Webb County, Tex., home of the nation's largest inland port and the second fastest growing city in the United States, also has more than its share of challenges and troubles.

Located along the Texas-Mexico border with Laredo at the center, the sprawling county has faced an inmate riot that gutted its detention center, a rabies epidemic, and the takeover of bankrupt water and sewer systems, all in the last nine months.

Then there are the ongoing problems of finding ways to pave some of the almost 300 miles of county roads, or about 85% of the total, and of paying growing indigent care costs in a region where more than one-third of the people live below the poverty line.

Add to that a growing number of colonias, or shantytowns, without adequate sewer and water services, an estimated 58 -- a reflection in part of the thousands of illegal immigrants who are flocking to the rural border county from Nuevo Laredo and other Mexican communities.

"We don't have the financial resources to take care of the problems," Webb County Judge Mercurio Martinez said. "It's impossible to meet the needs in a county the size of Ours."

To cope, Martinez said he plans to ask for a tax increase, from 33.79 cents per $100 assessed value to 34.95 cents, for fiscal 1995, which begins Oct. 1. That would raise an additional $1.8 million a year for the county budget, which is proposed to be about $27 million.

In addition, Martinez said he has been talking with state and federal government officials to get grant money and other financial assistance.

"We have been very aggressive in lobbying," he said. "The need is exceptionally great."

Details of the rash of troubles support his point. In December, the jail riot not only sent 10 inmates and a nurse to the hospital with injuries, but resulted in the burning of some areas of the Webb County Detention Center and its subsequent closure.

That means the county is losing more than $1 million in revenues a year from housing about 400 federal and state prisoners at the detention center while officials attempt to settle a dispute with the insurance company and consider pressing a lawsuit to recover damages. No timetable has been set for re-opening the minimum security facility and a further drain on county funds is expected.

"We will not have much of a fund balance this year," Webb County auditor Ramiro Martinez said.

Following the riot, another scourge hit the county. Earlier this summer, the rabies epidemic moved from Texas' Rio Grande Valley, carried by infected coyotes and dogs that prowl the colonias. A joint vaccination program by the city of Laredo and Webb County to protect residents has been started to limit the spread of the disease in the county, which at about 3,300 square miles is larger than New Jersey.

"We are going through a major rabies crisis," Mercurio Martinez said. "There are more than 40 confirmed cases."

Meantime, Webb County also is trying to improve living conditions in colonias and bring economic development and employment to an area where Mercurio Martinez estimates that more than 90% of the residents live below the poverty line.

Taking action on water

As of Aug. 1, the county will expand its role and take over financially troubled water and wastewater plants that serve 6,000 residents in El Ceniza and Rio Bravo in southern Webb County.

"We are the first Texas county to take over water and sewer operations plants," Mercurio Martinez said. "We are breaking ground."

Under the plan, he said the county is acquiring a water plant from a private developer with the assistance of a $233,000 grant from the Texas Water Development Board, which has a program to help economically disadvantaged counties.

In addition, the county plans to upgrade and expand wastewater treatment plants in El Ceniza and Rio Bravo, which have been cited for violating federal and state environmental standards. A $4.3 million grant from the Farmers Home Administration will be used to fund the improvement, although more money could be sought later, Mercurio Martinez said.

Eventually, the auditor hopes that the economic development will justify the money spent and that the water and wastewater treatment plants will be self-supporting. "I am extremely optimistic that we will see a tremendous amount of economic development that will bring employment to the area," he said.

Other improvements also are planned. Laredo is building an inner loop to connect key roads and highways in the region.

An outer loop to circle the municipality could be started in the next decade to serve the growing population and huge numbers of trucks that cross the three bridges in the border community.

"The main challenge," Ramiro Martinez said, "is the infrastructure requirements to accommodate the growth," which has grown in the Laredo area from under 100,000 in 1980 to an estimated 166,000 this year.

The growth in Laredo has been phenomenal because of its central location along a corridor that links many U.S. and Canadian cities to Mexico. The corridor includes Monterrey, Mexico, a rising industrial and commercial giant.

Its location benefited Laredo as trade with Mexico soared after Mexico joined the General Agreement on Trade and Tariffs, or GATT, in the mid-1980s, and as an emerging Mexican middle class and smugglers thronged to the U.S. border town for retail goods.

The result has been hundreds of retail stores in Laredo, the construction of the largest Walmart in the United States, and expansive supermarkets and malls aimed at Mexican visitors.

The number of transportation companies in the Laredo area has grown to 300 from 49 in the past decade, and all major trucking firms have bases there, which is the nation's largest inland port. Thousands of trucks a day cross the border on Laredo's three international bridges, transporting more than onethird of all goods traded between Mexico and the United States.

Rows and rows of warehouses line the old Mines Road that stretches from Laredo to the Columbia Solidarity Bridge, which is located more than 15 miles from Laredo's central business district.

A growing population

The economic growth has gone hand in hand with population growth. In February, the U.S. Census Bureau reported that the Laredo metropolitan area, which represents Webb County, was the second fastest growing area in the nation, behind Las Vegas. Population grew by more than 11% from 1990 to 1992, jumping from about 133,000 to 148,500.

The longer-term population growth is equally impressive, from about 99,000 in 1980 to the 133,000 in 1990.

In tandem with the population increases, the taxable value of Webb County also is rising, primarily because of added warehouse space and industrial growth. In the past year, the taxable value of assets in the county has climbed by $400 million, to $4.3 billion from $3.9 billion, according to county auditor's figures.

That type of economic development helps Webb County, but still doesn't keep the county's financial resources from being taxed.

"The taxable value has been increasing, but their financing has been problematic," said Mary Francoeur, an analyst with Moody's Investors Service.

In March, Moody's gave a Ban, or its lowest investment grade rating, to $8.7 million of the county's tax and revenue certificates of obligation, saying that it expected a further drawdown on reserves because of the detention facility closure, although the financial cushion appeared adequate.

Other strains on the county budget also have emerged in recent years. The cost of providing indigent health care services has increased along with taxable value because the state mandates that 10% of all tax levies be earmarked for such services. In addition, Webb County funds its own welfare system.

"That puts a real burden on us," Ramiro Martinez said.

For example, state-mandated indigent care has jumped from $1.1 million in fiscal 1993 to $1.37 million in fiscal 1994 and an estimated $1.9 million in fiscal 1995. The number of cases has increased from 280 in fiscal 1993 to 359 for the first nine months of fiscal 1994.

Although there normally has been enough funding, Webb County could run out of money for indigent care by the end of the year, said-Ricardo Garcia. head of the municipality's welfare agency.

With all these pressures, Webb County could be compelled to find unusual ways to cope. Both the county's financial adviser, Floyd Westerman at Southwest Securities, and the county's bond attorney, Paul Martin, at McGinnis, Lochridge & Kilgore, said the municipality could continue to expand its role as it did when it assumed control for the water and wastewater treatment plant.

"It is a county that has a lot of needs," Martin said. "They will have to deal with it."

Don Gonzales, an executive in charge of the border region for Rauscher Pierce Refsnes, said communities such as Webb County may have to rely on a combination of direct grants and debt financing to accomplish their goals.

Whatever the case, Mercurio Martinez said Webb County will need to look for innovative approaches and continue to break new ground.

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