Debt payment and infrastructure issues loom over budget approved by Devine City Council in split vote

The Devine City Council approved the budget for fiscal year 2021-2022 in a split vote last Tuesday, September 21, and while a surplus exists in both the General Fund and Sewer and Water Fund, debt incurred in recent years is a problem that could potentially lead to increased utility rates for residents.
Council also unanimously approved a fiscal year 2021-2022 tax rate of $.5298 to support the budget.
General Fund
The General Fund budget, which funds the police department, streets, Animal Control, the Driscoll Public Library, the Municipal Airport, the golf course, and parks and recreation, among others, is projected to bring in $4,768,845 in revenue against $4,033,775 in expenditures.
The resulting surplus is misleading, as $598,279 – the first half of the $1.2 million the City was awarded from the American Rescue Plan, the most recent round of federal funding related to the ongoing COVID-19 pandemic – is allocated in the General Fund on the advice of the City’s auditing firm.
Council discussed using that $598k for utility infrastructure improvements in a Special meeting on August 31 (see “Council considers infrastructure needs, payment options” in the Sept. 8 edition of The Devine News).
Without that money, the General Fund’s projected surplus is just $4,739.
“I’m not happy,” District 5 Councilwoman Debbie Randall said. “I’ve said it before. We’re not doing the streets; we have a six-year plan now instead of a five-year plan. Our salaries are out of adjustment. There’s so many things that I disagree with on this, but I’ll be outvoted so it doesn’t matter. I just need everybody to know it’s not good for the entire city. But it is what it is.”
The street budget is $673,896, though street maintenance expenses are just $263,000.
Much of the street repair the City planned to do in conjunction with Medina County Precinct 4 during the current 2020-2021 fiscal year didn’t happen due to weather delays and equipment problems (see “Road work scaled back in Devine, Natalia” in the Sept. 1 edition of the News).
District 2 Councilwoman Angela Pichardo said a lot of funding went to an entity in District 5, referring SG Golf Management, the private management company contracted to run the Devine Golf Course on the City’s behalf. Randall countered by saying money paid to SG Golf was budgeted, and Pichardo said it was “overextended.”
The golf course budget request for FY 2020-2021 was $286,681, though the final amended FY 2020-2021 budget approved by Council showed expenditures of $428,001. Much of this additional expense was due to unbudgeted management fees paid to SG Golf after the clubhouse renovation project stretched through the fiscal year. As per its contract with SG Golf, the City must pay the management company $32,536 a month until a turnkey renovation of the clubhouse is complete. Construction on the clubhouse is complete, but the installation of kitchen equipment is not.
“That’s one of the issues, making good business decisions and saving our citizens the tax money,” Pichardo said. “Again, we could have had the expenditure and the money spent on roads and that wasn’t done. And so now we’re having to rectify some of those situations.”
Mayor Cory Thompson said the City started with a budget surplus of approximately $25,000 for the 2020-2021 fiscal year, which was gone by January 2021.
“So I can’t imagine [$4,739] making it even that long,” Thompson said.
Thompson also said it was easy to blame the golf course for the City’s financial woes, but that money the City will save in management fees once the clubhouse renovation is complete should go towards parks and roads.
The parks and recreation budget includes additional money for maintenance, while the library’s includes money to purchase new public access computers. (This reporter is a member of the City’s Library Advisory Board.)
The Animal Control department has experienced frequent employee turnover, and its budget includes funds to increase salaries, while the Community Center budget increased in order to purchase a new refrigerator. The Municipal Airport budget also increased, while the police department’s budget bucked the trend with a $26,418 decrease.
Some aspects of the City’s budget, such as the cost of insurance and the price of electricity, are outside of City or Council control.
Water and Sewer
The Water and Sewer Fund is projected to have $2,689,375 in revenue and $2,414,122 in expenditures. After $75,000 in other cash flow is accounted for, water and sewer is projected to have a $200,253 surplus.
The Water and Sewer Fund was projected to have a surplus in FY 2020-2021, but finished with a deficit thanks to unforeseen costs such as the replacement of clarifiers at the sewer plant.
Thompson noted that the possible purchase of any equipment as discussed during the Aug. 31 Special meeting was not included in the budget, and payment for that could come from the surplus.
“In terms of the deficit spending, what’s happening is our system is aging, and we have not put enough money into it to keep it up,” City Administrator John Vidaurri said.
Vidaurri also pointed out that thanks to a 2013 bond, 2018 utility system revenue bond, and Certificates of Obligation from 2019, the City has annual utility debt service payments of $543,852 (see “Utility rates to rise to fund water pipe replace” in the May 23, 2018 ed. of the News, “Utility rate increases on the horizon” in the June 28, 2018 ed. of the News, and “Devine issues Certificates of Obligation to finance $1.1 million water meter replacement” in the April 24, 2019 ed. of the News).
“So the only way to keep up with the debt service – and I know it’s not something that Council wants to consider – but is to go back and look at utility rates,” Vidaurri said. “Four meetings ago, I mentioned that our financial advisor said your debt service requirements are getting to the point where you may have to consider a phased plan to gradually increase rates to keep up with the cost of materials that you’re buying, which go up every year, and to offset some of this debt that you can then take and reinvest in utility projects, [and] in the General Fund, street projects, and do other things.”
Vidaurri recommended having the City’s financial advisor give a presentation on the City’s finances.
“Not only in the utility fund but in the General Fund,” Vidaurri said, “because we’ve got an annual debt service there of over $187,000 from those two recent issues – the golf course and the airport.” (See “Devine authorizes $450k tax note for golf course clubhouse renovation” in the Sept. 30, 2020 ed. of the News, “Up to $1M in Certificates of Obligation to fund Devine Airport improvements on the table” in the Apr. 14 ed. of the News, “City of Devine borrowing ‘$1 million to purchase 4 airplane hangars’ news revealed in open session” in the June 23 ed. of the News.)
“It wouldn’t hurt to have a plan that will allow the City Council then to consider investing money in streets and other projects that you prioritize,” Vidaurri added.
A motion by District 3 Council David Espinosa and District 4 Councilwoman Kathy Lawler to approve the FY 2021-2022 budget passed 3-2 with Pichardo’s support. Randall and District 1 Councilman Rufino “Flipper” Vega voted nay.
A Lawler-Espinosa motion to approve Ordinance 9-21B establishing the budget passed 3-2 with Pichardo voting for and Vega and Randall voting against.
Tax rate
An Espinosa-Randall motion to set the FY 2021-2022 tax rate at $.5298 passed unanimously, as did the Randall-Espinosa motion approving Ordinance 9-21C to levy the rate.
Though the tax rate did not increase, and additional $85,704 in revenue will be raised thanks to increased property appraisals.
Ordinance 9-21B and 9-21C can be seen in the Public Notice section of this edition of the News.
The FY 2021-2022 budget, as well as the final amended budget for FY 2020-2021, can be viewed on the City’s website at
By Marly Davis
Staff Writer