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El Paso city officials make misleading claims in pitching budget, tax rate, exemptions for seniors [1]
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Date: 2025-07-20
When El Paso city leaders unveiled a budget plan that would increase property taxes, they touted an expanded exemption for senior citizens and people with disabilities that they said would reduce the sting for some. What they didn’t say is that the expanded exemption would only save $19 a year for the households affected.
Instead, the city said the exemptions saved $380 per household, without mentioning that longstanding policies were responsible for $361 of that savings.
In unveiling the city budget and tax rate for fiscal year 2026, officials included an increase to the homestead exemption for people 65 and older and those with disabilities, from the current $42,500 to $45,000. That’s on top of a $5,000 exemption available to all those occupying homes they own.
With a proposed tax rate of 76.1 cents per $100 of valuation, seniors and people with disabilities would pay $19.03 less with the expanded exemption than they would have if the city had left current exemptions unchanged. About 57,000 homeowners currently claim the exemption.
“We wanted to highlight the total savings,” city spokesperson Laura Cruz-Acosta said about how the city presented the figures to the public. She added that the city has also presented the impact of exemptions, citing the $3 million in property taxes the city loses out on with the exemption the state gives disabled veterans.
Exemptions shift the tax burden from those who receive them to those who don’t, said Manish Bhatt, a senior policy analyst with the nonprofit, nonpartisan Tax Foundation.
“These (exemptions) need to be thoughtfully considered so that homeowners are able to stay in their homes, but at the same time, carve outs that preference some over others have the tendency to shift the burden onto those who may be least able to afford them,” Bhatt said.
The city did not respond to questions about how the increase in exemptions for seniors will impact other taxpayers.
The proposed tax increase and increase in the homestead exemptions for some residents come as the city is also looking to keep a no-frills budget that includes tapping into its reserves while maintaining basic city operations and paying for committed police and fire pay raises.
El Paso Police Department officers at the ribbon cutting and grand opening of the Upper East Side Regional Command Center, Sept. 5, 2024. (Courtesy City of El Paso / EPPD)
The city will introduce its tax rate to fund next year’s general fund budget of about $624.4 million on July 31 along with certified property values. A public hearing on the proposed budget and tax rate will be held Aug. 12, ahead of an Aug. 19 meeting when the City Council will vote whether to adopt them.
As proposed, keeping the current tax rate of 76.1 cents per $100 valuation will result in a $104 increase on the average $223,435 value home. Under Texas law, governments that don’t reduce tax rates to offset rising property valuations are increasing taxes – and are required to state so in public notices before adopting them.
The general fund pays for operating costs for basic services such as public safety, streets and maintenance and parks and recreation and is funded mainly through property taxes and sales tax dollars.
Property values have been steadily climbing over the last four years as housing prices have risen in El Paso. This year, single-family home valuations increased by about 11% following another El Paso Central Appraisal District mass reappraisal. State law requires that property valuations for taxation be driven by market trends.
The appraisal district does not set property tax rates, which are adopted by local governments such as the city, county and school districts.
The city anticipates collecting about $303 million in property tax revenue to fund next year’s budget – a $25 million increase over the current fiscal year, though the figure could change slightly when certified property values are released at the end of the month.
Homeowners currently pay about $1,600 in city taxes on an average-value home of about $205,000.
The City Tax Office, on the third floor of the Wells Fargo building in Downtown El Paso, collects property taxes for most governments in El Paso County. (Robert Moore/El Paso Matters)
“The mortgage is going to go up. I tell you that because it looks like it’s going to go up $300 more on the taxes,” said 68-year-old Richard Jeffery, a homeowner in Northeast El Paso.
Jeffery, who is retired, supplements his income with part-time jobs to manage his expenses. He is concerned about the rising property values and taxes affecting his retirement.
Balancing services, tax burden
Bhatt said local governments are tasked with ensuring they can operate and provide services while not overburdening taxpayers.
“There is always that pull and push in taxation to make sure that government is appropriately funded, but not overly so people can stay in their homes, local government services are appropriately funded, and that we’re not shifting the burden,” Bhatt said.
Some of the city’s key priorities of the next budget are to maintain basic services and facilities, increase non-uniform employee pay wages and ensure increasing city contractual obligations for police and fire salaries are met.
“I think it’s a pretty flat budget. We really are working on making sure that this year it’s about stabilizing the organization,” City Manager Dionne Mack said during a recent media roundtable discussion.
The preliminary proposal puts the total budget at about $1.4 billion – and about $50 million over the current year. That includes the general fund budget and other revenue sources and expenditures such as rents, franchise fees, and fines and forfeitures.
Nearly 80% of the $25 million increase to the general fund will go toward public safety for pay raises through collective bargaining agreement, new academies, vehicle replacements and staffing.
A Streets and Maintenance truck drives down Bob Mitchell Drive in an Eastside neighborhood where the city is re-surfacing several streets. (Corrie Boudreaux/El Paso Matters)
The budget also maintains the current level of city services.
“I think taxes are an important part of living in a community. Taxes are meant to help everyone … (but) I worry about how difficult it might be for some in our community to keep up with the tax increase. Life can be unexpected and challenging so I am certain these increases have caused a lot of stress for some community members,” said Cynthia Bernal, a homeowner whose property taxes have been steadily climbing.
Bernal, 44, bought her home in the Mission Hills neighborhood 10 years ago. Though she has paid off her mortgage, she has to manage her finances carefully as her property taxes have increased over the last two years.
“My property value has increased approximately 20% over the last three years. My salary has not increased over the last three years,” Bernal said, adding the increased home values have contributed to her rising property taxes.
City tax rates, reserves and financial health
The city has adopted a no-new-revenue rate for the last two fiscal years – a move pushed largely by the previous City Council. The rate generates the same amount of property tax revenue as the previous year on the same properties, which depending on property valuations, may have minimal impact on taxpayers.
The no-new-revenue rate also makes it difficult for the city to respond to inflation and other issues that add costs to government services, which could stress city finances over the years.
Mack and Chief Financial Officer Robert Cortinas have consistently warned the approach is not sustainable for the long-term financial health of the city.
“The council direction over the last two years was to hold the line on taxes without consideration for the long-term impact of what it took to make it happen,” Mack said in her message from the city manager in the preliminary budget book.
The city reduced funding to fill vacancies, tapped into reserve funds, and reduced funding for vehicle replacements and facility improvements as part of the effort.
La Nube: The Shape of Imagination, the children’s museum under construction in Downtown El Paso, caught fire on Monday afternoon. The El Paso Fire Department said the condition 3 fire impacted the museum’s roof. The cause of the fire is being investigated. (Cindy Ramirez / El Paso Matters)
“Those adjustments helped to hold the line on taxes, however one-time fixes are not financially sustainable when the focus should be on developing structurally balanced budgets,” Mack said.
Next year’s budget continues to dip into the city’s general fund reserves with about $4 million being used from the city’s pay for futures fund – a portion of the general fund reserves used when needed to offset the impact from police and fire pay increases approved in collective bargaining.
The city has dipped into its reserves over the last two fiscal years. For the current fiscal year, the city approved using $7.5 million from the unrestricted fund balance to maintain a no-new-revenue tax rate. And in 2024, the council approved using $5 million from the pay for futures fund, although Cortinas has said the funds were not used after the city collected more sales and property tax revenue than it anticipated.
Other strategies the city used to generate more revenue included dissolving Tax Increment Reinvestment Zone 9 that was part of the Eastside Sports Complex construction. TIRZ generate revenue from property owners within the designated area to fund improvements, in this case, for the complex. The second phase of development was completed in June. Dissolving the zone freed up about $4.3 million and will generate about $2.2 million in property tax revenue per year that will go directly into the city’s general fund.
Lowest debt tax rate in 12 years? Not exactly
The tax rate – the amount homeowners pay for every $100 of their property valuations – comprises two parts: a debt service rate also known as the interest and shrinking (I&S) rate used to pay off debt, and a maintenance and operations (M&O) rate that pays for basic city services.
Over the last two years, the city has not issued voter-approved debt – or borrowed money for projects that voters approved in a previous election to be paid with additional taxes. It also does not plan to issue any new debt in the upcoming fiscal year.
In rolling out the budget, city officials said the debt service portion of the tax rate is the lowest it has been since 2012.
But that is a misleading claim, because tax rates are combined with property valuations to determine tax bills. The taxable value of an average home in the city of El Paso has risen by almost $100,000 since 2012.
The owner of an average-value home in the city of El Paso would pay about $472 in property taxes for city debt service under the proposed rate for fiscal year 2026 – $185 more than that tax on an average value home in 2012. That’s a 64% increase, well above the 40% inflation rate in that time.
“The debt rate is not a ‘claim,’ but a fact,” Cruz-Acosta said. “While the city has issued several hundred millions of debt since 2013, we have lowered our debt by $300 million since 2022. As far as paying more in debt, we would point to all of the new projects the City has done since 2012. It is through the debt service that those projects are paid for. Since 2012, the voters have authorized almost $1.2 billion in debt (not including interest).”
The city has also issued millions in debt that didn’t require voter approval – known as certificates of obligation bonds – to fund capital improvements.
The city has about $434 million in outstanding certificates of obligation debt as of fiscal year 2024, according to the most recent Annual Comprehensive Financial Report. The city has paid about $81 million off since 2014, the report shows.
The remaining debt that needs to be issued is about $246 million for the Public Safety Bond approved by voters in 2019 and about $226 million for the Community Progress Bond approved by voters in 2022.
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