lengthy budget approval process in which City Council can make changes if they have majority support.
They’ll receive more in-depth briefings from the city departments in the coming weeks, and approve the final budget on Sept. 17.
Mayor Gina Ortiz Jones has been urging colleagues to consider even more seismic changes to avoid raising taxes this year, warning in a letter that staff is already projecting that another 4.4% city property tax increase will be needed next year.
