Newsroom

September 7, 2018 • Local News

El Paso Inc: Q&A: Mayor Dee Margo

El Paso Mayor Dee Margo is in his second year as mayor, and it’s been a little bumpy with two tax increases in a row, petition drives, police car problems and costly court fights that have delayed the $180 million Downtown multipurpose center.

But more shiny new cop cars are on the way, unemployment is still at 4 percent and the economy is humming.

Although he campaigned for holding the line on taxes last year, he broke a tie for a 5.5-percent property tax increase by El Paso Inc.’s calculation to fund a $991-million budget two weeks ago.

A 4-percent increase in property values will add to revenues but had homeowners grumbling about the first valuation increase in three years. But the mayor is quick to note what’s happening in the rest of Texas.

Values went up 13 percent in San Antonio, 10.6 percent in Fort Worth and 10 percent in Dallas, Austin and Arlington – the kinds of economy-driven increases El Paso has never seen but some wish for.

The fall election will be a big test for Margo’s administration because, in addition to four council races, the ballot will include proposed raises for city representatives and the mayor himself.

And, for the first time ever, City Council elections are in November with state and congressional races that will draw a lot more voters than a typical city election.  

Margo didn’t have much to say about a proposed City Charter change that would boost city representatives’ salaries by more than $15,000 to $45,300 and take the mayor to $67,050. It also includes a formula to make future mayor and council raises automatic.

“I don’t have a stake one way or the other; I’m not taking a paycheck,” said Margo, who donates his salary to charity. “And it hasn’t come up in my meetings with citizens.”

He waited until the budget was wrapped up before sitting down with El Paso Inc. to talk about Wall Street’s view of the city’s debt, what he thinks of the job the city manager is doing and how nice it’d be to have a new headquarters for the police and fire departments.

A traditional Republican, Margo also revealed how he parts company with the Trump Administration and his Washington brethren when it comes to immigration.

Q: El Paso’s unemployment is at a record low and wages are up. The city’s economy seems to be humming along this year. What do you attribute that to?

I think we’re kind of coming into our own. We’re still to a great extent an unknown. But lots of positive things have been happening over the last several years. It certainly isn’t the result of one year of my tenure as mayor.

I did get some stats. From 2014 to 2017, employment increased by 14,000 jobs. That’s phenomenal. From 2016 to 2017, we went up 3,000.

Q: Were the increases in any particular sector?

We’ve been doing a lot in the financial sector. We’ve added ADP. Prudential came here. They’re talking about growing some more.

It’s been kind of unique. They’re not call centers; they’re financial service centers. They can be loan originators. Primarily, they are technology-driven operations.

Q: What brings them here?

We have a work ethic and a tremendous culture here. A lot of them are looking south as well, toward Latin America. It’s a base of operations. They’re looking at us not as a United States play but an international play for Mexico and El Paso.

Q: Violence is up in Juárez again. Are you concerned that it will affect the perception of El Paso and hold the city back economically?

I don’t know if it’s going to hold back the city economically. It looks like they have a NAFTA arrangement that could affect us. But it does affect the perception for those who don’t know, and that’s one of my biggest challenges as mayor: We’re an unknown jewel.

Q: Is El Paso experiencing a worker shortage, and do you think the administration’s curbs on immigration are contributing to it?

Oh, yeah. I find it very frustrating when we have our leaders in Washington saying we need to limit legal immigration, given the economy and the need for jobs and employees. That just doesn’t make any sense.

Q: Farmers are having a tough time finding workers, too.

Yeah, we did away with the Bracero Program years ago, which we should still have. It allowed people to come over and go back.

Q: El Paso City Council approved a 3.9 percent property tax increase on Aug. 21 – or 5.5 percent by our count using the effective tax rate. You had to break a tie vote on council to get there. Some city reps said they wanted to keep a proposed 1 percent utility sales tax on water and gas bills and reduce the property tax increase a little more. What was wrong with that idea?

I don’t remember talking about reducing the tax rate. Originally, all the recommendations from staff were at 3.99 cents per $100 valuation. My comment was to stay with what the staff recommended. We didn’t need to have any increases in requests. Council requests were about $1.7 million.

What we do need – and I agreed with some of the council members on this – is a valid funding source for replacement of fire equipment. This budget was $2.8 million for equipment.

If we look at a utility sales tax, what I was hearing from people was enough’s enough. If the electric company makes its infrastructure improvements, they can do that as a pass-through to ratepayers. So it would have been compounded.

My position was we can live within our means. Council does not need to have any add-ons beyond what staff agreed are the basics for infrastructure, public safety and our quality of life – like parks. That’s all I did was break a tie on that rate and that discussion.

Q: I’ve also seen articles about big property value increases across the state this year, especially in the Dallas area and Austin.

Certified values for San Antonio went up 13 percent, Fort Worth went up 10.6 percent, Arlington went up 10 along with Dallas and Austin. We went up 4 percent and Houston was only 2 percent because of the hurricane.  

Q: How about a rundown on the new city budget?

The increased costs are about $27 million. Tax increases, including the valuation increase, only come to about $13.9 million. The rest is being made up with efficiencies. It’s not like we’re out there going nuts.

We’ve got $15.1 million additional for police and fire. We’ve got $7 million more for streets to allow us to do 55 streets. And $3 million for quality of life maintenance and operation. Part of that’s water for the parks, the soccer fields and all that. We also had some increases at the zoo because of the Chihuahuan Desert exhibits.

As you’ve heard me say, 77 percent of our budget is employee compensation. And 81 percent of that is police and fire. So the lion’s share of our budget is for public safety.

Q: Earlier this year, City Council approved your administration’s request for authorization to sell $80 million in additional bonds without voter approval for quality of life projects. Where will that money go?

We’ve approved it, but we have not issued that debt. The problem we have with some of our quality of life projects is that they were voted on overwhelmingly by the public in 2012. However, they were not budgeted correctly.

So, we’re sitting here saying we voted for them, and we still want them. So, we’re doing them – like the Westside Natatorium. It was in there at $7 or $8 million in the bond election but it took $15 million to build it, and it should have been budgeted that way. That’s what we’re dealing with.

Q: Years ago, you headed Mayor Carlos Ramirez’s ad hoc bond committee and proposed a policy under which the city would only use voter-approved bonds for quality of life projects. That policy stood for years. What made you change your mind?

What I just said. The fact that they were budgeted improperly doesn’t change the fact that we voted for them.

Q: What do you think will happen to the Multipurpose Performing Art and Entertainment Center?

All of the legal experts that we talk to have said it’s been approved to build one, but the restrictions are onerous as far as being able to make it what we want it to be. But they have said if it gets to the Texas Supreme Court, we will win – bar none. And it will probably get to the Supreme Court.

Q: You mean regarding the ability to have sports in that arena?

To have sports, to have the naming rights, to do all those things that were restricted by the Austin judge. Then, you talk about something that wasn’t funded correctly; it’s $250 million to build one of those.  

Q: What then, once you’ve prevailed on a $180 million arena that needs an additional $50 million or more?

If it is done correctly, I think we will have plenty of opportunities to attract naming rights, plus the fact that we are going to need more convention space once the rest of these hotels are completed. That is a perfect venue add-on to what we have for conventions now.

We can attract more dollars. That is the purpose of those hotels. It fits together to drive revenue streams and tax base for us – hotel-motel sales tax and venues. We’ve done some studies that say we have the ability to attract from a six-hour region for venues and entertainment.

That is atypical. The normal would say maximum of four hours in a region. Six brings in Tucson, Chihuahua City, that whole region, Albuquerque and all that. We have the ability to attract if we have the venue to do it.

Q: Do you think you’d be able to get a sports franchise of some kind?

I don’t know that we’re ever trying for a franchise. We could attract the NCAA regional tournaments. We can’t now. If you’ve been up to big concerts at New Mexico State, they’re the bigger venue, not the Haskins venue. They’re going up to New Mexico State, the country western concerts and entertainment.

We could really have some tremendous entertainment, and that’s what we’re trying to do. So, I’m optimistic that we’ll get it done.

I feel I have a fiduciary duty to fulfill the obligations of 72 percent of the voters who voted for that in 2012.

Q: Some are saying the city’s bonded indebtedness and indebtedness in general threaten the city’s bond ratings and financial future. Do you have any concerns along those lines?

None whatsoever, no. Our indebtedness is not exorbitant for this city.

Q: No bond-rating houses have cautioned the city about its debt?

No, they have not. We are a Double A rated city. I’d love to see us get to a higher rating, which would save us on our cost for debt. At some point, I don’t see why we can’t get to Triple-A.

But the issues they’ve talked about are not the indebtedness we have. They’ve talked about our pensions, the reserve fund and those kinds of things.

Q: What about the shortage of police officers?

We’re doing two police academies, overlapping and 7½ months each. That’s $3 million more in this incoming budget. We’re adding 87 new policemen who will bring us up to where we were in 2010.

Prior councils were saying we’re already safe without any acknowledgment to the fact that to stay that way, you’ve got to deal with normal attrition and population growth.

Q: What price has the city paid for not having increased the number of police officers? It doesn’t seem to have affected the crime rate.

Response times. Our crime rate is still down 9 percent to date this year. We have an excellent police force. Over 50 percent of them are eligible for retirement right now but they are not retiring because they care about this community and its citizens.

Q: What about a new police headquarters?

We have an old police station in an old Sears & Roebuck building and a parking garage that’s collapsing. It would cost between $2.5 million and $3 million to fix that garage.

Why would we want to do that and not look at relocating the Police Department and the value of that land in Five Points with all of its growth? Would we be better off selling that land where it is, and maybe going further east to another location and maybe combining the Police Department with the Fire Department?

Q: Where are you looking?

We haven’t started. It’s just a discussion. But these are the things you’ve got to think about for the future. That is an inefficient building. I think this (City Hall) is a very inefficient building. Look at all the wasted space. We’re spread out in multiple buildings.

Q: Are you thinking about a new City Hall?

No, but I don’t think anything would be off the table.

Q: A few years ago, City Manager Tommy Gonzalez was in a lot of trouble with City Council, and there were people openly calling for his dismissal. What is your assessment of the job he’s doing now?

I think he’s doing an excellent job.

Q: We recently reported that you’ve been using your personal email account for city business and that not all of those communications were being forwarded to your city account where the public would have access to them. Can you explain that? And, are you deleting messages?

Already did. I did my mea culpa on that.

The difference between the city’s email and the state’s email requirements are simply that in order to keep something in the system at the state, all I had to do was send an email if it was from my personal account to anybody with a state address and it’s in the system.

With the city set-up, I have to forward the email to my mayoral email box, which I wasn’t doing.

Q: But the city’s rule says you have to send it to your own public address or device?

Yes, it does say that. But I wasn’t aware of that. So, I did my mea culpa slap me on the wrist. I am now following the letter of the law.

http://www.elpasoinc.com/news/q_and_a/q-a-mayor-dee-margo/article_f43e7dda-aee0-11e8-a1d0-079d08a43c03.html