Council set for final budget, tax rate vote



The Liberty Hill City Council is set to vote Monday on a 33 percent budget increase, and a 4-cent tax rate reduction.

Prior to the meeting the Council will hold a public hearing at 6 p.m. for residents who would like to pose questions or comments about the proposed budget.

The personnel increases that characterized last year’s budget have carried on as a theme in this year’s proposal. The proposed budget, presented to the Council in early August, includes nine new positions above what was approved last September. That approved budget added 18 positions to a staff that previously totaled 37. If approved, the City will have 63 total positions, and a general fund budget of $5.68 million, an increase of 33 percent over the current budget of $4.24 million.

Staffing comparisons
While it is rarely possible to compare apples to apples when looking at one city’s budget versus another, The Independent compiled data on the budgets and staffing for three other area cities to compare to Liberty Hill’s proposal.

Burnet, Taylor and Hutto are each considerably larger in population and geographic area than Liberty Hill.

In a comparison of total City employees – including the police department – Burnet’s 62 comparable positions is one shy of Liberty Hill’s proposed 63 despite a population and geographic area nearly triple the size of Liberty Hill. Across the board, Burnet’s salaries total roughly $6.5 million, but that includes fire department, golf course, parks department and airport personnel. When those departments are subtracted, the Burnet budgeted payroll is roughly $2.86 million compared to Liberty Hill’s $3.7 million.

While Taylor (16,982 estimated population) and Hutto (25,367 estimated population) have considerably more residents and geographic area, their police department staffing and budget is far less per capita than Liberty Hill’s. Hutto has a staff of 43 in the department with a budget of $5.88 million, Taylor has a department of 29 with a $3.9 million budget.

The Liberty Hill Police Department has 18 employees and a $2 million budget.

Taylor and Hutto do have the economies of scale Liberty Hill does not, but per capita, Liberty Hill has one department employee for every 105 residents, while Taylor has one for every 589 residents and Hutto has one for every 604 residents. Burnet has 18 total in its department, according to staffing data provided by the City of Burnet, which includes three positions identified as school resource officers. Burnet has one department employee for every 353 residents.

The three cities have between three and six times the geographic area to patrol as Liberty Hill.

Tax rate
While Liberty Hill’s increase in expenses is dramatic, it does not include a tax rate increase. The proposed tax rate of $0.454559 per $100 valuation is a rate reduction.

While the City touted the rate reduction, under new rules set by the Legislature, it is not a decision truly in the hands of the Council.

Due to changes mandated by Senate Bill 2, passed during the 2019 legislative session, allowable revenue increases for Texas cities has been cut by more than 50 percent. The new proposed rate is the highest rate allowed by law without voter approval.

“Senate Bill 2 also caps the amount of revenue that you can increase with new property taxes at 3.5 percent,” said City Attorney Tad Cleaves. “The old rollback rate was capped at 8 percent, so your revenue could increase year to year without having voter approval of a new tax rate.”

It is projected that even with the lower rate, the expanded tax rolls and increased property values will generate about $1.4 million in local property taxes next year, compared to just over $1.1 million in the current year. Liberty Hill Finance Director Becky Wilkins said the current rate – if it were adopted – would have generated $2.2 million in the upcoming year.

The current Liberty Hill property tax rate is $0.490187 per $100 valuation. Under the current rate, a home valued at $250,000 would pay $1,225 in property taxes. Under the proposed rate, a home valued at $250,000 would pay about $1,137.

The tax rate, though, doesn’t take into account fluctuating property values. The anticipated total tax levy on all properties will increase about $300,000, and the average homestead taxable value increased about $6,500.

In a survey of 16 random properties on the Liberty Hill tax roll, 14 increased in value this year an average of $8,500. The highest property value increase among those researched was $19,000.

Budget details
Across all funds (general and enterprise funds), salaries are projected at $3.68 million — up $486,971 over the current budgeted salaries.

Not only is that total considerably higher than the current budget, the actual salary expense for the City this year was much lower due to staffing changes and unfilled positions. While not an exact annual expense, a list of City personnel by position and salary acquired by The Independent through an open records request in May showed the total annual salary of all City employees on the payroll at that time was $2.88 million.

The $100,000 in salaries approved last year for the Mayor and Council members was again included in the new budget. None of those costs were realized in the current budget due to the delay of the May election. After the November election, the $40,000 salary for the mayor’s position will take effect, and the monthly $1,000 salary for Council members Kathy Canady and Tony DeYoung will begin as neither were opposed in their bid for reelection.

Salaries for the administrative department increased more than $200,000, even after the planning department, City Council and property maintenance departments were separated out.

Salaries for the police department are up $103,560 over the current budget and are projected to increase $327,326 over actual expenditures this year.

Fifteen of the City’s employees fall under the wastewater and water funds, totaling $813,500 in salary expenses.

About a third of the property tax rate is for debt service. The Interest and Sinking (I&S) – or debt service – portion of the total proposed tax rate of $0.454559 is $0.145096.

The debt service included in the proposed budget is $647,075, and that stems from two outstanding tax notes.

Increased bond or tax note debt would, in future budget years, increase the I&S rate, reducing the amount of the property taxes raised that could go to general fund expenses such as salaries and operations.

On the enterprise fund side, the City currently has two sewer, three water and three wastewater bonds.

Among the new equipment items listed for the upcoming year is a postage machine with an envelop stuffer, allowing the City to streamline mailings.

The police department will be getting radio upgrades and weapons upgrades.

The Council approved the financing of a new dump truck for the City at its last meeting.

There is nothing budgeted under capital improvements for the upcoming year, but that doesn’t mean the City can’t take on new projects.

This past year, the Council met its CIP needs by transferring money from the reserve fund, and the proposed budget shows a transfer to capital projects of $3.29 million in the current year, with at least some of that being pulled from the reserve fund.

Any capital projects added for the upcoming year, which would include the swim center and downtown intersection of Loop 332 and CR 279, would have to be covered primarily through the issuance of new bonds.

In the discussion of handling capital improvement projects in the future, Wilkins indicated that bonds should be issued for particular projects, again indicating that previously the City was not handling projects this way, but when tax notes were issued in previous years they were issued for specific projects.

A recent look at the City’s projects by the Council showed there was little remaining in funds to address projects, with the final $710,319 said to be available likely going toward the planned community center approved in July, at an estimated cost of $750,000.

Any bonds issued next year would likely not impact the I&S tax rate until the 2021-2022 budget. The current tax notes are in year four of their seven-year payment plan.

Issuing bonds for future projects would be a decision made by the Council.

The Council said that perhaps as revenue streams grow – sales tax in particular – in coming years that the city might be able to divert more funds to the reserve account. There is no plan to add to the reserve fund currently.

But last year that is exactly what the Council voted to do in taking money from the reserve fund to cover capital projects. Rather than putting more into the reserve fund, which was at approximately $2.7 million at the end of the 2018-2019 fiscal year, the Council voted on a new policy that only holds four months worth of reserve which last year totaled $1.06 million. The remainder of the reserve was redirected to cover other expenses in the current year.