A proposed tax rate to fund the city of El Paso’s 2026-27 budget could increase city property tax bills by about $132 a year for owners of an average-value home if approved by the City Council later this month.
The City Council voted 5-3 Tuesday to introduce an ordinance to adopt the voter-approval rate of 80.9 cents per $100 of property valuation to help pay for the proposed general fund of about $665 million – a 6.6% increase over the current year. The voter-approval rate is the highest rate a local government can adopt without holding an election.
City Reps. Josh Acevedo, Chris Canales, Art Fierro, Deanna Maldonado-Rocha and Cynthia Boyar Trejo voted in favor of introducing the tax rate and city Reps. Lily Limón, Alejandra Chávez and Ivan Niño voted against it.
If adopted, the proposed tax rate would mean the owner of an average valued $232,669 home could see a city tax bill of $1,883 this year – an increase of about 7.5% over last year.
The general fund, which pays for public safety services, streets and quality of life amenities such as parks and libraries, is supported primarily through property taxes, sales taxes and city service fees.
The largest driver of the spending increase is public safety – including police, fire and other emergency response services. Public safety makes up about 57% of the general fund budget, with about $371 million proposed.
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The city is looking to adopt a $1.4 billion all-funds budget for the next fiscal year as it faces rising costs for personnel, infrastructure and operational costs. The all-funds budget includes debt, grants and other special purpose funds, as well as the general fund.
The city is facing a loss of $7 million in property tax revenue from increased state exemptions for business personal property approved by voters last year. It’s also seeing higher debt service from voter-approved bond projects such as new and renovated fire stations, new police facilities and streets.
The city is not dipping into its fund balance for the next fiscal year as it had the prior two years. The council those years directed city financial leaders to use fund balance dollars, as well as other one-time funding sources, rather than adopt a higher tax rate.
Robert Cortinas, who serves as the city’s chief financial officer and deputy city manager, said prior allocations from the fund balance to the general fund were “one-time” fixes that are no longer sustainable for city operations.
“We could make adjustments or reductions and defer things, but ultimately it catches up to you and it’s kind of the position we’re in now,” Cortinas told El Paso Matters. “It was good during that time, but it has an impact in the future. We’re kind of living through that right now, of having to deal with those decisions.”
If the City Council adopts the no-new-revenue rate – the rate needed to generate the same amount of property tax revenue as the previous year on the same properties – it would have to cut about $24.5 million from the proposed budget.
Cortinas is advising the City Council against adopting a lower tax rate.
Before adopting a budget and tax rate, the city and other governmental entities such as the county and hospital district must publish their proposed tax rates on their websites and in local newspapers and must hold public hearings to receive community input.
Taxing entities cannot adopt a tax rate higher than introduced on public notices, but they can adopt lower tax rates. The adopted property tax rates help fund public services while shaping homeowners’ tax bills for the coming year.
The El Paso County Commissioners Court on Monday introduced the voter-approval rate that could raise the county tax bill by about $164 a year on the average home. The El Paso Hospital District, which comprises University Medical Center of El Paso and the El Paso Children’s Hospital, on Tuesday proposed a no-new-revenue rate that could increase its tax bills by about $10 a year on the average value home. A public hearing for both the county and hospital district’s proposed tax rates is set for Aug. 17.
The tax increase proposals come as El Pasoans are dealing with increasing electric and water bills, and other inflationary pressures.
The City Council could vote to adopt a lower rate ahead of the final vote on the budget and tax rate Tuesday, Aug. 18. A public hearing is set for Monday, Aug. 17.
The city in May introduced a preliminary tax rate that would have increased a city tax bill on the average-valued home by about $105, but Cortinas said uncertainty from the financial impact of police and fire collective bargaining agreements led to the introduction of the higher tax rate.
“We’re working as best we can to get that (negotiations with the fire union) wrapped up and hopefully come to an agreement very soon, but it’s really – that’s kind of the driver right now. There’s a lot of uncertainty of where those final costs are going to be,” Cortinas said.
The city is negotiating a new collective bargaining agreement with the El Paso Association of Firefighters Local 51. The union is seeking new and increased benefits for its members of about $66 million over the contract’s four-year term that begins Sept. 1 if approved without changes.
The city has offered a counter proposal with an increase of about $43 million that would cost taxpayers about $7.7 million for the first year of the new agreement and an average increase of $11.7 million a year over the remaining three years of the contract, Cortinas said.
The El Paso Municipal Police Officers’ Association collective bargaining agreement will expire in August 2027, with any changes to it impacting the budget for the 2028 fiscal year.
Cortinas said adopting the voter-approval rate will better position the city for the impacts of the police and fire agreements.
If the city adopts the voter-approval rate as proposed, the city would be able to collect an additional $9.7 million in property tax revenue to allocate to streetlight and park lighting, fleet replacement for animal services and about $8 million for the fund balance, public safety collective bargaining agreement impacts or other City Council priorities.
Also on Tuesday, the City Council voted unanimously to allocate $380,000 of American Rescue Plan Act interest savings to the Welcome Center – an intake and coordination hub where homeless people receive emergency shelter, food, and medical screenings while longer-term support is arranged. The gap funding will help the center in South El Paso remain open for six months starting in September after pandemic-era federal funding runs out at month’s end.
The city has about $430,000 in interest savings from ARPA available.
Canales made a motion to allocate the remaining $50,000 in interest funds for Animal Services free spay and neuter initiatives, with a majority of the City Council voting in favor. Limón voted against the allocation, without explanation. The council also voted to allocate $78,000 from the $8 million in proposed emergency funds for the spay neuter services as recommended by the Animal Shelter Advisory Committee.
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