According to the latest census data, El Paso’s population continues to decline. There is speculation that the decline is caused by high taxes and a lack of job opportunities. El Pasoans used to talk about a brain drain. A mayoral election was around the brain drain. After World War II, the Australian government, with the help of Britain, offered to pay the cost of travel to British citizens willing to relocate to Australia. By 1963, over 70,000 British migrants had left Britain to Australia. Among them included laborers and doctors looking for better pay. University professors emigrated for jobs paying salaries up to three times what they earned in Britain. The exodus of British citizens led to concerns that England was losing “expensively trained scientists, engineers and teachers with a significant part to play in the British economy.” This became known as “brain drain.” However, at the time, even with stricter immigration controls, Britain was not in danger of being depopulated as more migrants were arriving than departing. [1] Although Britain was not in danger of depopulating, the exodus of trained workers had a cost on the British taxpayers that remained. By 1967, it was estimated that Britain’s “brain drain” was costing the British treasury at least $300 million. [2]

By 1966, the issue of skilled workers and trained professionals leaving their homes for other locations became a concern for Latin American countries as their citizens migrated for better jobs. Former Chilean ambassador to the U.S., Sergio Gutierrez published a report for the Organization of American States (OAS) where he argued that “emigration of trained persons from Latin America constitutes an export of technology which is undesirable for an economy seeking to accelerate its development.” [3]

When trained workers leave a community like El Paso to ply their expertise in other communities, El Paso not only loses its ability to bolster its local economy, but the departure of its citizens takes with them the investment the local taxpayers paid to train the citizens who help grow the economy of other communities. Although declining population is an issue, there is the problem of the loss of community members as well as the cost to the local economy, both in lost education investments and the ability to grow the economy to raise wages and lift the tax burden on those who remain.

Throughout the 1960’s, 1970’s and the 1980’s, the so-called issue of “brain drain” in communities continued to dominate global headlines. By the 1970’s, Mexican officials began to be concerned about Mexico’s own “brain drain” as its population increasingly left the country.

By late 1980, El Paso’s economy was both “one of the nation’s richest major cities” but also had the “third lowest” income in a study of 53 of the largest cities published by the University of Michigan and Princeton University. Although about 22% of the city’s population lived in poverty, the researchers, James Fossett and Richard Nathan, argued that El Paso was “one of the nation’s richest major cities” in the country. [4]

However, Edward George, who led El Paso’s Bureau of Economic Research at the University of Texas at El Paso (UTEP) said that the report’s findings “were made with incomplete, secondary data” that did not support the conclusions. According to George, El Paso’s economy hadn’t changed since 1977 and that it was “barely keeping up with the growth of population.” [5]

Although El Paso’s population grew by 16.5% between 1960 and 1970, and “skyrocketed another 26.4 percent between 1970 and 1977,” it was experiencing a “brain drain” because UTEP’s top graduates were leaving “because they don’t believe there is enough opportunities” in El Paso. The “brain drain” created the “vicious cycle” of that businesses relocated to El Paso would bring their own professionals, or, worse, “hesitated” to move because they believed they wouldn’t find the educated work force they needed. [6] The cycle created the “brain drain” of local talent and a stagnant economic base because business growth did not have a local workforce to grow their businesses.

The lack of opportunities for UTEP graduates only exacerbated the “brain drain” in El Paso, especially among the Hispanic population. Roberto Villareal, chairman of UTEP’s political science department explained that “the attitude in much of the Hispanic community is ‘Once you’re educated, you leave.’ And all the investment goes somewhere else.” [7]

However, it wasn’t just the low pay that drove educated Hispanics out of El Paso. It was also that El Paso businesses were “prejudice against our own people,” preferring to hire “non-local candidates over local applicants who may be just as talented.” It wasn’t only the lack of local businesses hiring Hispanic talent, but also an “inferiority complex” among El Paso’s Hispanics. According to Kathy Staudt, a political science professor at UTEP, El Paso Hispanics harbored a “a kind of fear that their ideas won’t be listened to” by El Paso’s business leadership. [8]

The city’s former director of economic development, Pablo Salcido argued that the problem lies in “the same good old boy network” in El Paso that led to the city’s “brain drain.” The irony for El Paso was that “most young Hispanics have strong ties to the city through family and want to stay.” [9] but they couldn’t stay.

Britain’s “brain drain” continued to be an issue through 1979, when then-prime minister Margaret Thatcher set about reducing Britain’s maximum tax rate of 83% to 40%. Thatcher’s tax rate reduction not only strengthened Britain’s economy but stopped its “brain drain.” [10]

England’s experience demonstrated that high taxes was a fundamental underpinning for the “brain drain” phenomenon. The solution to the “brain drain” was not simply businesses looking to recruit locally but also in public policy that addressed “brain drain” through incentive legislation.

Nonetheless, El Paso’s leaders ignored the correlation and instead focused on the “them versus us” narrative between the Anglo business community and the predominantly Hispanic workforce. While Hispanics argued that the business community marginalized them, the business community responded by arguing that the solution lay in working together. El Paso Times editor, Tom King, argued in a February 29, 1992 editorial that the problem was an unidentified “they” who were used to prove the “brain drain” of El Paso without articulating who “they” were, both from the business community and the workers leaving the city. “They,” according to King, were El Pasoans unwilling to work together to solve the problem. King used the example of the city’s two chambers of commerce, the El Paso Chamber and the Hispanic Chamber of Commerce as a possible solution by working together they could solve the problem. [11] King was alluding to tribalism among El Pasoans as the “brain drain” culprit.

By 1992, city officials started to recognize that El Paso faced a problem with the “brain drain” phenomena. However, they ignored public policy, choosing instead to place the blame on El Paso’s tribalism. Mayor Bill Tilney told the El Paso Times that although he was looking at bringing new jobs to the city, the underlining problem remained outside of the government’s control. According to Tilney, the problem was that “in a 70 percent Hispanic community” there was a sense among Hispanics that they were not included in the city’s future. [12]

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If We Build It, They Will Come

In 1993, addressing the problem of “brain drain” through public policy came in the form of a survey commissioned by the El Paso Community Foundation arguing that the solution to the problem lay in the city’s Quality of Life. [13] Since 1986, the El Paso Community Foundation had been trying to convince the city’s taxpayers to fund the restoration of The Plaza Theater. Taxpayers refused to fund saving the theater several times through elected officials and bond measures. Taxpayers rejected a $5.5 million bond to restore the theater in 1990. This voter rejection was the tenth time voters refused the Community Foundation’s request to help restore the theater.

Unable to secure support for The Plaza Theater, the Community Foundation commissioned Bill Kaigh to survey the community about The Plaza Theater and other downtown projects. The K Associates survey showed “nearly 70 percent of respondents” would vote to support a bond measure to restore the theater. [14] That was the talking narrative.

However, a closer examination of the results that were published demonstrated that the support did not exist, as evidenced by the numerous failures by the foundation to convince the taxpayers to fund the theater renovations. Although, Kaigh, in an El Paso Times editorial on October 17, 1993, argued that “if WE [sic] build it, they (businesses, tourism, retirees, etc.) will come.” Kaigh further argued that investing in the city’s landmarks would solve the persistent “brain drain” problem. [15]

However, the survey’s data betrayed a problem ignored by proponents of quality of life as a solution to the problem. Parsing deeper into the survey data that was released, El Pasoans, Anglos and Hispanics generally equally supported The Plaza Theater for a combined 62% of the respondents. When asked about supporting a downtown art museum, only 14%, compared to 24% agreed taxpayers should foot the bill. However, when asked about a new main library, 84% of respondents supported funding a new downtown library. More telling was that Hispanics overwhelmingly wanted a library over the other options. Kaigh and the Community Foundation focused on The Plaza Theater ignoring the library that the Hispanic population wanted. Kaigh wrote in his editorial that El Paso being “penny wise but pound foolish” as the cause of the “brain drain.” [16]

It wasn’t until 2002 that the El Paso Community Foundation received the money it had been asking for to renovate the theater. It came in the form of parking meter fees pushed forth at city council by then-city representative Beto O’Rourke. The city council voted six to one to raise downtown parking fees from 25 cents to 50 cents to pay for the foundation’s wishes.

It was The Plaza Theater where Bill Sanders unveiled the Glass Beach Study that succinctly articulated the divide between the Hispanics and the Anglo communities in El Paso.

It is the “build it and they will come” mindset that embarked El Paso into significant public debt, rising taxes and the attempted gentrification of vulnerable Hispanic neighborhoods like Duranguito. Build it and they will come became the public policy of the city.

The Brain Drain As Public Policy

From The Plaza Theater emerged the argument that all major taxpayer-funded expenses in the city required a commitment from the taxpayers to solve the “brain drain” problem. In 1996, the debate over whether El Paso should have a law school included the argument that it helps address the “brain drain” issue. [17] But there was another issue that few were willing to discuss. Charlie Edgren, an editor at the El Paso Times articulated in a 2001 editorial that El Paso has “problems that are not politically correct to talk about.” Among them were “the tax burden imposed on taxpayers, white flight, brain drain and racism.” Edgren’s editorial laid bare the underlining problem of a divide between the Anglo-minority that controlled the political arm of the community and the majority Hispanics that were being marginalized. [18]

Edgren didn’t specifically write it that way but exposed it with his explanation that the many problems he listed in the city were centered around undocumented immigrants that burden the taxpayers by “using services and schools.” Edgren wrote that among the problems in El Paso was “white flight.”

White Flight

El Paso has always been a majority Hispanic community, but the political power rested on the Anglo minority. Edgren’s use of the “white flight” narrative exposed that the Anglo/Hispanic divide in the city continued, especially when it came to public policy.

White flight is segregation along ethnicity, most commonly between the Black and White communities. White flight is usually described as Whites moving away from neighborhoods when Black families begin to move into them. [19] In El Paso, being a majority Hispanic community with a very small Black community, the use of “white flight” by Edgren in his editorial can only be interpreted one way – that the Hispanics were keeping El Paso down.

While Hispanics were leaving El Paso as soon as they could because they felt they could not compete, White residents like Edgren seemed to resent the Hispanic majority in El Paso, placing blame on them for the problems faced by fellow El Pasoans.

However, a striking issue pointed out by Edgren in his editorial, 22 years ago, is the problem that is being discussed today. Edgren wrote in 2001 that El Paso lagged the rest of the state in population growth. According to Edgren, El Paso grew by the “sorry statistic” of 15% compared to the state’s growth of 22%. Edgren added that the city’s public policy in attracting new businesses was sacrificing the taxbase by “lavishing tax abatements on companies paying minimum wage.” [20]

The Brain Drain Mayor

Nonetheless, “brain drain” was not just a public policy issue but also the rallying cry of a mayoral election. The 2000 census showed that El Paso lost about 26,000 residents aged between 18 and 30. To address the exodus of younger El Pasoans, Beto O’Rourke, Club 101 and Restart Records organized a mayoral forum at Club 101. The forum’s topics included the “brain drain,” creating jobs and “breathing life into Downtown El Paso.” Among the mayoral candidates at the forum included Raymond Caballero who would go on to serve one-term as El Paso’s mayor. [21]

Caballero wasted no time creating public policy that was to be funded by the city’s taxpayers. Caballero expected the taxpayers “to invest” in El Paso to transform the city “into a ‘clean and green’ business- and tourist-attracting machine.” Caballero wanted a 6% property tax hike, higher than the 5% the city had been raising taxes since 1982. [22] Caballero’s mayoral legacy ended being about an 11.8% property tax increase, gentrification through his proposed TIF districts and his insistence in using certificates of obligation to fund his public policy initiatives. On May 3, 2003, Caballero lost his reelection bid 24% to 58% to Joe Wardy.

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Joyce Wilson And Tommy Gonzalez

Although Caballero had lost to a pro-business candidate, downtown revitalization, brain drain and taking politics out of public policy melded together into a change in the way the city’s public policy was led. On February 7, 2004, the city’s charter was amended to move away from a strong-mayor form of government towards a city manager type of government. Charter proposition amendment 4 adopted a council-manager form of government on a vote of 11,812 for and 9,973 against the measure. Less than 2,000 (1,839) votes fundamentally changed El Paso’s municipal government. Under the new form of government, the city council would set policy and the city manager would implement it. It was argued that the city manager would provide continuity to public policy in between elections.

On August 4, 2004, the city council selected Joyce Wilson as their top choice to be El Paso’s first city manager. On August 16, 2004, the city council officially approved Wilson as the city’s first city manager. Wilson assumed the role on September 1.

El Paso’s second city manager was Tommy Gonzalez. He was appointed in June 2014. Gonzalez was fired by the city council on February 28. His last official day is June 29. Cary Westin will assume the interim position of city manager until the city council appoints a new city manager.

Both city managers have been controversial. Wilson spearheaded the demolition of city hall to make way for the Chihuahuas ballpark, paid for by the taxpayers. Both city managers oversaw the issuance of non-voter approved certificates of obligations and rising property taxes as the solution to El Paso’s dire economic situation. Although the blame for higher taxes is placed on the city managers, it is important to point out that ultimately it is the city council that makes public policy that the city managers that implement it.

However, the secrecy and the lack of transparency with both Wilson and Gonzalez has led to criticism of both and a lack of trust by the community.

By 2009, local new coverage of a “brain drain” crisis in El Paso had subsided. Although chronic low wages and lack of jobs continued to impact El Paso, the argument that “brain drain” had a solution largely subsided. But taxes continued to increase as El Paso’s population declined.

Rising Taxes

According to the city’s August 23, 2022 Fiscal Year 2022-2023 budget report, El Paso taxpayers have seen their per capita tax debt burden increase from $587 in 2005 to $2,274 this year. Between 2005 and 2007, debt ratio to taxes increased from 1.83% in 2005 to 1.54% in 2007. From 2008 through this year the ratio to funded debt jumped from 2007’s 1.54% to 3.61% today. In 2005, El Paso carried a debt of around $360 million. Today the city’s debt is $1,542,725,000. The city’s tax rate in 1991 was 0.560247. When Ray Caballero took office in 2001, it jumped to 0.719833 until it dropped to 0.696677 in 2014. In 2016 it rose back up to 0.729725 going as high as 0.907301 from 2019 through 2021. In 2022 it was 0.862398.

Today, El Paso taxpayers are supporting a total debt of $2,257,059,694 including interest on the debt.

Citing data from the U.S. Census Bureau, El Paso Matters’ Bob Moore wrote that El Paso’s population grew by 700 people between 2021 and 2022. El Paso’s population grew by 2,216 between 2020 and 2022.

The main driver of El Paso’s rising property taxes has been the city since 2012. It is the city which has led the effort to build with taxpayer funds as the economic driver for the city. However, although new infrastructure, like the Chihuahua’s stadium, have propped up downtown El Paso, the push for property tax relief for El Paso’s homeowners has not materialized in the decade of “build it and they will come” public policy.

El Pasoans leaving the city continues to be a problem.

In 2001, the solution to the “brain train” was to entice new businesses and for the local trained workforce to remain in the city. According to the Federal Reserve Bank of St. Louis, which has tracked El Paso’s unemployment rate since 1992, the city reduced its unemployment rate from 13.6% in June 1991 to 5.7% by December 2000.

When Caballero was elected as mayor, by June 2003, the unemployment rate was back up to 10%.

When Joyce Wilson was appointed the city’s first city manager, El Paso’s unemployment rate was at 7.6%. When Tommy Gonzalez took over as the city manager, the unemployment rate was 6.9%. Except for the anomaly of the Covid pandemic crisis, El Paso’s highest unemployment rate from 2000 to today was 10.6% in July 2011.

As of April 2023, the unemployment rate was 4.1%.

Part of what drives the “brain drain” are high taxes. According to the city’s proposed budget for 2022-2023, the city received $297 million in property taxes from the city’s taxpayers in 2019. El Paso is forecasting about $374 million for the next budget. That is almost a 20% increase in four years.

Is the revenue increase for the city based on new construction, or on rising taxes on existing home owners is a question that needs to be answered in order to understand if the city’s rising property taxes are the result of new construction, as the “build it and they will come” public policy envisions, or is it the result of artificially propping up the public policy by forcing existing taxpayers to pay more.

The U.S. Department of Housing and Urban Development published a comprehensive housing market analysis on March 1, 2020 that helps to answer this question. (Download report below) Because the report was completed before the pandemic, it is useful to understand El Paso’s economic trends over the longer term. As expected, government jobs are the largest employers in the city, accounting for 67,134 jobs. The City of El Paso is the second largest employer, behind Ft. Bliss with 6,840 jobs. Of the largest employers in the city, private industry accounts for only 15,759 jobs.

According to the report, between 2001 and 2003, when Caballero was mayor, non-agricultural jobs declined in El Paso by an average of 500 jobs annually. As private industry lost jobs during that period, government jobs increased by about 7%. Between 2004 and 2008, private industry led the 1.8% job increases in the community. From 2010 through 2017, El Paso began adding jobs at about 1.5% annually, with mostly government jobs in health and education leading the job growth. However, the report notes that the second largest new job driver was in the leisure and hospitality sectors, adding about 1,000 jobs. The report credits downtown revitalization as contributing to the gains.

The report forecasted a job rate growth of 1.5% annually before the pandemic through 2023.

Job growth is one metric to understanding the city’s public policy for economic growth. The other is new home construction as the burden on the local taxpayers is offset by new homeowners added to the tax base. According to the report, since 2010, “homeownership rate has declined.” Instead of adding to the tax base, existing homeowners are more burdened today from the increase in city debt because there are less homeowners. As the report notes, homeownership is declining because of a “decrease in housing affordability.”

Rising property taxes is the likely culprit behind the decrease in home affordability. Resale of existing homes only moves one taxpayer from one home to another. They do not increase the tax base. New home construction increases the property tax inventory thus reducing the burden on the taxpayer. From 2009 through 2016, new home sales declined by an average of 2% annually.

More important to note is that housing affordability – the result of rising property taxes – has declined since 2010.

The report also forecasted that El Paso’s population growth rate will continue “to slow as net out-migration continues.” Although not a headline topic today, the “brain drain” problem continues in El Paso, even under the “build it and they will come” public policy.

One metric that ties directly to the “brain drain” issue that the report shows is migration out of El Paso. The report points out that from 2003 through 2011, more El Pasoans were leaving than staying in the city. The report notes that in 2012, the trend reversed, but it attributes the reversal to troop movements into Ft. Bliss. Between 2012 and 2015 more El Pasoans left than new residents arrived.

Out-migration due to high taxes continues to plague the city. Tommy Gonzalez is due to leave the city at the end of the month with the city council starting the recruitment process of appointing a new city manager to oversee the city’s public policy. Investigations are underway investigating current and former city officials for their use of taxpayer funds and the use of incentives for attracting new businesses to the city.

However, absent is a review of the public policy based on “build it and they will come” of revitalizing El Paso’s downtown to curtail the outflow of El Pasoans. The Comprehensive Housing Market Analysis report credits the 2015 El Paso Plan as effective in addressing problems with El Paso’s economy.

But at what cost to the taxpayers.

Most indicators suggest that rising taxes are driving El Pasoans out of the city, new businesses are not coming and the job growth is concentrated in government jobs that do not contribute to the property tax base. This leaves a high burden on the city’s homeowners. Are property owners benefiting from “build it and they will come” public policy or are they footing the bill to their detriment? A decade of experience proves it is the latter.

Sources:

1. John Gale, “Australian Population Booming,” El Paso Times, March 3, 1963, 2B.
2. Frederick Ellis, “’Brain Drain’ Costs Britain $300 Million,” El Paso Herald Post, October 26, 1967, 3D.
3. “Says U.S. Brain Drain On Latins,” El Paso Times, March 28, 1966, 6A.
4. Jeannie Kever, “Princeton study calls El Paso rich city,” El Paso Times, August 18, 1980, 1A.
5. Kever, “Princeton study,” 1A.
6. Kever, “Princeton study,” 8A.
7. Steven Almond, “Talented Hispanics seek fortune elsewhere,” El Paso Times, March 26, 1989, 1E.
8. Almond, “Talented Hispanics seek fortune,” 2E.
9. Almond, “Talented Hispanics seek fortune,” 2E.
10. Louis Rukeyser, “Thatcher saved Britain, made capitalism stylish again,” El Paso Times, December 1, 1990, 1D.
11. Tom King, Editor, “Let’s begin serious work on the future of El Paso,” El Paso Times Editorial, February 29, 1992, A10.
12. Nicole Carroll, “Youth flee El Paso for opportunities elsewhere,” El Paso Times, March 1, 1992, 1F.
13. Bill Kaigh, “Restoring city landmarks will help restore El Paso,” Guest editorial, El Paso Times, October 17, 1993, 2G.
14. Kaigh, “Restoring city landmarks,” 2G.
15. Kaigh, “Restoring city landmarks,” 2G.
16. Kaigh, “Restoring city landmarks,” 2G.
17. David Sheppard, “Video plan links law students, school,” El Paso Times, December 11, 1996, 1A.
18. Charlie Edgren, “El Paso ‘growth’ is a huge problem,” Editorial, El Paso Times, March 17, 2001, 10A.
19. Emily Badger, “’White flight’ began a lot earlier than we think,” The Washington Post, March 17, 2016, (https://www.washingtonpost.com/news/wonk/wp/2016/03/17/white-flight-began-a-lot-earlier-than-we-think/), paywall.
20. Edgren, “El Paso ‘growth’ is a huge problem,” 10A.
21. Jeany Llorente, “Making youth count,” El Paso Times, April 20, 2001, 1D.
22. Bernadette Self, “Mayor departs from ‘business as usual’,” El Paso Times, July 13, 2001, 10A.

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