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Laredo staff present preliminary FY25–26 revenue outlook, warn final tax and bond choices will alter projections
Summary
City finance staff told the council preliminary 2025 property valuations rose, projecting a modest tax-rate reduction but stressing final tax and debt choices — especially decisions about interest-and-sinking (I&S) financing for bonds — will change household impacts and the city—s borrowing capacity.
City of Laredo budget staff told the council on March 20 that preliminary 2025 property appraisal totals rose to about $27.8 billion, and current modeling showed a roughly 2‑cent drop in the overall tax rate if current assumptions hold.
The presentation came from the budget department—s Jesus Esparza and finance staff during a pre‑budget workshop, part of a multi‑month process that will produce the council—s FY2025–26 budget proposals. Esparza said the preliminary appraisal total for 2025 is $27,800,000,000, up from $24.3 billion in the current year, and staff is tightening revenue assumptions as they move from revenue projections into the expenditure side.
Why it matters: property values and the city—s choices about how to finance capital projects determine both the tax burden for residents and the city—s ability to sell bonds. Esparza and other staff emphasized that the final tax rate and household impacts depend on whether the council directs staff to increase the I&S portion of the rate to finance capital needs rather than raising the maintenance-and-operations levy.
Key points from staff: - Preliminary appraised values for FY2025 are $27.8 billion, up from $24.3 billion in FY2024. - Staff—s early modeling showed a possible reduction of about 2 cents in the overall tax rate under the current assumptions and a 3.5% growth cap used in planning. - The I&S rate (interest and sinking, for debt service) pays debt service on bonds; Esparza called it the portion that is used "to pay for the loans that we have." - Staff cautioned that pending state legislation discussed in Austin and final decisions about whether to float bonds or use alternative financing (including PFCs/Certificates of Obligation) could change the I&S and M&O splits and thus homeowner bills.
Council discussion and context: council members pressed staff for clearer definitions, noting that acronyms confuse some residents. Several members asked whether the I&S portion is capped; staff said it—s tied to the amount the city chooses to finance and the city—s capacity, which a financial adviser evaluates. Staff also noted possible legislative changes in Austin that could freeze or restrict I&S levels, which would leave cities with less flexibility.
What—s next: staff will continue to refine appraisal and tax modeling, meet with the city—s financial adviser, and return with more detailed financing alternatives before the council sets a tax rate and final CIP financing method.
Ending: The presentation framed the coming weeks as a time for council direction on how aggressively to finance capital needs, with staff repeatedly noting that the appraisal increase gives the city options but not automatic tax relief until formal financing decisions are made.
