SAN ANTONIO – The City of San Antonio could possibly restore budget cuts forced by the pandemic as well as invest in some strategic areas for the next fiscal year, which begins in October.
City staff presented a “trial budget” for FY 2022 to the new city council on Wednesday, which is balanced over the next two years. The trial budget would restore $37.2 million worth of proposed budget cuts, including restoring street maintenance funding to pre-pandemic levels, taking furlough days for civilian employees off the table, and partially thawing a hiring freeze.
Arts funding could also be restored to FY 2019 levels and civilian employees could get a raise, top city staff said. The trial budget also restores funding for the Henry B. Gonzales Convention Center and Alamodome to support upcoming conventions and events and increases the city’s contribution to Visit San Antonio.
The trial budget also includes spending an additional $30 million on strategic areas, including homelessness, housing, EMS enhancements, and public health.
“Last year, we did the trial budget largely to talk about how the reductions are going to look. This year, where it’s the flip of that, we’re talking about what type of investments we can make based on the council priorities,” Budget Director Scott Huizenga told reporters. “So‚ we still have a lot of building to go - to use the analogy - but it’s a different scenario in many respects - well, in all respects, really - a better scenario.”
The restoration and investments rely on sunnier-than-expected local revenue projections but also $97.5 million of federal dollars from the $465.5 million pot of money the city expects to receive through the American Rescue Plan Act (ARPA).
The biggest chunk of the ARPA funds - $326.9 million - are for fiscal recovery, which the city can use for making up lost revenue because of the pandemic. Based on FY 2020 shortfalls, the city will use $46.5 million of those fiscal recovery dollars for the general fund and $51 million for the Hotel Occupancy Tax (HOT) fund.
City staff have not included any revenue shortfalls for the current fiscal year, FY 2021, or the other $138.6 million the city expects to get for specific uses like housing security or health disparities.
The city has collected record levels of sales tax in the past two months, and while the hotel occupancy tax fund revenues are still down from pre-pandemic levels, they are doing better than expected.
Deputy City Manager Maria Villagomez said the city needs both the ARPA money and the increased revenues to fund the trial budget as presented, and Huizenga told reporters that the city is “returning to normal.”
“I think, you know, the next several months will tell how close we get to that level. Again... revenues are growing. How fast that will grow is still... lots remains to be seen. But if things are opening up, the finances are looking much better, and I would say we are returning to normal quicker than we anticipated,” Huizenga said.
The trial budget is not the full budget, but rather a tool to show council members the “framing of the house,” in the words of City Manager Erik Walsh, ahead of their goal setting session next week.
Staff first used a trial budget last year ahead of the FY 2021 budget process as the pandemic wreaked havoc on the city’s typical revenue streams, like sales or hotel occupancy taxes.
City staff will develop a full budget proposal to be presented Aug. 12, and the final budget is expected to be passed Sep. 16.