Bexar 'had no idea' budget deficit was coming, county manager says

Bexar County Judge Peter Sakai, right, leads a panel at his State of the County address at the Grand Hyatt on Tuesday afternoon. Credit: Michael Karlis

Bexar County Manager David Smith said Wednesday that it was nearly impossible for Commissioners Court to foresee the county’s looming $145 million budget deficit.

“We really had no idea,” Smith told the Current. “ We’re not the only ones scrambling.”

Smith’s comments came after outgoing Bexar County Judge Peter Sakai’s final State of the County address at the Grand Hyatt downtown on Wednesday morning.

Sakai’s speech, and a subsequent panel over which he presided, was largely devoted to discussing the judge’s accomplishments during the past year. However, Smith provided a frank assessment for the audience of Bexar County’s looming budget crisis.

“It will be, in my experience, the most fiscally challenging budget process we’ve had since the housing crash of 2008,” Smith said during the discussion.

Indeed, Bexar County — as well as every other Texas county — is, by law, heavily dependent on property taxes to generate revenue. About 75 cents of every dollar in Bexar County’s operating budget comes from that source, Smith said.

Declining home values, a result of higher mortgage rates, have taken a bite of Bexar’s property tax revenues, Smith explained. Meanwhile, an uptick in homesteading among retirees has also hurt the county’s bottom line.

Beyond that, the Texas Legislature’s decision to expand property tax exemptions for the first $125,000 for small business owners, and the sunset of the COVID-era American Rescue Plan Act (ARPA) funding, which ends in December, are also causing significant financial stress for Bexar County.

Indeed, those policies led Smith to project a 2% decline in property tax revenue — or a $145 million deficit — by 2029.

“We’re reacting to it earlier than most, and I can tell you it’s not my intention to propose a budget that has a property tax increase,” Smith told the Current. “It hasn’t happened in 30 years, and I don’t want to be the first to do it. So, we will be on the forefront of dealing wth that issue as well.”

While Smith maintains a property tax hike isn’t in the cards, Sakai told reporters he opposes cutting vital county services.

“We can’t compromise public safety, we can’t compromise on basic needs,” Sakai said. “Food security, housing issues, workforce development, economic development — all those issues have to take top priority.”

Even so, what falls under the budget ax will largely be up to the incoming Bexar County judge.

Voters will decide in November whether Democrat Ron Nirenberg, the former mayor of San Antonio, or Republican culture war crusader Patrick Von Dohlen will lead the county through its worst budget cycle since the Great Recession.

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