By a split 3-to-2 vote, the Mercedes City Commission approved the first of two votes on the city’s proposed budget for fiscal year 2020-21.
Tuesday’s vote of the $11.1 million budget fell along familiar lines, with the commission majority — made up of Mayor Henry Hinojosa and Commissioners Leo Villarreal and Cris Deleon Hernandez — voting to adopt the budget, while the commission’s most junior members, Leonel Benavidez and Jose Gomez, voted against.
They did so citing what they called inconsistencies in how the budget’s final figures were reconciled after the city’s first round of budget workshops showed Mercedes was potentially facing a $1.1 million deficit.
“I know the motion was made without an explanation, and the taxpayers have the right to know what’s going on to balance this budget,” Gomez said shortly after the mayor closed a public hearing on the proposed budget, during which no members of the public volunteered to comment.
A few moments later, Benavidez echoed his colleague’s concerns, saying, “As far as my input on the budget, if we’re taking action on it right now, I experienced that there was inconsistencies with what we were being told as far as certain parts of it.”
At issue were projected revenue shortfalls that ballooned from just over $400,000 to more than $1 million as the commission labored to analyze individual line items over the course of seven budget workshops in July and August.
At the end of what was slated to be the seventh and final workshop, City Manager Sergio Zavala assured the commission that he and Finance Director Nereida Perez would resolve the issue before presenting them with a final proposal.
After holding an eighth workshop earlier this month, staff presented the commission with a budget that had been balanced, in part, by pulling more than $250,000 from the city’s reserve fund and including that figure among projected revenues, according to a copy of the proposed budget posted to the city’s website.
“[It’s] in writing, just to balance the budget, not that we’re going to spend it,” Mayor Hinojosa said of listing those reserve funds as projected revenue before asking the finance director to “explain it for the benefit of Commissioner Gomez.”
“There was an amount used out of the reserves to balance the budget. Now, that doesn’t mean we’re going to use it,” Perez, the finance director, said Tuesday.
“But if we don’t need it during the course of the year, then we don’t need to use it,” she said.
Immediately after the commission entered its split 3-2 vote to approve the budget, Commissioner Villarreal asked to address Mercedes residents directly. Reading from a prepared statement, Villarreal lambasted his own colleagues on the commission, as well as local news reports on Mercedes’ finances.
“Today, we presented an approved and balanced city budget,” Villarreal said. “Regardless of all the false information being put out there by the local newspaper and reckless misinformed personnel, even after eight long budget meetings, never at any point were we in any deficit in any of our budget workshops,” he said.
Villarreal lauded city staff for their work to balance the budget amid the added stresses of the COVID-19 pandemic and the resultant losses in sales tax revenues.
“ It is not possible to be in a budget deficit when the budget is still not even finished, and even with all this, this was done during a global pandemic. This was done without diminishing city services. This was done with [an] over $850,000 shortfall in our projected sales taxes,” Villarreal said.
Undeterred, Gomez stood by his criticism. “Yes, it is true that it is balanced — with revenues coming in from the reserves… [and] an added $58,528 to bring up the revenues to balance with the expenditures. Plus, there was another 80-plus-thousand dollars so we can keep the tax rate at [$0.7450 per $100 valuation],” Gomez said.
“So? It’s still balanced legally and we passed it,” the mayor replied.
“There’s nothing illegal about it. If there was, the city attorney would have said so,” Hinojosa said, before adding that — after serving more than a year on the commission — both Gomez and Benavidez now share in its successes and failures.
“That’s a milestone that you guys — instead of being so negative — should be proud of. Because you guys have been part of the commission for 16 months, and you’re part of this,” Hinojosa said.
Overall, the $11.1 million budget represents a decrease of nearly $386,000 compared to last year. As with most municipalities, the biggest expenditures come from public safety — from Mercedes’ police and fire departments.
Despite adding more than a dozen new police officers and staffers over the course of the last fiscal year, the police department requested a budget of just over $3 million for FY 2020-21 — a nearly $97,000 decrease compared to last year.
Meanwhile, the fire department’s budget has grown by nearly $65,000 to $1.3 million, according to figures listed in the proposed budget.
The only other categories with budgets larger than $1 million — non-departmental expenditures and sanitation — both saw decreases to their budgets, as well, shrinking by more than $391,000 combined.
The commission has until Sept. 29 to hold a second and final vote to finalize the adoption of the city budget.