Mar 23, 2023 - Politics

Texas bill could cut San Antonio budget for police, streets, parks

Data: City of San Antonio; Chart: Thomas Oide/Axios

San Antonio leaders are alarmed about legislation they say could slash the city's budget by about a quarter and cut services — but the bill's author, a Republican state lawmaker from the Austin area, says that's not his goal.

Driving the news: A Senate committee held a hearing Tuesday on Senate Bill 1110, which would in some cases prevent cities from taking revenue from electric utilities they own or operate.

  • Officials from San Antonio and Austin testified against the bill, along with the interim president of the San Antonio Chamber of Commerce. CPS Energy also filed testimony opposing the bill.

Context: As much as 14% of city-owned CPS Energy's revenue goes into San Antonio's coffers. In recent years, that has amounted to more than a quarter of the city's general fund, which is about $1.5 billion this year.

Why it matters: Most of the general fund pays for the police and fire departments, followed by street repairs and parks. Large cuts to it would require reductions in city services, or an increase in property taxes to keep up funding, the city's chief financial officer Ben Gorzell said.

Details: The bill's author, Sen. Charles Schwertner of Georgetown, aimed the bill at preventing or reducing utility rate increases. He's concerned some cities take too much money from their utilities, leaving the utility in a poor financial state.

Flashback: With City Council approval, CPS Energy increased rates last year, and plans at least two more rate hikes. CPS officials asked the council for a rate hike in part to shore up substations and other power transmission systems for a growing population.

  • Before then, some at City Hall floated the idea that the city could take less money from CPS to lessen the blow of a rate increase, the Express-News reported.
  • City officials ultimately worked with CPS to adopt a lower rate increase last year — 3.85% instead of 10%.

What they're saying: "SB 1110 would cause a catastrophic loss in revenue that would negatively impact services to our community, the city's bond credit ratings and capital programs," Gorzell told the committee this week.

  • Having multiple revenue sources also helps the city keep property taxes lower, Gorzell said.

The other side: Schwertner disputes the estimate that the bill would cut a quarter of San Antonio's budget.

  • "That's not right. That's not the intent of the bill," Schwertner said during the hearing. "It just would prohibit transfers that cause a rate increase or cause indebtedness on the part of the utility."

Yes, but: It's difficult to separate the city's take of CPS Energy revenue from customer rates, Gorzell said.

Zoom out: There are 72 municipally owned electric utilities in Texas that the bill could affect.

The big picture: This year's legislative session has officials in many Texas cities worried about the state infringing on local affairs. Schwertner's bill is one of many San Antonio is watching.

Of note: Texas in 2021 prevented large cities from cutting police budgets.

What's next: The Senate panel would need to approve the bill before it goes to the full Senate for a vote.

  • It would also need to pass the House before going to Gov. Greg Abbott for his signature.

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