I would like to join our City Council in thanking the City staff who have worked diligently to develop our $194 million FY2025 budget. Setting our annual budget is a literal balancing act because unlike the federal government, the City cannot simply print money or run its operation on borrowed money; our funding is limited and restricted, and we must have a balanced budget, per State law.
The issue of employee compensation has received much attention from staff, Council and the public during this year’s budgeting process. We have had problems with turnover for years, and we know from exit interviews that wages are a key reason why people are leaving.
Since 2021, we have invested nearly $5 million in recurring funds to improve compensation, implementing a $13/hour minimum wage, a new step plan for our public safety departments and a more competitive salary structure within our means across all positions.
In 2024, the City went through a new compensation study to better understand what more we need to do to stay competitive in the job market. Based on the results of this study, next fiscal year, we are raising employee pay by 3% across the board, raising our organization’s minimum wage to $15/hour and implementing an additional 1% step increase for eligible public safety personnel.
Council also approved a tax rate of $0.4707 per $100 of property valuation, a 4% decrease from last year’s rate. The rate was described as a “tax increase” in Council documents; however, this legally required language is misleading because it refers to only one part of the overall tax rate: the maintenance and operations (M&O) rate, which is the part of the tax rate that is capped under state law.
The other part of the tax rate is the interest and sinking (I&S) rate or debt rate, which generates funds to pay off bonds and other types of debt. Thanks to the City’s efforts to pay off debt early, we were able to significantly decrease our I&S rate this year. Because of this, we were able to increase the M&O rate while still giving residents an overall tax rate decrease.
Due to the lower rate and the stabilization of residential property valuations, more residents will see a reduction in City taxes compared to last year. The total residential property value in Victoria increased by only 1.1% this year, and residents who experienced a smaller increase in line with this trend will pay less under the new rate. Of course, every property owner’s situation is different, and some residents’ payments may still go up if their property values increased significantly.
In addition to improving compensation, we are continuing to fund crucial projects such as parks improvements and road maintenance, including our $40.5 million capital improvement program that covers street projects and other infrastructure needs.
Ultimately, the only way for the City to generate more revenue for these critical efforts without raising taxes is for the City to grow. Population growth is good for our financial health because it increases our tax base and helps us attract new businesses.
The numbers don’t lie: When we compare ourselves to other cities with more funding, we find that Victoria is behind the curve when it comes to population growth. To address this issue, we have been working closely with our local and regional partners to find new ways to grow Victoria. Stay tuned for updates on these efforts.
We want to empower residents to understand the FY2025 budget and learn how City resources are being spent. To learn more about the budget, visit www.victoriatx.gov/budget.
Jesús A. Garza is the city manager for the City of Victoria.