The Midweek #80: A Testing Week in San Antonio

This week brings to a head an unwelcome reality in San Antonio, a city that is growing in population faster than it is growing its public tax base and general revenue. It’s made much worse by the leadership vacuum at city hall where Mayor Gina Jones continues to operate without a supportive City Council majority.

It’s been more than 20 years since public confidence in municipal government felt so low, according to what I am hearing as I move through the city. There aren’t any polls to cite as confirmation of that claim, but does anyone reading this really disagree?

So here we are this week, anticipating City Council votes on Thursday to approve City Manager Erik Walsh’s proposed $4.4 billion city budget, including a $1.76 billion General Fund that includes leaving dozens of civilian jobs unfilled, spending reductions, and across-the-board fee increases. And it includes a modest 2-cent increase in the city property-tax rate, to just over 56 cents per $100 of taxable value. The proposed budget already contains about $41 million in General Fund cuts. All of the above is in response to an anticipated $158 million budget deficit over the next two fiscal year cycles.

In other words, this is a budget likely to leave everyone unhappy, and undoubtedly Walsh is hearing that from the mayor and council members at today’s working B session when everyone can lobby to have items added and subtracted from the final, approved budget.

The tax vote is noteworthy only because it would be San Antonio's first increase in the property-tax rate in roughly three decades. The latest estimate is that the 2-cent increase would cost the average homeowner with a homestead exemption about $35 more per year in city property taxes. In a fast-growing city and an inflationary economy, that’s more than justified.

I’ve heard people in San Antonio leadership positions boast about that long hiatus in tax increases. I disagree. Deferring necessary increases in the city budget or at CPS Energy or SAWS only makes it more difficult to ever raise rates. This year’s tax increase is a modest one, hardly something that merits the theatrical opposition of some council members.

That opposition is driven less by conviction than by politics. The long knives are out at City Council; Jones’ inability to build consensus on the council or confidence with taxpayers fuels that opposition. It’s one more opportunity for some council members and many in the town square to express their disdain for the most ineffective mayor in the city’s contemporary history.

Declining revenue is a real issue, but it’s also cyclical. Better days are ahead, though not right around the corner. In the meantime, a failure in leadership is a more consequential issue. It’s only going to get worse as the city comes to grips in 2027 with responsible growth of data centers in the metro area. Opposition to new data centers and calls for a moratorium could add to San Antonio’s reputation as a city that says no. Mayor Jones’ continuing opposition to city funding for a new Spurs arena at Hemisfair continues to attract attention beyond the city, which contributes, in turn, to outside investors looking elsewhere in Texas for places to deploy their capital. When the Legislature convenes for its biennial session in January, it is expected to set new ground rules for the data centers now on the drawing board, covering both incentives and energy and water usage standards.

San Antonio would be wise to follow the state’s lead here. The alternative is to watch the growth go elsewhere. Artificial intelligence is changing just about everything in the digital universe, and we are all users and beneficiaries, so opposing data centers is akin to opposing all carbon-generated energy while air conditioning your home or filling up at the gas station.

We shouldn’t lose sight of our gains amid the current belt tightening and political discord. The city’s job creation trends, while still trailing other Texas metros, are encouraging.

We rightly celebrate Toyota’s July announcement that it will invest $3.6 billion in Toyota Texas, its San Antonio assembly plant to add a second assembly line and return production of the Tacoma pickup truck to San Antonio. It previously moved out of San Antonio and into Mexico a decade ago. The work will add another 2,000 jobs to the city’s growing advanced manufacturing sector.

British heavy-duty equipment manufacturer JCB's $500 million factory is about to become an operating employer, a milestone that merits more media coverage and public attention. The 1-million-square-foot plant here will be JCB's largest manufacturing facility in North America and second-largest worldwide, with about 1,500 jobs created over the next five years.

Industrial Electric Manufacturing (IEM), a company I had not heard of, has announced plans to establish operations at Brooks with a $200 million investment in another 1 million square foot manufacturing facility and creation of up to 3,000 jobs. The company produces electrical-distribution equipment used in data centers, health care, energy and advanced manufacturing.

Space is the new frontier at Port San Antonio, which has quietly – too quietly, I would argue – become the city’s high-wage technology employment center. Germany's Blackwave has selected the Port for its first U.S. manufacturing facility where it will make lightweight, carbon-fiber-wrapped high-pressure tanks used in rockets and spacecraft.

The initial $2.5 million investment is modest, but the company expects to create up to 250 jobs, a milestone for the Port nearly a decade after it built Boeing Center at Tech Port and expanded its portfolio of industries, adding space industry manufacturing to its existing cybersecurity, aerospace, military and advanced-manufacturing capabilities. ​Knight Aerospace​ is already manufacturing modules to support extended stays by humans in space and on the moon.

What isn’t being studied closely is why the jobs at the Port pay so much better than other manufacturing employers. The Port reports about 19,000 existing or anticipated workers at more than 80 employers, with average total compensation of about $111,000. That’s double what IEM workers will earn at Brooks, and well above the average salary of less than $60,000 at Toyota.

The Port puts its annual impact at $9 billion, while the Texas Comptroller elevates that to $20 billion. The two entities should get their math straight, but either way, the impact is enormous and arguably the Port holds the most future promise for the city.

That is something for Mayor Jones and City Council to ask themselves: Why has investment in the Port infrastructure and beautification not been more robust and consistent since the closure of Kelly Air Force Base at the end of the 20th century? Much has been accomplished, but three decades after city officials began to brace for the base closure, much still remains to be done to make the site a nationally competitive facility with attractive live-work-play amenities.

Why write about a budget deficit and tax increase followed by positive economic news? Simple: I think the wrong story about San Antonio is being spread across the community, the state and the nation. Mayor Jones and others on council are overly focused on the city's persistent poverty rate and deficits, and not telling the story of the city’s continuing development and what makes it a place so many people want to call home.

How we tell our story has a real impact on our future trajectory. I’ve read recent stories in the national media about our fight over the Spurs arena, and the mayor and others shunning the business community while sounding the alarm about our persistent poverty rate. I have not read articles about Port San Antonio, or Toyota bringing back jobs previously lost to Mexico.

It’s going to be a tough week in San Antonio, and I do not expect things to get any easier when it comes to city finances. But there are other stories out there to tell.