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Item 6I, 6JFY 2017 Proposed BudgetItems 6I and 6J September 20, 2016 Sharen: Thank Council for opportunity to present This is the final step for the formal adoption of the FY 2017 proposed budget 1 Council Action Requested 2 Sharen: This evening we have a couple budget items for Council consideration which include the 6I-second reading of the tax levy ordinance 6J-second reading of the budget FY 2017 Planned Expenses $92,948,537 FY 2017 ExpendituresAll Funds Sharen: Funds are mini-budgets that show revenues, expenses and ending fund balances - Together, they make up the City’s FY 2017 budget Total budget for FY 2017 is about $93 million Comparing the FY 2016 Adopted Budget to the FY 2017 Proposed Budget, expenses are increasing 6.9% ($5,968,182) The largest portion of the increase is… Market Adjustments for DPS, other compensation & benefit adjustments Water budget (water costs driven by consumption/peaking charges) Wastewater budget (TRA – accounting change – related to bonds) Expenses related to The Marq (staff additions for Phase 2) Crime Control District (radios is largest portion, HQ weatherization) Vehicle Replacement (buying vehicles, dump truck, medic) I want to note that the “other” category depicted on the slide includes the following funds: Reforestation: $40,000 Park Dedication: $100,000 Parks/Rec (Sponsorship Fund): $44,000 Library Donation Fund: $10,000 Vehicle Replacement Fund: $994,550 Facility Maintenance Fund:$110,566 Court Security: $70,737 Court Technology: $81,500 Red Light Camera: $452,511 Public Art: $189,000 Commercial Vehicle Enforcement: $130,594 3 FY 2017 Property Tax Tax Rate Sharen: No tax rate increase is proposed for this year. Rate will support the general operations, debt service Split between an allocation for operations and debt service. Low debt service tax rate - reducing property tax-supported debt by paying for capital projects with cash. Appraised value has increased over last year reflecting value growth for existing development in Southlake, as well as new construction. The portion of the appraised value that will be taxable, is less than the appraised value due to several exemptions, include an over 65, and disabled exemption of $75,000. Also a senior tax freeze. Increasing homestead exemption since 2009. Up to 16%. 4 Homestead Exemption $98,285 reduction (average priced home) Equivalent to a 7.4 cent tax rate reduction Revenue Reduction = $3.3 Million FY 2017 Tax Relief Sharen: The homestead exemption provides a generous reduction in the taxable value of Southlake’s residential properties. Avg value home = over $614K Reduction of value shown based on 16% exemption compared to fully taxable value Revenue reduction from full taxable value is $3.3 million for homestead alone 5 FY 2017 BudgetTax Rate *This analysis assumes that other taxing entities make no changes to their tax rates for FY 2017. Sharen: Ours is only one portion of overall property tax bill COS constitutes 16% of total taxpayer bill 6 Capital Improvement Program Sharen: I want to mention the capital improvement program or CIP. The city has developed a five year plan for roads, water, sewer, drainage, facilities, parks and other projects. For FY 2017 we are proposing to fund about $23.2 million in projects. Almost 60% of the CIP projects are cash funded from a variety of sources. The primary purpose of the CIP is to advance the projects identified as master plan priorities. These projects ensure that our community has strong basic services and that we are prepared for growth. These investments keep people safe and comfortable. General Fund $6,250,000 Utility Fund $4,725,000 Water Impact Fee $800,000 Sanitary Sewer Impact fee $950,000 Storm Water Utility System Fund $1,050,000 Road Way impact fee $200,000 Hotel Occupancy Tax Fund $200,000 Park Dedication Fee Fund $100,000 SPDC $3,600,000 CEDC $6,400,000 Grand Total All Funds: $23,275,000 The CIP was previously reviewed with Council during the August 16th work session Projects are strategically linked to provide funds for meeting Council’s priorities A variety of funding sources used As mentioned previously, Almost 60% of the CIP projects are cash funded from a variety of sources. 7 FY 2017 Debt Service HighlightsProperty Tax-Supported Debt Sharen: A portion of the FY 2016 debt tax rate has been reallocated to provide cash funding for capital projects Transferring dollars over the City’s optimum fund balance to the Strategic Initiative Fund provides cash funding for capital projects addressing the City’s master plans. For FY 2016, $6.5 million dollars in cash will be available for use in funding the General Fund CIP. That is sufficient to cover the cost of ALL OF the FY 2016 general fund capital budget and provides that no bonds will need to be issued for this purpose. Note: Also – We are cash funding all CIP projects this year… The only bonds we plan to issue are those required for the voter-approved Marq. Note: Since 2006, about $74.4 million in cash has been used for capital projects, to avoid borrowing money to fund these needs. An additional $17.7 million is programmed for FY 2016 projects 8 FY 2017 Debt Service HighlightsProperty Tax Supported Debt 91% 10 years Sharen: The City has over the years issued certificates of obligation to fund many of its capital improvement programs. It is important to note that about 91% of the City’s overall existing property tax supported debt will be retired within the next ten years. This reflects aggressive amortization schedules and the City’s efforts over the past decade to use cash funding for certain projects. No debt for this year’s capital budget means that we will not be adding to the debt load that is supported by property taxes. 9 Debt Reduction TrendProperty Tax Supported Debt Sharen: Chart shows two things: First, overall property-tax supported debt is declining Second, debt as a percent of assessed value has declined significantly This is a measure used by bond rating agencies, financial advisors Balance: debt to build infrastructure versus underinvestment OR intergenerational equity issues Industry warning signals for this measure – overall PTS debt exceeding 10 percent of assessed value (we are at 0.92%) Since 2002, the City’s has reduced its property tax supported debt as a percentage of assessed value by almost 75% Since 2003, the City’s has reduced its total outstanding property tax supported debt by 38%. (or over 1/3) 10 Guiding Principles Sharen: The guiding principles that were put into place several years ago continue to provide the framework for the preparation of the budget. Establishing a set of budget goals and abiding by them has been developed as a part of the city’s budget culture – and will continue to be priorities for the coming fiscal year. As mentioned, budget supports strategic goals and the implementation of Southlake 2030 recommendations Always look for ways to reduce the cost to the taxpayer Unlike the federal governments budget, ours is balanced! Also, no reliance on our savings acct to balance the budget We consider the impact of today’s budget decisions on future budgets…also plan for future needs based on City growth Finally, understand that we have to have great people to get the job done – Want to be an employer of choice 11 Communication Outreach My Southlake News Eblast Video YouTube Facebook City Website Star-Telegram During the budget process we have pursued/requested citizen input through various channels as outlined on the slide….as of today we have had two inquiries. 12 Budget Information cityofsouthlake.com/FY2017 Sharen: As a reminder – there is quite a bit of information related to the budget We’ve put the budget materials on our website for ease of review Encourage people to visit and take a look at it 13 www.cityofsouthlake.com/FY2017 Questions? Sharen: I’ll be happy to entertain any questions you may have at this time. 14