MARFA — Over the past few weeks, the Presidio County Commissioners Court has been toiling through a grueling meeting schedule to draft and pass this year’s budget. Hearings scheduled for later this month will give the public one last opportunity to weigh in on the proposed tax rates and budget, which they will vote on and forward to the state in September.
Last year, the county made the controversial decision to adopt a tax rate that raised revenue beyond the typical state-mandated haul, but this year they’ll go back to the usual playbook of using what’s called the voter-approval rate, which does not necessitate an election or offer property owners the ability to petition for one.
Historically, the county — which ranks among the poorest in Texas — has struggled to stay in the black. Without money-making industries like oil and gas, the city must rely on property taxes to stay afloat. Presidio County’s annual budget tends to hover around $4 million. That’s chump change compared to many other rural West Texas counties — Loving County, the state’s smallest by population, enjoys a $25 million annual budget for its 67 residents.
Before 2019, local taxing entities were allowed to grow property tax revenue by 8% each year without necessitating a rollback election. That changed with the Legislature’s passage of SB 2, which capped that growth at 3.5%. That year, the county squeaked by with a $10,000 surplus — but not without putting off investments in the county’s aging infrastructure and maintenance equipment.
In the years prior, the county had filled in its deficit gaps with reserve funds — including a $500,000 payout from the controversial Trans-Pecos Pipeline. Former Presidio County Auditor Patty Roach warned against the practice and pushed the county to clean up its financial act by focusing on keeping healthy reserves.
Pandemic-era inflation, deferred capital improvements, slow tax roll growth and the Texas Legislature have impacted the county’s financial future over the past few years.
During last budget season’s round of calculations, newly-elected County Judge Joe Portillo inherited a budget deficit of around $300,000. That left the county facing an alarming shortfall of $680,000, which they were able to whittle down to $278,000 — thanks to what Precinct 4 Commissioner David Beebe called a political “good gamble” in hiking rates alongside the adoption of game-changing property tax legislation.
Last year, the county tried a number of strategies to balance the budget, including asking the cities of Marfa and Presidio to sacrifice some of their sales tax to create a county-wide tax, which was — to say the least — politically unpopular.
Instead, the county opted to use a loophole for small counties and cities, which allows these taxing entities the wiggle room to grow their tax revenue by up to $500,000 instead of strictly abiding by the growth cap. The rate required to raise $500,000 of new revenue is referred to as the “de minimis” tax rate. Technically, voters can petition for a rollback election against the de minimis rate, but an election is not required.
For many Presidio County property owners, last year’s adoption of the de minimis tax rate — a hike of 13.2% — flew under the radar, thanks to lucky timing. Last year, property owners across the state voted in favor of raising the cap on the state’s homestead exemption, which lowers tax bills on properties that owners can claim as their primary residence. As a result, many county residents saw their overall tax bill go down, despite the county’s risky decision to raise their own rates.
This year, county officials won’t see those same stars align — and property owners may find following this year’s tax discourse confusing, thanks to how these state policies have fudged the numbers. Last year’s tax rate was around 47 cents per $100 of taxable value; this year’s could be around 48 cents. If the county wanted to adopt the de minimis rate again this year, it would be set at 52 cents per $100.
The commissioners opted to offer constituents the usual voter approval rate, which would grow revenue by 3.5%. Residents are invited to offer their thoughts at a public hearing held on Wednesday, September 4, at 10 a.m. at the Presidio County Courthouse in Marfa.