City budget plan still a mystery
By MIKE EDDLEMAN
There are still more questions than answers as the clock ticks down on the City of Liberty Hill budget process.
The City Council did not discuss budget details or potential changes Tuesday — a week after asking city staff to look at options that could raise the tax rate and dip into the city’s reserve fund.
Because there was no discussion or guidance to staff from the Council at Tuesday’s budget workshop, City Finance Director Michel Sorrell said the proposal Sept. 10 for the final budget will be a budget with no additional staffing and the current tax rate of $0.50 per $100 property value.
The Council will have to amend the budget ordinances at that time to add any new employee positions or change the tax rate.
The contract with the County Tax Assessor is that the tax rate must be adopted by Sept. 15.
Sorrell presented the numbers Tuesday on what it would cost to fund all the new positions being considered in the new budget at the current tax rate of $0.50 and the rollback rate of $0.54896.
Adopting the rollback rate would mean the annual property tax on a home valued at $300,000 would be $1,646, an increase of $146 over the current year rate. Each penny added to the tax rate adds about $25,000 in revenue for the city.
Pushing the tax rate up to the rollback rate would not cover the costs of the new positions, meaning the city would have to dip into reserve funds. With the higher tax rate, the city would be pulling $87,000 from its $2.5 million in reserves. Keeping the tax rate the same and funding the positions would mean drawing $209,000 from the reserves.
Both Sorrell and City Administrator Greg Boatright have repeatedly warned against using reserve funds to pay for new positions that incur longterm budgetary commitment. The city just received its first Standard and Poor’s bond rating, which was a AA+ rating, but it can also be impacted by budgetary decisions.
“We are really doing a good job as a city maintaining fund balance, good fiscal policy, good budgetary control,” Sorrell said. “But one of the comments that was made (in the report) that would make it more optimal was that we continue to contribute to fund balance and that we have a long, longterm financial plan. The other thing is it could be downgraded if we chose to use non-recurring revenues for ongoing operating expenses.”
In addition to the draw on reserves for the upcoming year, Sorrell showed what the city would need to bridge the gap in the following year, even with a 3 percent growth in revenues budgeted.
“Putting all the staff on the department heads have requested, and rolling forward to fiscal year 2020, you’re going to draw down potentially another $220,000 on fund balance, because when you add staff, that’s going to be a constant operational cost moving forward,” Sorrell said.
The additional positions being considered are two maintenance techs, who would do the work currently being done by contract through Giraffe Services, three new additions at the police department and a code enforcement officer. Sorrell estimated these six positions would cost the city $625,528 next year, and $346,000 in annual salary and benefits costs going forward. The remainder of the costs for the upcoming year would be for vehicles, equipment, travel and training.
The requests from Police Chief Maverick Campbell included a second lieutenant, an investigator and a traffic officer.
The code enforcement position was approved by the Council early in the summer, with the plan being to fund it in the upcoming budget.
Following the meeting Tuesday, Mayor Rick Hall shared his preferences on the positions and tax rate, saying he supported adding all of the new positions but one.
“I really think that at this point and time I would be comfortable with all the positions except for the police lieutenant,” he said. “I’m not sure we’re quite big enough of a department yet and not big enough of a city to have two lieutenants.”
Keeping the current tax rate and funding the additions from the reserves is his preference on how to fund the budget needs.
“I personally think we could take a little more out of the general fund to fund that stuff we need,” Hall said. “I understand that’s not what everybody thinks we need to do, but most cities our size and even larger have half of the reserve fund that we do, so I’d be okay with using more of it to fund the needs of our department heads because we are going to grow.”
The administrative baseline budget initially presented to council has revenues projected at nearly $3.23 million, with expenses at $2.96 million, which includes a 3 percent cost of living raise for all staff. It would put a projected $267,286 into the reserve fund next year.
All other options discussed to date would increase expenses up to $500,000, maintain or raise the tax rate, and draw down the current reserves.