Council approves City budget, sets tax rate

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By Rachel Madison

The Liberty Hill City Council adopted a budget and set a tax rate with minimal changes from last fiscal year.

“Because of what happened with the prior treasurer, as well as not having the [2020] audit completed, we are sticking to last year’s budget for now,” said Council member Chris Pezold, referencing the August termination of former treasurer Becky Wilkins. “We all are going to have to be hawks on this and be ready to amend the budget any time as we get information coming in. This is a highly irregular situation. We don’t have the audit done from last year and don’t have the paperwork to understand exactly where we are compared to last year. At this point we cannot have a full picture of where we are going at all.”

Interim Finance Director Misti Hancock said this is why she decided to keep the City’s budget flat at $5.6 million for the general revenue fund.

“There are some lines that we’ll need to adjust, but we’re going into this knowing where we are with leadership’s understanding and knowing where Council’s opinion is,” she said. “This is a conservative approach to move forward, and hopefully before the end of the calendar year—after we come back to you with a complete audit in October—that will allow us to go through and have more time to dig into some of these details as well as educate you all. Some of the [City’s finances] are so muddled that you have to look at the vendors and what they’re providing to even understand the accounts.”

Hancock said while the 2021-2022 budget estimates general fund revenue of $6.9 million, she still wants the budget to remain at $5.6 million.

“I updated the sales tax (revenue) increase to 15 percent, which is very conservative,” she said. “From 2020 to 2021, sales tax grew 24.2 percent. With new businesses coming to the city as sales tax generators, we will have the opportunity to improve on that number as we see revenues come in.”

Hancock added that the conservative budget will also allow for approximately $1.3 million to remain in the fund balance.

“I’m basically placing it into a savings account and not appropriating that to spend,” she said. “The City should be keeping 20 to 25 percent in the fund balance at all times to operate on. The last audited financial statements we have for now are from 2019, so I’m not comfortable telling you that we’ve done that, but my guess is we will be close to 20 percent, or at least 15 percent. Moving forward we will be proposing that we meet all fiscal responsibilities and have those funds dedicated as required by policy.”

The street maintenance fund remains the same at $173,500, while the wastewater fund was cut slightly from $5.9 million to $5.4 million.

“I am worried about wastewater, because it’s significantly below what was expended this year, but part of that is because it includes capital projects that won’t be part of next year,” Hancock said. “It will be important as we go into the coming months to work on that to make sure we can operate at the level needed and support the services the City needs to provide.”

The sewer fund was lowered from $1 million to $755,000, and the water fund was lowered from $1.8 million to $1.7 million. The administration budget was lowered from $1.8 million to $1.7 million; the city council budget was lowered from $161,036 to $130,530; and the municipal court budget was lowered from $318,000 to $313,149. Property maintenance was lowered from $307,200 to $282,902, and the parks budget remained the same at $132,500.

The police department’s budget increased slightly from $2.07 million to $2.08 million; the events budget increased from $187,084 to $191,420; and development services increased from $685,050 to $795,522.

The Council also unanimously approved the budget for the Liberty Hill Economic Development Corporation. Hancock had set the budget for the same as the previous year, at $458.500. The budget was approved after the Council decided to remove a $20,000 line item for office space, which the EDC does not need, as director Matt Powell works from home.

Lastly, the Council adopted a property tax rate of $0.454559 per $100 property valuation, which is unchanged from last year. This rate raises revenue by 30.6 percent over the previous year, and means taxes on a home valued at $100,000 will increase by about $64.44.

As adopted, the new budget raises more revenue from property taxes than the previous year’s budget by an amount of $744,266 — a 40.79 percent increase. The property tax revenue to be raised from new property added to the tax roll this year is $460,768.

Council member Tony DeYoung asked Hancock to look at what revenues would be if the City changed its tax rate to $0.41, $0.43 and $0.44. Hancock said while the City could live with those options, the most conservative approach was to leave the tax rate unchanged from the previous year. This decision passed 4-1, with Council member Kathy Canady opposed.

Canady said she thought the citizens should be given a break by lowering the tax rate one percent to $0.44, but the rest of the Council felt no changes should be made because so much of the City’s finances, like the audit and the budget, are still up in the air.

Public hearings were held for both the budget and tax rate, but no one from the community spoke.

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