Edinburg officials begin working on 2025 fiscal budget

EDINBURG — As the summer begins to heat up, so, too has the budget planning process for the four-time All-America City.

To that end, the city’s highest officials gathered at Edinburg City Hall this week for the first of what will become many public workshops on the path to approving a balanced budget by the end of September.

“We’re just getting started,” Edinburg Mayor Ramiro Garza Jr. said after a lengthy public workshop and city council meeting Tuesday evening.

“We’re such a fast-growing community, so there is a lot of needs that we have. So, we’re carefully evaluating all the requests by our departments, but at the same time, keeping tabs on what had been committed previously,” the mayor added.

Things got started Monday evening, when elected officials, city administrators and all of Edinburg’s department heads gathered for a roundtable discussion on their wishlist proposals for the upcoming 2024-25 fiscal year, which begins Oct. 1.

The hourslong discussion featured conversations about new positions the various departments hope to create or fill and large-scale infrastructure projects they’re hoping to fund — all of which was meticulously laid out in a 264-page working document.

On Tuesday, the budget talks continued with a half-hour presentation by the city’s financial advisers, Estrada Hinojosa, about Edinburg’s current debt obligations and its potential capacity to borrow more.

THE WISHLISTS

The mayor spoke of the importance of going over the city’s wishlist line by line.

“Our budget is an operations budget … that’s a one-year budget. But we can’t just consider things for one year. We’ve gotta look three, five years down the road. So, there’s always capital outlay things that we need to do,” Garza said. The mayor was referring to projects that require years and high cost to complete, such as drainage projects or constructing new buildings.

“For that we have to look at our long term debt. That’s when we have to evaluate that because we want to make sure that … we know what we have to work with,” he added.

To that end, Edinburg has a laundry list of projects it hopes to complete over the next decade.

The city hopes to invest millions into things like streets, remodeling fire stations, revamping traffic signals, and keeping park facilities tidy and welcoming by purchasing pricy landscaping equipment, according to the 264-page “Budget Programs” document that was included as part of Monday and Tuesday’s workshop agendas.

But it’s not just maintaining Edinburg’s foundations that is important to city leaders. Officials are also keeping quality of life top of mind.

To that end, Edinburg is planning for the final investments to its newly constructed Arts, Cultural Events, or ACE Center, including the purchase of the facility’s furniture and educational equipment.

And as city operations grow, department heads are asking the city council to consider expanding their staffs, as well.

For instance, the information technology department is hoping to add cyber security analysts and network administrators to its staff, while a whole host of personnel are being requested to help operate the ACE center once it opens.

Meanwhile, the city’s public safety departments — police and fire — are asking for additional personnel, as well.

Police Chief Jaime Ayala explained he’s hoping to hire several non-commissioned staff to help with investigations, communications and jailing.

Fire Chief Omar Garza, meanwhile, explained that he needs ranked officers to help with department administration, including an assistant fire chief, two captains and a lieutenant, among other positions.

But perhaps the most cost-intensive line items the city council will have to consider throughout the summer are the dozens of infrastructure projects pending in Edinburg’s aging water and wastewater systems.

Maintenance on many of the city’s water systems has been deferred for far too long. During discussions throughout 2023, the council learned that nearly 90 projects are needed — everything from installing new water towers, to fixing sewage lift stations, to major overhauls to Edinburg’s water and wastewater treatment plants.

For instance, a set of 75-year-old clarifiers have suffered cracks and corrosion and are in need of $1.4 million in repairs, according to figures from the Budget Programs workbook.

But Edinburg doesn’t currently have the money to pay for the projects, which will cost an estimated $260 million, according to discussions that took place in 2023.

DEBT CAPACITY

Those discussions were part of a rate study the council commissioned to see what it would take for the city to be able to pay for the infrastructure improvements.

The council learned that the city’s utility rates had not changed in two decades, not even to adjust for the rising price of inflation. As such, the utility department has become insolvent — unable to meet its outstanding debt, according to Noe Hinojosa, principal of Estrada Hinojosa Investment Bankers.

On Tuesday, Hinojosa delivered a presentation of both the city’s general fund and utility fund debt capacities.

Currently, the general fund — what Edinburg uses to pay for daily operations — is subsidizing the utility fund by about $2 million per year, Hinojosa explained.

Learning how upside down the utility fund is gave him “heartburn,” Hinojosa explained.

“So that’s what prompted us to come to you and say, ‘Please give us the support to bring those rates up,’” he said.

And that’s precisely what the city council did.

Earlier this year, the council unanimously approved implementing a series of utility rate increases.

The first one went into effect in April, with another 11% increase expected this October. Rates will continue to rise by 11% every October thereafter until 2027.

By the end, Edinburg residents will have seen their rates increase by about 67% compared to what they were paying in March 2023.

And so far, the plan is working. On Monday, Edinburg Finance Director Ascension Alonzo said the first set of rate increases has already begun to generate about $350,000 in additional revenue per month.

Hinojosa hopes the new revenue will have enough of an impact by the end of the year to give Edinburg a little breathing room should it want to borrow funds for additional projects.

“If you support all of the debt then that gives you the ability to do something on the general fund side to fund for capital projects that I know you’ve been holding back for well over a year-and-a-half or two that you wanted to do,” Hinojosa said.

As Edinburg works to right itself financially, things are already looking brighter. Hinojosa lauded the city for achieving an AA credit rating from independent financial analysts, Fitch Ratings.

The mayor cautioned that he and the rest of the council must maintain a fiscally conservative mindset if the city hopes to balance financial commitments made by prior administrations with Edinburg’s future needs.

Nonetheless, as a former Edinburg city manager himself, Garza was pleased to hear that the city’s AA rating had been reaffirmed.

“It’s gonna help us as we plan for the long term, because that means we have a good credit rating to work with,” Garza said. “It also speaks to our finances, how they’re being managed. I think overall it’s a good thing.”

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