Focusing on Property Values Bexar

County leaders do more with less.

Like most Texas local governments, Bexar County is being forced to tighten its belt in response to tougher economic times.

But quick reactions and careful planning are making the process as painless as possible, according to David Smith, the county’s budget and chief investment officer.

Bexar County began keeping an eye on the national housing debacle a year ago.

“We’ve been watching developments since last summer, in part due to being in the bond market and seeing the massive changes that were already starting to take place on Wall Street,” Smith says. “So we were already concerned by the future implications.”

And while San Antonio-area property values haven’t taken the kind of body blows seen in other states, its county government, which collects no sales tax, will feel any drop in home prices. Bexar County currently derives about 55 to 60 percent of its ad valorem revenues from residential property.

“In late November, when we started to see the first signs of impact to our county revenue collections, the commissioners court reacted immediately,” says Smith. “By taking early action, we were able to estimate the potential impact and spread it out over two budget cycles, rather than doing it all at once later. That gave our departments and elected officials time to adjust their expectations and their operations to an environment with less revenue.”

The commissioners court quickly ruled out a tax increase. “We made some cuts midyear,” Smith says. “They were mostly voluntary and across departments. People can read headlines as well as we can–they didn’t need a whole lot of persuading. The economy was turning, and turning rapidly.”

But the county, which employs about 5,000, chose to use a scalpel rather than a cleaver. “We sent out what were essentially spending targets to our offices and departments, and asked them how they would propose to meet those targets,” Smith says. “We individualized and adjusted the targets for each department to reflect the likelihood of them being able to achieve those cuts.”

Bexar County is planning to pull the belt in another notch. “We’ll go through a second round of cuts in the upcoming budget,” Smith says, estimating that the total impact of both rounds of cuts will be in the range of 6 to 7 percent of operational spending, or about $20 million.

But current conditions aren’t all bad news. “We’ve been directed to speed up capital projects,” he says. “The environment is favorable for locking in longer-term interest rates. Bond costs are near historically low levels. Eighteen months ago, we were using 6.5 to 7.5 percent interest rates on long-term debt for planning purposes. Today, it would be about 5 percent.

“We’ll be in the market pretty heavily this year, trying to get at least a couple of years’ worth of capital funding in place,” Smith says, noting that the county plans to issue bonds for flood control projects and a new county office building.

Download the latest Bexar County budget.

From Texas Rising by Bruce Wright