City Council Members Express Concerns About SAWS Contribution to City Budget

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Scott Ball / Rivard Report

San Antonio City Council

Most City Council members said they were receptive to using money from San Antonio Water System to make up for shortfalls in the City’s proposed $2.9 billion 2020 budget, but wanted to learn more about how the move will affect SAWS’ bottom line and ultimately ratepayers before endorsing the plan.

City Manager Erik Walsh presented the draft budget for the next fiscal year Thursday in a meeting that began with activists unfurling a banner above the dais and chanting support for the City’s paid sick leave ordinance. City Council is slated to vote on the final budget on Sept. 12 after several community meetings and presentations from department heads on their specific budgets. Council members have their own projects and initiatives they would like to see funded next year, too.

Click here to read an overview of the proposed budget and here to download the 454-page document.

The City is looking to increase the revenue it receives from its publicly owned water utility to make up for revenue it lost through legislative changes at the state level, Walsh said. The Texas Legislature approved a measure during the last session that abolished some fees telecommunications companies pay to use City infrastructure, a $7.4 million hit to the budget. The City faces other budget constraints next year, including the new homestead property tax exemption and lower revenues from CPS Energy, he said.

You can replace that money one of three ways, Walsh said. “You cut city services permanently, you raise additional revenue or a combination. … SAWS has the financial ability to contribute more.”

The proposed budget calls for SAWS to increase its portion of revenue transferred to the City from 2.7 percent to 4 percent, providing an additional estimated $9.9 million to the City’s general fund in 2020 for a total of $29 million.

“After all, SAWS is owned by the City,” said Councilman John Courage (D9) “It’s really just an additional resource.”

Most Council members wanted to know more about how SAWS can afford to take a $10 million annual hit without increasing rates.

In the short term, it won’t increase rates or impact the utility’s daily operations and maintenance, SAWS CEO Robert Puente has said, but a $10 million expense each year depletes the savings account SAWS has built up for large capital projects, so eventually it will need “revenue from somewhere.”

Councilman Manny Pelaez (D8) praised the budget as a whole, but said he has concerns.

“I’m looking at this SAWS piece and I am worried,” he said. “I just want to make sure it’s not somebody else’s belt that we’re tightening too hard.”

He suggested that the increase in SAWS revenue have a two-year “sunset clause” attached to it so that the City and the utility can review the impact.

Councilwoman Shirley Gonzales (D5) said she expects to be briefed by SAWS on this funding mechanism’s impact.

“I personally find it very hard to believe that they just had an extra $10 million sitting around,” Gonzales said.

Councilman Clayton Perry (D10) delivered the strongest criticism of the idea. Two years ago, he said, he suggested using SAWS’ cash-on-hand account to avoid rate increases, but the idea was rejected.

“This to me is a slap in the face to not only SAWS but our ratepayers that are already absorbing multiple increases,” he said. “Now we’re proposing to take that money away from that pot of money and fund City services.”

Mayor Ron Nirenberg said it is the job of SAWS, CPS Energy, and the City to work together to improve residents’ quality of life.

“In a private corporation, the dividends would go back to the stockholders,” he said. “in this case, dividends from CPS and SAWS go back to the public in the forms of streets and sidewalks, police and fire services. … There are priorities in both [the City and SAWS] that are not being done right now because they want to keep rates affordable.”

Council also was largely receptive of quarterly funding for the City’s Migrant Resource Center and associated nonprofits that provide food, shelter, and other resources for migrants passing through San Antonio.

Walsh recommended spending $333,000 for the first quarter of fiscal year 2020 from the City’s $1 million emergency fund.

Councilwoman Ana Sandoval (D7) said she was concerned about not setting aside more for the full year.

Given the unpredictability of how many migrants are coming and a slow federal reimbursement process, Walsh said, he does not want to tie up the entire emergency fund in case something else also needs funding.

Council members also pitched other projects not yet included in the budget, including District 1 Councilman Roberto Trevino’s $100,000 request for legal representation for qualified renters challenging eviction and District 3 Councilwoman Rebecca Viagran’s request for a police substation in her district.

The City and Council Districts will be hosting several input meetings on the budget. For dates, times, and locations visit SASpeakUp.com. An online survey will be conducted starting next week.

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