El Paso city manager previews FY2026 budget, holds property tax rate and trims pay-go

El Paso City Manager Dionne Mack and city budget staff presented the city’s preliminary fiscal year 2026 spending plan at a special City Council meeting July 7, saying the draft holds the tax rate steady while shifting how the city pays for capital and service needs.

Mack said the proposal would maintain the current property tax rate and use $4 million of the city’s fund balance to balance the budget. Robert Cortinez and Office of Management and Budget staff told council they identified $26.1 million in department efficiencies and reductions that, together with new and restricted revenues, cut an initial $51 million gap to a $24.8 million increase driven mainly by compensation and public safety staffing.

Why it matters: the plan aims to protect core services while limiting direct tax increases. Mack emphasized the city is not proposing a higher property tax rate and that the city has taken steps—refundings and debt defeasances—to reduce the debt-service portion of the tax rate to its lowest level since 2012.

Key figures and trade-offs - Preliminary general-fund increase: about 4.1% citywide (3.8% overall preliminary budget increase). - Reductions/efficiencies identified: $26.1 million. - Major expenditure drivers: compensation and public-safety staffing (about 77% of the remaining $24.8 million increase), contractual services (IT, police and fire), and utility increases. - Use of fund balance: $4.0 million in FY2026 (a decline from prior years’ $5.0M and $7.2M uses). - Pay-go (cash capital) for streets remains at $10 million; however facilities and fleet pay-go were cut previously and are not fully restored in this proposal.

Revenue changes and one-time moves: Cortinez explained a $25 million projected increase in property valuation receipts tied to not issuing debt next year, and noted the council recently approved a defeasance that will free up roughly $2 million a year when fully acted on. He also described a planned ordinance to dissolve a separately governed entity (TER S9), which staff said would return about $2 million a year to the general fund when completed.

Budget risks and outlook: staff warned that federal and state grant uncertainty is a major risk. Mack and Cortinez told council the city absorbed multi-million-dollar federal grant reductions earlier in the year—Cortinez said departments have already felt about $3.5 million of public-health cuts—and that additional state actions (for example, the personal property tax exemption adopted by the state) will reduce available revenue in FY2027. The administration said it is seeking new and redirected revenue sources and will continue presenting community-level briefings before formal adoption in August.

Public-safety and staffing: Mack and Cortinez emphasized that much of the increase funds people costs—wages, benefits, and recruitment to restore police and fire staffing toward pre‑COVID levels. Cortinez and Fire and Police leadership told council several recruitment and academy classes are underway and that planned new facilities (including two new fire stations) and the return of grant-funded positions will increase recurring O&M costs.

What’s next: staff said the council will receive certified appraisal values on July 25 and a special meeting on July 31 to set tax-notice requirements. The preliminary budget will be revised as new certified data and any additional council directions arrive before the public hearings and adoption in August.

Ending: Mack framed the FY2026 proposal as an effort to maintain services and invest in personnel without raising the tax rate, but said council choices in August will determine the final shape of the budget and any further tradeoffs.