SPECIAL EDITION:
City Approves Budget and Tax Rate for FY2007

The City of El Paso recently saw the culmination of months of intense fiscal planning for the organization in the approval of the FY2007 budget. In preparing for this budget, City staff was faced with addressing the following challenges and priorities:

• Pressure to reduce tax rate in response to large increases in property assessments
• Increased service demands associated with new facilities from the 2000 and 2004 Quality of Life bond initiatives that will be fully operational in FY 2007
• Growth in core services as a result of general growth in the City, particularly the expedited growth anticipated with the expansion of Ft. Bliss
• Expectations associated with the completion of the Open Space Master Plan
• Service demands associated with implementation of Council's strategic priorities
• Employee compensation increases including unfunded pension liabilities that will require resolution in the near term

Taking these priorities and issues into consideration, the City Manager worked closely with City staff to create a budget that was predicated on the following guiding principles:

• Sustainability. The O&M and debt service budget is funded with current revenues. Surplus undesignated reserves will only be used for one-time capital expenditures as may be required and approved by the City Council. Attention was given to concerns about residential property tax burden, along with other costs of service.
• Core Services. All core services are fully funded with attention to public safety, health and community development concerns. All contractual obligations are also addressed.
• Quality of Life Bond Obligations. Funding has been provided for all new facilities associated with the 2000 and 2004 bond initiatives that are or will be fully operational in FY 2007.
• Structural Deficiencies. We continue to attempt to address structural deficits in the City's operations and maintenance budget as we identify these issues and as funding permits. This will be a multi-year effort as we integrate appropriate expenditures into the Operations and Maintenance budget that have historically not been adequately addressed or funded inappropriately through bond sources.
• Investment in Employees and Technology. This budget reflects our continued commitment to address disparity in compensation for non-safety, general employees, as well as other workforce-related investments, including technology infrastructure to support our productivity.
• Council's Strategic Goals/Priorities. This budget provides funding to substantially advance Council's strategic policy goals.

The amounts City Council has approved for the FY2007 budget are as follows:

General Fund (Operating) Budget: All Funds (Entire City):

$281,867,119 $617,123,454

Departmental Budgetary Breakdown



Note: All amounts per department that were approved by the City Council are listed in the column titled: Revised 2007 thru 8/8/06.

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FY2007 Budget Highlights
New facilities to come on-line in '07

The City, as part of its commitment to improving service delivery and enhancing quality of life throughout the El Paso community, has provided support through the FY2007 budget to open and operate multiple new facilities.

All projects and/or facilities that will be operational during the FY2007 year are a product of the 2000 Quality of Life and 2004 Bond issues. The 2000 Quality of Life and 2004 bond initiatives are both initiatives that were placed on a public ballot and approved by the residents of the El Paso community.


The following table provides financial information on the new facilities that will be coming on-line this fiscal year:



Additionally, as part of addressing new parkland that has come on-line as a result of the Parkland Dedication ordinance, funding in the amount of $226,212 has been allocated in the budget. This will assist in providing for staffing, materials to maintain the additional acreage, clean-up and utilities.

Funding that has been allocated in this year's budget will also work to substantially address strategic goals that were identified by the Mayor and City Council - goals aimed at improving the El Paso community and region.

Fiscal Policy
Goal: To ensure long-term financial stability and sustainability of the City government.
Fiscal Policy FY2007 Budget Highlights

Customer Service
Goal: To become a high performing, customer-focused organization.
Customer Service FY2007 Budget Highlights

Citizen Participation
Goal: To facilitate opportunities for citizens to be involved in local government.
Citizen Participation FY2007 Budget Highlights

Community Development
Goal: To become the most livable city in the United States and be recognized as an international city.
Community Development FY2007 Budget Highlights

Transportation
Goal: To establish a comprehensive transportation system.
Transportation FY2007 Budget Highlights

Economic Development
Goal: To become the city with the lowest unemployment rate and highest per capita wages in the United States.
Economic Development FY2007 Budget Highlights


Additional Budget Highlights

• As part of the environmental management fee, increased code enforcement and graffiti abatement programs will be implemented through a seven-day work schedule with expanded staff.
• The new citywide recycling program will begin in early 2007.
• Two 20-recruit academies will be done by the El Paso Police Department to increase staffing.
• The Museums and Cultural Affairs Department will be implementing its public art and historic preservation programs, in addition to new programming.
• Major investments, made through the Streets Department, will directed into the international bridges, expanding crews to address potholes and to address other street concerns.
• The Neighborhood Services division is now fully funded. New programs, including a Neighborhood Leadership Academy and Neighborhood Outreach Program, will be implemented in FY 2007.

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Understanding Property Tax Values

Setting Property Tax Values
The El Paso City Council has no authority to set the tax value of any property in the city. Neither does the El Paso County Commissioner's Court, the El Paso ISD, the Ysleta ISD, or other independent school districts, Thomason Hospital nor the El Paso Community College.

Property tax values are set by the El Paso Central Appraisal District which is required by the State of Texas to set values. Increases in appraisals for residential properties are typically attributed to the sale value of properties throughout the year being at a value higher than what was placed on the tax rolls on January 1 (e.g. a property whose value was placed at $100,000 on January 1 sells for $110,000 later in the year). If this sale is typical of how sales are occurring in that neighborhood, chances are this trend will be monitored and will factor in when looking at property valuations in the area. If a property owner disagrees with the value assigned to their property, their only recourse is to the El Paso Central Appraisal District. It is the only political entity with authority to adjust property values.



Setting the Property Tax Rate
Annually each local taxing entity sets its own tax rate while taking into account how much overall tax values have changed. It can adjust its existing tax rate upward or downward to offset overall value changes. City of El Paso Historical Tax Rate Information:

• FY 2004-05 budget: City reduced its tax rate because of increased values.
• FY 2005-06 budget: City reduced its operations and maintenance tax rate while holding its overall tax rate steady. This was necessary to pay for the increased debt costs of the 2000 and 2004 Bond Elections.
• FY 2006-07 budget: City again reduced its overall tax rate because of increased property values.
• The tax rate that was approved by the City Council for the FY 2006-2007 year is $0.672326.

The actual property taxes to be paid to the City of El Paso by individual taxpayers will vary depending on whether their taxable values as calculated by the Central Appraisal District increased, decreased or stayed the same. Many taxpayers, including virtually all the elderly and disabled, will see significant decreases in their City tax bills for 2006-07.



Property Tax Breakdown
While the City Council is concerned about property tax levels in El Paso, its ability to control those levels is limited. City taxes have historically amounted to only about one/fifth of the property taxes paid by taxpayers. Almost 80% of the property taxes collected from City of El Paso taxpayers went to school districts, El Paso County, Thomason Hospital, and the Community College.

Taxing Entities: Property Tax Rate Comparison 2005

Property Tax shares for other school districts are as follows:
Ysleta ISD 54%      Socorro ISD 53%