Los Cabos city hall doesn’t usually volunteer bad news about the real estate market, so when the municipal treasurer stands in front of Cabildo and says the budget is shrinking because property sales have cooled, it’s worth paying attention. On Thursday, November 12, the Ayuntamiento presented its proposed Ley de Ingresos — the annual revenue law that sets the municipality’s budget and tax targets — for the 2027 fiscal year, and the number is smaller than this year’s. A lot smaller, and the reason given was blunt: the local, national and international real estate market has contracted, and the city is feeling it in its own tax collection.
The total proposed budget for 2027 comes to roughly 7.65 billion pesos, around $400 million USD, a reduction of 9.09% compared to what was approved for 2026, according to Colectivo Pericú. Most of that drop isn’t coming from state or federal transfers. It’s coming from the city’s own-source revenue — the money Los Cabos collects directly, mainly through property tax and real estate transfer fees — which is projected to fall from about 4.17 billion pesos to 3.34 billion pesos, a reduction of roughly 834 million pesos, or close to $45 million USD.
Municipal Treasurer José Manuel Araiza told councilmembers the city expects to close out the current fiscal year with a 20% shortfall in own-source revenue, and said the 2027 proposal reflects that reality rather than papering over it. “We are going to close this fiscal year with a hit to our own-source revenue of 20%, and we are acknowledging that in the 2027 budget by running a more conservative projection,” he said, per the outlet’s report.
Predial and ISABI Take the Hit
The two taxes Araiza specifically named as weak spots are predial, the annual property tax paid by homeowners, and ISABI, the tax charged when a property changes hands. Both are directly tied to market activity — predial assessments and collection rates track property values, while ISABI only generates revenue when a sale actually closes. A slower sales market means fewer ISABI payments and, apparently, softer predial collection as well, which lines up with what agents and brokers covering the shifting Baja California Sur market have been describing for months.
There’s a subplot here that property owners should watch closely. Araiza also told Cabildo the city is updating its cadastral records — the official property database used to calculate predial — and the stated goal is to collect what’s actually owed in tourist zones without raising the burden on residential neighborhoods. In principle that means closing gaps on undervalued commercial and resort properties rather than squeezing homeowners further. In practice, cadastral updates have a way of producing surprises on tax bills, and anyone who hasn’t had their property reassessed in a while may want to check their current valuation before next year’s predial notice arrives.
Araiza framed the smaller budget as prudent rather than alarming, predicting the conservative targets set for 2027 will be easy to beat. “I believe it’s favorable to present a conservative budget that will allow us to have financial strategies to reach and exceed the target,” he said, adding that the cadastral cleanup should produce “revenue surpluses” that the city plans to earmark for public works in the following fiscal year.
The proposal still has to clear the Congreso del Estado, Baja California Sur’s state legislature, before it’s final, and lawmakers could adjust the numbers before signing off. For now, the takeaway for anyone watching the Los Cabos buyers’ market is that the slowdown showing up in listing prices and days-on-market has now shown up in the city’s own books — and city hall is betting that a tighter cadastral net, not a tax hike, will make up the difference.
