El Paso presents preliminary FY2027 budget; staff warn state exemptions cut $7 million and project modest tax‑rate rise

El Paso City Manager Miss Mack opened a special City Council meeting on May 27 by calling the FY2027 budget “preliminary,” framing it as a launch point for community input and revisions before adoption in August. She said the city is moving to program‑based budgeting to make spending more transparent, and that the plan preserves core services while investing in workforce stability, including “starting this year with adding 50 cents to the minimum wage.”

Office of Management and Budget Director Robert Cortinez presented revenue and tax‑rate modeling that underpins the preliminary proposal. Cortinez said most of the city’s revenue growth is concentrated in property and sales taxes, but that recent state and voter‑approved exemptions are removing taxable value and forcing difficult tradeoffs. “It will be reported…that the city is increasing the property tax rate by 2.3 cents. So we’re going from 76 to 78.3 cents,” Cortinez said, adding that the average homeowner with the homestead exemption would see an increase from $1,723 to $1,829—about a $105 annual change on the average bill.

Cortinez highlighted one driver in particular: state‑level changes to business personal property exemptions, recently expanded from a $2,500 threshold to $125,000 per location. He said the adjustment will reduce local tax revenue by roughly $7 million and is “a significant challenge for the FY2027 budget.” The budget office’s preliminary numbers forecast an overall $22.9 million increase across all city funds (about 1.7%), with the general fund up $29.6 million; but that growth is partially offset by declines in restricted or one‑time revenue sources.

On spending priorities, the city manager and department directors emphasized public safety, infrastructure and workforce retention. The budget assumes continued investments in police and fire recruiting—Cortinez and Chief Jonathan Killings reported planning for roughly 90 police academy graduates in FY27 and a 10‑month paramedic‑certification track for one of the next fire recruit classes—and sets aside funding for equipment, radio upgrades and vehicle replacement. Miss Mack and staff stressed they are trying to minimize reliance on one‑time fund balance and are preparing a formal fund‑balance policy to guide when reserves may be used.

Several council members pushed staff on clarifying assumptions and community outreach. Cortinez said certified valuations on July 25 will change the numbers, and staff plan more workshops and community meetings before the proposed budget filing July 17 and adoption on Aug. 18. Miss Mack said a new public budget simulator will let residents test tradeoffs and submit budget adjustment requests ahead of a June 22 review of recommended adjustments.

Council members and department heads also discussed lower‑visibility but consequential items: the city’s transfer of some police and fire positions from ARPA (federal) funds into the general fund; a planned $70 million debt issuance tied to bond projects; capital needs at the airport and venues; and a looming funding cliff for community programs that rely on one‑time ARPA dollars. Nicole Rodriguez, director of Community and Human Development, warned that the city’s welcome center for people experiencing homelessness—largely ARPA‑funded—will lose its current funding Aug. 31 unless a new source is found; she estimated the program’s operating cost at roughly $600,000–$800,000 annually.

What’s next: the council will continue budget workshops and department presentations; staff expect to present adjusted proposals after receiving certified property valuations in late July. The May 27 presentation was explicitly labeled preliminary; the city expects to return to council with a proposed budget July 17 and to adopt a final FY2027 budget in August.

Quotes

“This is preliminary,” Miss Mack told council, stressing the city is “launching” public engagement and will not adopt the budget until August.

“It will be reported…that the city is increasing the property tax rate by 2.3 cents. So we’re going from 76 to 78.3 cents,” Robert Cortinez said, noting changes to exemptions and one‑time revenue explain much of that movement.

“Starting this year with adding 50 cents to the minimum wage,” Miss Mack said, describing a multi‑year approach toward a higher living wage for city employees.

What to watch

- Certified property valuations (expected July 25), which will change the final tax calculations.
- Whether the city identifies a funding source for the welcome center before ARPA funding expires Aug. 31.
- Debt pricing on the planned $70 million issuance and its effect on the debt service portion of the tax rate.

Attribution

All direct quotes and specific attributions in this report come from speakers recorded in the council’s May 27 preliminary budget workshop: City Manager Miss Mack; Robert Cortinez, Director of OMB; Chief Jonathan Killings; and Community & Human Development Director Nicole Rodriguez. If an item quotes a speaker not named in the meeting transcript, it is presented without a direct attribution.