San Marcos City Council voted unanimously to approve the budget and tax rate ordinance for the 2020-21 fiscal year at its second reading during the council's Sept. 15 meeting.

The proposed tax rate for FY 2020-21 is $0.593 per $100 of appraised property value. Although it is a decline from $0.6139 in last year's budget, it is an increase of 4.9% over the no-new-revenue tax rate of $0.565—or the tax rate the city could impose to raise the same amount of tax revenue as the previous year.

San Marcos is able to achieve greater tax revenue off a lower rate because property appraisals increased from roughly $5.64 billion to $6.27 billion since last year, an increase of 11.13% due to appraisals of new properties and higher appraisals of pre-existing properties.

Projected revenue for the FY 2020-21 budget was expected to increase by 6.6% from the year prior, but the new budget of $258.71 million is an 8.22% increase from the FY 2019-20 budget of $239.06 million.

During the Sept. 1 council meeting, Assistant Finance Director Melissa Neal explained the budget would still be balanced.

This is in part because of the use of the general operating fund to meet expenditures. The general fund balance is projected to decrease by $3.2 million in the upcoming year—from roughly $19.3 million to $16.1 million—which will reduce the fund balance from 28.2% of general fund expenditures to 21.4%.

A provision stating the city's budgeted fund balance must be at least 25% of total general fund expenditures for the year was reduced to 20% because of the pandemic.

Meanwhile, electric, water and wastewater, resource recovery, transit, airport and hotel occupancy tax fund balances were all projected to see declines in the new budget, despite use of cash reserves and federal Coronavirus Aid, Relief and Economic Recovery Act money by some funds.

Bolstered by a 6.5% rate hike, the stormwater fund would be the only fund to see an increase to its starting balance.

Waste and wastewater rates would be increased by 5% and 3%, respectively. The resource recovery fund would be supported by a solid waste and recycling rate increase of 3%.

Place 2 Council Member Saul Gonzales lamented the use of the city's cash reserves to balance the budget during the Sept. 15 meeting.

"The reason I'm supporting this is because of COVID-19, and our budget took a hard hit this year, and we had to go into our reserves," Gonzales said. "We're going to have to start living within our means."