The City of El Paso has started looking into its 2014 fiscal year budget and officials are proposing a tax increase.
In 2013, the total city budget was more than $756 million. The proposed budget for 2014 will increase by $27 million, to about $784 million.
City officials said they need the additional money for police operations and other services, but also because of an increase in debt they have to pay off.
During Tuesday's City Council session, officials explained they have more debt because this is the first year when they begin paying off a voter-approved half-a billion dollar Quality of Life bond in addition to the Sun Metro transit operation center, the Bus Rapid Transit (BRT) systems, a multimillion-dollar bond to fix streets and the relocation of city hall.
City officials propose raising the tax rate 2.6 cents. One cent would pay for city operations and the rest would pay for debt.
If approved, the tax hike would increase taxes by $25 on a home worth $100,000. The property owner's bill would go from $658 to $684.
If the home is worth $200,000, the city portion of the property tax would go from $1,316 to $1,368, a $51 increase.
City Rep. Eddie Holguin was not pleased with the proposal and asked city staff to present a budget with zero tax increases.
"If we do what City Rep. Holguin is asking, we come back with proposals to reduce the budget so that there is no tax increase, essentially we have to absorb all the things supported by that two-cent increase which means drastic cuts," said Linly Leeper, the city's chief budget officer.
The city started the 2014 budget at a disadvantage because Western Refining, the largest commercial taxpayer in town, contested its appraisal by the Central Appraisal District and won. The city's portion of that adjusted property tax bill is $3 million lower than initially calculated, which is affecting the budget, officials have said.
To avoid the same issue in the next budget, the city wants to be conservative as it calculates the initial estimates of what big companies will pay in taxes, said Downtown-West El Paso representative Cortney Niland.
"What I don't want to do is get us into a position again like what happened to us last year, so I'd rather us be very conservative and especially in these large cases where we know we're going to have contestment, to not even include those funds," she said.
Tuesday marked the beginning of a month full of budget hearings. Council has until the end of August to adopt the budget and tax rate for the new fiscal year that begins September.