The El Paso city government is looking to increase its budget by about $26 million for the next fiscal year, more than half of which will go toward funding increases to its public safety budget.

The budget increase would require a small property tax increase, officials said Monday when the El Paso City Council held its first budget work session to review the preliminary fiscal year 2025 budget and tax rate. A public hearing will be held Aug. 8 before they are adopted on Aug. 13.

To help fund the increase, the city is looking at a proposed tax rate of 0.778 per $100 valuation. The city anticipates collecting $282 million in tax revenue for next year’s budget, an $18 million increase over the current fiscal year.

“Right now with the recommended tax rate, we’re sort of in between the voter approval rate and  the no-new-revenue rate,” Chief Financial Officer Robert Cortinas said in an interview with El Paso Matters.

The no-new-revenue rate is the tax rate needed to generate the same amount of revenue from the same properties from the prior year. The voter-approval tax rate is 3% above the no-new-revenue rate. A rate between those two numbers would represent a small tax increase under state law.

Even though the proposed tax rate is lower than last year’s rate, many property owners would see an increase in tax bills because of rising property valuations caused by increased home sale prices over the past year.

Developing the budget and finding ways to continue to provide services with minimal impact to taxpayers has been key in the process, interim City Manager Cary Westin told El Paso Matters.

“I think people are impacted every time they go out whether it’s to get gas, to get groceries, pay utilities … last year we were able to achieve a no-new-revenue rate – we had the same goal in mind,” Westin said.

The proposed general fund budget for the next fiscal year is about $599 million. Last year, the adopted general fund budget, the city’s operating fund for basic services paid for primarily through property and sales taxes, was about $573 million.

The budget increases are largely driven by police and fire collective bargaining agreements the council previously approved, with about $14.8 million of the budget increase going toward public safety, city documents show.

Westin said that while public safety is the main driving force in the budget increase, other services such as having every library open next year for the first time since the pandemic and ongoing street repair needs all play a role.

Other budget increases will go toward operations, maintenance and staffing costs for new facilities, including new police and fire stations, and La Nube STEAM discovery center and Mexican American Cultural Center, which are slated to open this fall. 

The preliminary all-funds budget, which includes the general fund and other revenue sources and expenditures, is being proposed at $1.3 billion – a $16.9 million increase over last year.

Mayor Oscar Leeser said he wants the city to adopt the no-new-revenue rate again. Last year, although the city adopted the no-new-revenue rate – the rate needed to collect the same amount of property tax revenue on the same properties from the previous year – thousands of homeowners still saw an increase in the city’s portion of their tax bills because their home values increased.

“He wants to see a no-new-revenue tax rate – I think all Council does and we all do – I think that that’s the balancing act of developing the budget. It’s protecting taxpayers but at the same time not impacting city services,” Cortinas said.

Cortinas said the city does not have to issue voter-approved debt in the upcoming fiscal year. But that will change in 2026, when home values are also not expected to increase as much as previous years.

City documents show a projected 10% increase in home values for the upcoming fiscal year, but only a 4.8% increase in 2026. The city will also have to issue $215 million in voter-approved debt for the public safety bond, quality of life bond and the community progress bond.

Growth in sales tax revenue also is projected to slow in the coming years. For 2025, sales tax revenue will only increase by $3 million, compared with the $24.5 million increase last year.