City budget will be approved before audit completion

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By Rachel Madison

The City has set Sept. 22 as its date to adopt the fiscal year 2021-22 budget and tax rate, but the previous year’s audit won’t be finished by then, which means the new budget must be ultra conservative.

Interim Finance Director Misti Hancock said that according to Texas law, for a city to levy a property tax, it must have a budget approved.

“The statutes don’t set a deadline, but if you’re going to get your tax levy in, then you need to approve a budget,” she said. “I’m going to recommend a conservative budget. I will adjust for salary changes and staffing changes that have occurred since last year’s budget, but the bottom line will remain flat. The new budget will be no larger than the budget approved last year.”

Hancock said as she finishes her review of the City’s finance department and works through the remaining 10 percent of the audit that is still unfinished, she hopes to see a fluctuation or surplus in the budget that is approved. That way, the City can amend the budget to reflect more feasible amounts as needed.

“We have responded to a significant amount of data requests by the auditors,” she added. “We’ve gone through and we’ve answered 90 percent of their questions since my tenure here. There are a few receipts and supporting documents we have been unable to locate, so we will be reaching out to those vendors to avoid not having them. We have exhausted all internal options. However, our biggest sticking point is fixed assets and long-term liabilities.”

When it comes to the roll-forward schedules for capital assets, fund balance and long-term debt, the fund balance doesn’t equal. During their audit, the auditors found a difference of $1.558 million when comparing the grand total of contractor fees collected to the ending balance of several expense accounts, including building permits and sign permits.

“We are going to be working through that with the auditor,” Hancock said. “We need to figure out which items were actually completed, and which were still in progress.”

Hancock added that “it depends on whose side you listen to” when trying to determine how this happened in the first place.

“Staff feels the assets weren’t in use,” she said. “The opinion is the previous auditor may have been a little rash and harsh at throwing some things in fixed [assets] that shouldn’t have been there. It looks like there was a disagreement or lack of understanding on whether the projects were complete at the time they were booked as assets in the 2019 audit. These projects were finished, it’s just a matter of when they were placed on the books. Ultimately, it has to be fixed.”

Hancock said a realistic goal is for the audit to be finished by the first week of October, at which time the Council will receive a formal report.

During the audit discussion, Council member Chris Pezold said he knew a current employee in the City’s finance department was texting with former finance director Becky Wilkins about the audit.

“Someone was texting our ex-treasurer as of yesterday [Aug. 24] about our audit items,” he said.

Council member Kathy Canady asked a couple of times who was texting her, but her question remained unanswered. The Council did not discuss Pezold’s concerns further.

Council also voted unanimously to set next year’s maximum tax rate at $0.455934 per $100 property valuation—the same as the current tax rate. Once the budget is analyzed, council will decide whether that tax rate will stay the same or change. A public hearing to discuss both the proposed budget and the tax rate for fiscal 2021-22 will take place Sept. 8 at 6:30 p.m. at the Liberty Hill Municipal Court. Adoption of the budget and tax rate is set for Sept. 22.

The Council also held a lengthy discussion on a request, approved in August by the Planning & Zoning Commission, for a zone map amendment from general commercial/retail to multi-family residential on 2.7 acres on the north side of State Highway 29 east of Holmes Road. The seven acres directly north of this land is zoned for multi-family, which will include seven apartment buildings. Landowner representative Justin Day said adding the additional acreage would allow for the apartment complex to add two additional buildings. He also mentioned that the 2.7 acres have been for sale for over two years with no commercial or retail interest.

The Council as well as Economic Development Corp. Executive Director Matt Powell agreed that it was in the City’s best interest to keep that property zoned for commercial because of the long-term economic impact to the area. Because of this, Day withdrew his request, and said it “saddened” him that the Council didn’t see the value he saw in rezoning the property.

Also at the meeting, the Council voted to suspend a project to build a community center in Liberty Hill, on property currently used as a multi-purpose building for the police and public works departments.

Pezold said it’s not wise for the City to spend money on the project right now, and that it should be postponed indefinitely.

“Right now we have so many other irons in the fire,” he said.

Council voted 3-1 to suspend the project, with Council Member Tony DeYoung opposed. City Administrator Lacie Hale said she would look into what the impacts of canceling the project will be, but because no one has been mobilized to begin it, the costs shouldn’t be much. The project was originally approved in August 2020 with an estimate of $750,000.

Also last week, the Council:
• Unanimously passed a motion to nullify known or unknown ordinances that pertain to the Economic Development Corp.’s incentive programs, excluding the sign and façade programs currently in place. New incentive programs are set to be approved by council on Sept. 22.
• Heard a presentation on municipal utility districts (MUDs) from City Attorney Dottie Palumbo, including what they are and how they work.
• Discussed updating the City’s development agreement ordinance. Final approval on the update of that ordinance will take place Sept. 22.
• Approved annual service plans for the Liberty Parke Public Improvement District and the Summerlyn West Public Improvement District.
• Voted unanimously to sponsor the 2021 Rip Roar’n Ride in the amount of $2,500. The annual bike race, set for Sept. 25, is a fundraiser for the Lions Club. Proceeds raised are donated to the Juvenile Diabetes Research Foundation.
• Approved the City’s fiscal 2021-22 holiday calendar, which includes Juneteenth, the newest federal holiday.
• Gave staff direction to develop a service plan and annexation procedures for two properties. The first is 10 acres located west of Ronald Reagan Boulevard on the south side of SH 29. The applicant plans to use it for multifamily housing. The second is 5 acres located directly across the street. The applicant intends to utilize it for commercial use. Before the properties can be annexed, a public hearing must be held.
• Heard an update on the City’s shared use path. The bulk of the work should be completed within the next three weeks, said Hale, and final touches like benches, trash cans and the crosswalk beacon will be installed in late September.
• Discussed development of a policy regarding large expenditures made by city staff to be approved by Council.
• Decided not to move forward with council leadership development training through The Management Connection. The consensus among members was that the money required for the training could be better spent elsewhere.
The City Council held two executive sessions last week and adjourned at 11:32 p.m. Council member Crystal Mancilla was absent. The next City Council meeting is scheduled for Sept. 8 at 6:30 p.m.

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