The current health crisis is devastating by itself but it has also touched off a financial crisis that will seriously damage our communities. It is important that we deal with these circumstances vigorously and in consideration of the monetary impact to us all.
San Marcos gets a large portion of its revenues from sales tax rebates, hotel occupancy taxes and property taxes. Sales tax inflows will be very significantly reduced with the outlet malls and many other businesses closed or seriously curtailed. This and a severe reduction in hotel occupancy tax collections will make a large shortfall of revenue a certainty.
Does our city have contingency plans to deal with this? And if not, is the city now preparing contingency plans based on our current conditions, and further plans that can be triggered if the crisis deepens more? It would be comforting to hear what plans there are for cutting expenses, even if it means a reduction of services, delaying projects or even canceling them. An example is the extraordinarily expensive new Public Services Center at $44 million. That project should immediately be put on hold and more reasonably priced options pursued by the city.
And now the city has announced it will go to the credit markets to borrow more than $50 million if the council votes to move forward at a meeting scheduled for June 5.
The debt proposal announcement included information that the city’s current debt obligations have been designated as “self-supporting” and the city expects to pay those debts from revenues sources other than ad valorem (property) taxes; provided, however, that in the event that such self-supporting revenue sources are insufficient to pay debt service, the city is obligated to levy ad valorem taxes to pay such debt obligations.
The city presently proposes to provide for the payment of the new $50 million Certificates of Obligation by the levy of ad valorem taxes. Our property taxes are already very high and valuations are likely to fall due to this crisis. We are facing drastically reduced revenue which could potentially effect our ability to service our debt. To pile debt on top of debt and to be put in a position to raise property taxes to pay for it is exactly the wrong thing to do for the City of San Marcos.
Any additional debt is ill advised at this time. San Marcos must “live within its means.” We are not a rich city and cannot afford to spend as if we are. I hope the citizens of our city contact the mayor and council and ask that this item be placed on the agenda for the next city council meeting, where a report from the city administration can show exactly the impact of this crisis on our city’s financial health.
Thanks you,
Jay Stiles
3130 Summit Ridge Dr.
