LOCAL GOVERNMENT
- Directors look to tighten budgets and combine services to avoid service loss
- Finance recommends actions to avoid gap
- City employees might have pay raises on the way
- Water Utilities will digitize customer service
The year 2026 will be an important year in San Angelo, with several major changes from the state level, and massive private projects like potential data centers and industrial development adding to the burden that must be accounted for.
Additionally, this will be the last city budget workshop led in part by outgoing City Manager Daniel Valenzuela, who announced his retirement last year.
The main story this year is the anticipated funding gaps that will be caused by changes in state tax regulations, and by the imposed 3.5-percent property tax cap.
To that end, department directors have been ordered to sharpen their pencils in an effort to not diminish any services in the coming year.
Finance woes ahead for COSA
According to new Director of Finance Johnathan Flores, additional business and personal property tax exemptions, along with an increase in property owners over 65, and damage following the floods of last July, will lead to large funding gaps down the road. An estimated $1.8 million dollars less for fiscal year 2027. The inflation rate for San Angelo stands at 4 percent.
A large part of this was from loss of business property tax revenue, an estimated $234 million in property valuation being lost.
City Manager Daniel Valenzuela put the problems into focus, saying “that means for the city we’ll have to go the citizens every year for an election – we do live in a conservative city thankfully, but that means people are very mindful of what they’ll have to accept on a property tax increase.”
The new law in Texas requires voter approval of any property tax increases past 3.5 percent. While it may be popular for Austin politicians, it puts local officials in the position of either cutting services to an increasingly aging population, or asking to approve further tax increases, which has historically not been a successful way to get re-elected in Texas.
Finance recommends five actions be taken to straighten up and fly right. Possibly bringing public safety expenditures to a public vote, thereby authorizing the funding required automatically. Along with a cemetery tax levy which would increase the current tax rate to 0.12, and adding a credit card payment fee of up to 3-percent on customer transactions.
In the restructuring department, forgiving city-incurred utility bills in favor of usage requirements for water and electricity would save a little more than $400,000 from the general fund, and establishing a rolling debt program would alleviate more than $2 million.
At the end of the presentation, Mayor Thompson emphasized that there is little the city can do on its own at this time, later saying, “I see a lot more need here than $11 million,” before advising that the city look at selling municipally owned lake property and other revenue options.
In order to meet the deadlines for placing any tax increases on the ballot this November, officials will be tasked with assembling the budget in a five to six week timespan to be completed within the first two weeks of August.
Improving city employee pay and leave
As established by a recently completed compensation study, San Angelo is behind other municipalities in payment to employees. The survey, performed by Public Sector Personnel Consultants found that San Angelo had 328 distinct positions and a total of 900 employees.
The study found that 39 percent of city employees’ salaries are below market, 44 percent are within the competitive range and 17 percent are above that range.
In an effort to bring the model more in line with regional expectations, Human Resources removed the DFW area from the calculation, which they say was artificially raising estimates ahead of what could reasonably be asked.
Their recommendation is to bring all non-civil service employees whose pay is below that study’s average up to grade, at a cost of $1.7 million. For police the same applies, though with variances for service rank. Their raises would cost an estimated $1.1 million, a process which is already in process as of April 4.
Likewise, the same for the fire department, raises at a cost of a little over $400,000.
They also recommended adding more vacation time to a new schedule that says after four years of employment, the employee would be eligible for 6.67 hours per month. This would mean that after five years, city employees would get three weeks paid time off; after seven years, 4 weeks; and after 10 years, six weeks off per year.
To give employees some extra summer time, they recommend that Juneteenth be added to city calendars, making it a paid holiday, in accordance with state norms.
As well as at the addition of Paid Parental Time in the event child birth, adoption, or legal guardianship, of 80 paid hours per year. Currently city employees would have to use their vacation time or sick leave. Since 2025, there have been 17 cases of city employees needing to take time off for these reasons.
Finally, they proposed two extended hours schedules. The first would run from 7:30 a.m. to 5:30 p.m. on Monday through Thursday. The other would run for similar hours but have a half-day on Friday. The goal is to extend availability hours for customer services beyond normal working hours, though emergency response would still be included on Fridays, a process which they say they’re still working through.
Relieving Pressure from Other Departments
Operations proposes implementing a street use fee to fund interdepartmental work, in the hopes of taking some jobs off the plate of city services that are overburdened.
This means assisting the Fire Marshal’s Office with dangerous buildings, and bringing others up to fire code. In addition to helping street and bridge with mosquito spraying and illegal dumping cleanup.
Some council members were happy to see the proposal, but the mayor advised that this might need to be a 2- to 3-year move to make sure that the city does not overstep its revenue. The city manager agreed but seemed to state that these operations needed to be done sooner rather than later.
To fund this effort, they say a street use fee could be introduced to raise the money needed for over a dozen new full time employees.
The street use fee would work like this: first, a business would be assessed into different codes established by the Institute of Traffic Engineers. They developed a trip generation model to determine for that business how many vehicles per 1,000 traveller account for traffic going to that business.
The example they used was a fitness center, which under the ITE model accounts for 6.29 trips per 1,000. Using this rate, a fitness center encompassing 1,000 sq.-feet would be charged $55 dollars per month. This would also apply to residential properties with exemptions made for lower income property owners.
Water Utilities Moves to Online Customer Service
Moving away from orange card cutoff notices would save quite a bit of time and money for water utilities workers. A fully online process, the director advised, would allow residents to view their water usage in real time in the hopes of advising and working with customers to avoid cutoffs altogether. The proposal was brief, and council told Water Utilities to begin the process.
Keep up with the Concho Observer for further budget reporting.
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Thank you for the information.