Richardson City Council Budget Workshop July 24th & 25th, 2023
BUDGET OVERVIEW
City council met Monday and Tuesday to dive into the FY 23/24 budget. Since this took place over two nights, rather than the usual play-by-play, I’ll do my best to summarize what occurred. Overall, I am happy with how the city is handling economic factors. Reinvestment is the recurring theme in this year’s budget. We are prioritizing people and reinvesting in key components of our city’s infrastructure. I was expecting a much bleaker picture, but this budget serves the city very well. Let’s dive in.
Richardson’s budget is comprised of five different funds. The General Fund is the largest of the five and provides for most of the day-to-day funding needs. The Water & Sewer Fund, Solid Waste Fund, and Golf Fund are exactly what you would expect. The Hotel/Motel Tax Fund provides cultural arts funding, namely, the Eisemann Center. The entire budget is affected by the labor shortage, inflation, interest rates, and supply chain issues. We’re paying roughly double the rate from 2 years ago on CO debt. In short, costs are up across the board. This draft of the budget reflects a 5% pay increase for staff and an increase in longevity pay. Another additional benefit is a floating holiday for employees to use on the day that applies to them.
FUND PROJECTIONS
In the General Fund, the fund balance increases. This fund is projected to end roughly $1M in the black. Police and Fire will see increases in physical and mental health assessments as well as the implementation of a peer support program. This fund also adds body cameras and tasers for detention officers. Money has also been set aside for community engagement efforts that will be determined at the Council Goals Session. Contributions to The Counseling Place and Network of Community Ministries are increasing to $500K each thanks to money received from the opioid settlement. A new partnership grant with the North Texas Wildlife Center will also be added.
In the Water & Sewer Fund, the fund balance also goes up. This fund is also projected to end almost $1M in the black. In order to cover the increased cost of water, residents will see a 3% increase in the water and sewer rates. This fund also unfreezes the Environmental Outreach Manager position to assist with water conservation efforts.
The Solid Waste Fund is also projected to see positive revenues with an increased fund balance. This includes a $1/month rate increase for residential customers and a 3% rate increase for commercial customers.
In the Golf Fund, the fund balance goes down over 30%. This fund is projected to end $200K in the red. This is due to one of the courses being shut down for renovations for most of the year. This is reinvestment, and the legally required fund balance of 60 days is still maintained. I just hope this fund bounces back onto the fairway next year.
In the Hotel/Motel Tax Fund, the fund balance will go down roughly 5%. This fund is also projected to end in the red by almost $400K. This is also reinvestment. Eisemann Center revenues and expenses are projected to be way up from last year. This is due to an ambitious Eisemann Center Presents season. This fund includes several unfrozen positions and catching up on deferred maintenance. Hopefully, this sets the fund up for applause-worthy revenues next year.
COUNCIL FEEDBACK
Council made several requests after receiving this initial draft of the budget. They asked staff to find room to give employees a 6% raise instead of 5% to match last year’s raises. They also asked for an even greater increase in longevity pay and consideration of an additional floating holiday. They also asked about the city’s options surrounding the ever-increasing wholesale water rates. City Manager Don Magner stated that the best option is to work closely with the NTMWD (Water District) to decide which projects will be beneficial in the long term. Most of Richardson’s pipes are clay, so that adds to the increased cost of maintenance and repairs. Council also still wants to see a comparison of wholesale rates with other water districts. Council recognizes the impact of rate increases on those with a fixed income and asks for staff to come up with strategies for educating residents on the discount programs offered for senior and disabled citizens.
TAX RATE & PUBLIC HEARINGS
With all feedback noted, a recommendation is presented for the tax rate. While many residents would love to see additional property tax relief programs, the recommendation is to maintain the current senior and disabled property tax exemption without adding additional relief programs. Any other option would risk lowering the quality of programs and services. Since Council has asked for additional items to be considered, the current recommendation is to potentially keep the current tax rate the same for next year. Once property tax rolls are calculated, the proposed tax rate could be even lower. This will be decided at the Aug. 21st public hearing on the tax rate and the Aug. 28th ratification.
The process for establishing the tax rate can be confusing, but here’s how I understand it. State law requires cities to pass a tax rate that will result in “no new revenue”. Any rate above this would typically require an election. However, if a city has passed a tax rate that ends up being lower than the maximum no-new-revenue rate, they can bank the difference between the two rates across a three-year period. This is called an increment. Since property values have been growing, which increases revenue, cities usually end up having to lower the tax rate to comply. This is called compression. Richardson was able to bank increments in FY 20/21 and FY 21/22. So, even though the maximum no-new-revenue rate will be lower, the city can add some of the available increment to potentially not lower the tax rate as much or keep it the same. Confusing enough? Richardson’s current tax rate is .0056095.
And that’s it, in a nutshell. Council praised staff’s hard work and I echo that praise. We are accomplishing a lot in this budget for people, and we’re doing it during a year of major economic obstacles. Here’s hoping that the budget reports over the next fiscal year match or exceed the current projections. A public hearing on the tax rate will be held Aug. 21st and a public hearing on the budget will be held Aug. 28th.