SAN ANTONIO — San Antonio City Council members are considering a plan that could raise the property tax rate for debt service and nearly triple the city’s 2027 bond capacity as officials address a projected $157.7 million budget deficit and declining property tax revenue.
The plan could increase the city’s 2027 bond capacity from an estimated $450 million to about $1.2 billion, but officials said the larger program could require a property tax increase if taxable property values fail to recover.
City Chief Financial Officer Troy Elliott presented the options during a Wednesday budget work session. He said the city could move away from its long-standing fixed debt service tax rate and support a larger bond program with a more flexible rate.
Under the scenario, the city could need to raise the tax rate by about 3 cents if property tax revenue does not rebound as expected. That would add about $66 to the average San Antonio homeowner’s annual tax bill.
City staff estimated that each one-cent increase in the tax rate could generate about $300 million and add roughly $24 to the average homeowner’s annual bill.
San Antonio currently expects taxable property values to decline 2.7% in 2027 and remain flat in 2028 before growth resumes in 2029.
City Manager Erik Walsh said the city would face pressure to raise taxes if it cannot generate enough revenue to meet debt-service obligations.
“Right now, if we couldn’t pay a debt service payment that’s backed by the property tax… then we would need to increase taxes,” Walsh said. “You guys would have to vote for it, but there’d be like no options.”
At least six council members — Phyllis Viagran, Sukh Kaur, Edward Mungia, Ivalis Meza Gonzalez, Teri Castillo and Jalen McKee-Rodriguez — expressed initial support for the flexible debt-service tax rate approach.
Castillo said the city needs to consider tax adjustments to increase its borrowing capacity and address community needs.
“If we fail to have the tough conversations about property tax adjustments and increasing debt capacity, that means our most vulnerable continue to wait, and that’s unacceptable,” Castillo said.
Mungia said the $450 million bond capacity would leave limited funding for other city priorities, particularly if housing and downtown entertainment projects require portions of the program.
Council members Marina Alderete Gavito, Marc Whyte and Misty Spears opposed increasing the debt-service portion of the tax rate. The three members have also opposed tax increases during this year’s budget discussions.
Spears said the city should not rely on projected future property value growth to justify a larger bond program.
Mayor Gina Ortiz Jones also questioned whether economic growth would eliminate the need for a tax increase. She said she wants the city to consider a shorter bond program to reduce financial uncertainty.
“At this point, it’s hard for me to support a property tax increase on the bond piece,” Jones said. “I want to do some more analysis there. $450 million, though, doesn’t go very far. We’ve got to be very judicious about kind of who pays for what and what is going to do the most good for the community.”
The city plans to develop the 2027 bond proposals this fall and place them before voters in May 2027.
The city also expects downtown improvements tied to the planned downtown sports and entertainment district to affect the bond program. Staff previously estimated those improvements could cost as much as $250 million, but Walsh said Wednesday that the final figure will likely fall below $220 million.
Meanwhile, city staff reported that 96% of the projects approved under the 2022 bond program will either have finished or entered construction by September 2027. The $1.2 billion program funded more than 180 projects involving streets, parks, trails and libraries.
Jones said the city must weigh tax increases against spending cuts as it works to close the projected budget gap.
“With a $158 million budget deficit, there are no sacred cows,” Jones said. “There’s just people we need to help, and that’s what we need to do.”
She added that city leaders need to manage the financial risks while accounting for the needs of residents.