SAN ANTONIO – A San Antonio councilwoman thinks cutting the city’s $3.7 billion budget proposal could help cut help the legs out from an expected CPS Energy rate increase.
Councilwoman Melissa Cabello Havrda (D6) said she plans to propose a five-year plan for the city to accept a smaller share of the city-owned utility’s revenue in exchange for CPS Energy not increasing customers’ gas and electric rates.
But that would also require the city to cut $90 million out of the proposed spending plan for next year’s budget to balance the loss of revenue. The council is expected to vote on a final budget on Sep. 14.
The Northwest Side councilwoman announced her idea in a commentary piece for the San Antonio Report and discussed it with KSAT in an interview Tuesday afternoon.
AVOIDING A RATE INCREASE
As CPS Energy’s owner, the City of San Antonio gets 14% of the utility’s revenue in lieu of it paying city taxes. The payments have come in above what the city expected recently, with a $75 million surplus in FY 2022 and a $32.6 million surplus expected for the current budget year, finishing at the end of September.
Cabello Havrda believes if the city takes in only 11% -- or possibly 12% -- for the next five fiscal years (FY 2024 - FY 2028), it could save the utility enough money to forego at least one of its planned rate increases.
CPS raised rates in March 2022 and has been planning to raise them again in 2024 and 2026.
Cabello Havrda said she had approached the utility about her plan and was told it would be enough to avoid the next expected increase.
When KSAT asked if it would cover other future rate hikes, she said, “It depends on what they were going to ask for down the road. And every year, we’d have to kind of look at that again. What it would -- what I can say is that it would, that if we were able to do this, then it would stave off the rate increase they were going to ask for this year.”
A CPS spokeswoman told KSAT in an emailed statement, “We are still working to determine the final number needed for our next rate request.”
BALANCING WITH CUTS
By cutting one of its largest pots of money by more than one-fifth, the city would be foregoing more than $90 million worth of projected CPS energy revenue in FY 2024 alone.
Cabello Havrda believes there’s a way to remove that amount from the next year’s budget proposal without affecting existing city services. However, even from the city’s growing budget, a cut of that size would appear to take the city below current funding levels.
While city staff have proposed growing the overall city budget by more than $311 million, most of that is through restricted funds and one-time capital projects. The portion of the budget that CPS Energy revenue helps to fund is only expected to grow by $80 million.
That area of the budget, the $1.59 billion general fund, functions as the city’s checkbook and pays for most of the basic city services, like fire, police, parks, and libraries.
In a year where the city wants to add 105 new police officer positions and start dramatically increasing the Animal Care Services budget, it’s not clear what exactly would be dropped to make room for $90 million less to spend.
“I mean, we’d have to take from a little bit from everywhere, right,” Cabello Havrda said. “It couldn’t be all one area department.”
The Northwest Side councilwoman said she planned to present the idea to the rest of the council during Wednesday’s budget discussions.
“I have had some preliminary conversations,” she said. “But you know, I’m not asking for commitment. I really just want to have this open conversation. I want to hear from the community, too. What are they thinking about this?”
KSAT requested an interview with city staff about the councilwoman’s proposal, but a spokesman said there was no one available.
CLARIFICATION: A previous version of the story incorrectly stated the expected surplus from CPS Energy payments was $25 million. However, that failed to account for the $7.6 million the city listed as “one time” revenues from the utility.