Richardson City Council Work Session August 14th, 2023
OPENING
All councilmembers are present as well as City Manager Don Magner and City Secretary Aimee Nemer.
Two public comments are submitted. One comment is on the topic of taxes and the impact inflation has on senior residents. The second comment is on the city’s FY 23/24 budget, but details of the comment are not shared. No speakers are present.
FY 23/24 BUDGET DISCUSSION
The only discussion item on tonight’s agenda is the proposed FY 23/24 budget. The purpose of this presentation is to respond to feedback from Council and explain aspects of the budget in greater context and detail.
As mentioned in previous meetings, the federal interest rate has continued to rise. Inflation continues to be a concern. With student loans resuming, there is also concern that consumer activity may decrease. The city is still budgeting conservatively in preparation for a possible recession. City Manager Don Magner states that they expect inflation to be a significant factor in next year’s budget as well. The commercial real estate market is also a major factor. Richardson currently has roughly 2 million sq. ft. of vacant commercial real estate. Costs of materials and equipment have risen across the board significantly. Labor costs have also risen across the board.
Using the MIT Living Wage Calculator, the city acknowledges that currently 7% of staff (97 full-time employees) make below the hourly living wage of $18.24. The 6% wage increase that Council requested now brings the minimum full-time and permanent part-time hourly wage 65 cents above the living wage so that no employee makes below the living wage. Additionally, longevity pay has now doubled at Council’s direction. The city is also putting additional funds towards equipment, facilities, and maintenance on top of those discussed at the budget workshops. This budget also unfreezes the Environmental Outreach Manager position and creates a new Water Production Facilities Specialist position. It sounds like both of these positions will focus on water conservation.
Of the additional $15.4M in revenue this year’s budget creates over last year’s, almost 30% ($4.4M) is going towards public safety, 15% is being spent on both recruiting & retention ($2.3M) and infrastructure ($2.4M), 25% ($4M) is going towards the 90-day fund balance, and about 15% ($2.3M) remains in excess.
(JN: That’s $2.3M in projected revenue surplus with the currently proposed tax rate of .56095. The budget presented at the workshops projected a $1M General Fund surplus, and that was a great budget that would still ensure our AAA rating. By not lowering the tax rate, we get a lot of good things accomplished. But it also appears that we increase the projected surplus by $1.3M. If that’s true, is there any room at all to lower the tax rate and save taxpayers some money?)
The average customer’s annual cost for water is increasing $29 this year. Sewer’s average annual cost is increasing $14. Trash is increasing $12. With just the city’s rate increases, a typical customer is estimated to see an annual cost increase of $55. These also don’t include the gas and electricity rate increases from Atmos and Oncor. The estimated annual increase for an average property tax bill is $141. That’s a total of $196 extra annually that the typical ratepayer should expect to pay. A public hearing on the tax rate is being held this Monday, Aug. 21st. A public hearing on the budget, and a final vote ratifying the tax rate will be held the following Monday, Aug. 28th. If you think there is any room in this budget for a lower tax rate, please submit comments to Council and show up to the meeting to speak! At least submit written comments for the record.
COUNCIL COMMENTS/QUESTIONS & CLOSING
Councilman Corcoran asks when the current tax increment finance districts dissolve. CFO Kent Pfeil answers that these are currently set to expire in 2031 and 2036. At that time, those dissolvements will positively impact the General Fund. Councilman Corcoran also asks if the Sherrill Park renovations will be completed in time to get a good idea of what to expect for next year’s Golf Fund. CFO Pfeil answers that renovations should be completed in time to understand the impact on the next budget.
Councilwoman Justice asks about reevaluating fund balance policies for the Solid Waste Fund and Hotel/Motel Tax Fund. City Manager Don Magner answers that they will evaluate the benefits and risks for increasing fund balance requirements for these funds. Councilwoman Justice also asks about how funds are being changed for the Citizen’s Information TV (streaming meetings online) service. Don answers that they aren’t getting rid of any services, but they are moving all services under one department.
Councilman Barrios asks why golf fees aren’t included in the rate increases. Earlier in the meeting, City Manager Don Magner stated that fee increases are planned once renovations are complete. CFO Pfeil answers that rates for course #1 were raised last year but course #2 rates were not.
Councilman Hutchenrider asks about potentially changing regulations on alcohol sales to increase revenue. City Manager Don Magner answers that Richardson currently only allows off-premise beer & wine sales. Don explains that, before the pandemic, a group of small business owners was planning to pursue a referendum to put alcohol sales on the ballot for citizens to vote on. With state law now allowing off-premise alcohol sales from restaurants, that referendum was not pursued. Richardson still prohibits retail off-premise liquor sales, except for the area that was formerly the Town of Buckingham. Don states that there is opportunity to change the regulations and allow retail liquor sales, but it would need to be a citizen-led effort. Councilman Hutchenrider remarks that it could be a positive tool for reinvestment in areas that are vacant.
Mayor Dubey asks about the short-term debt policy. Finance Director Keith Dagen answers that they are moving away from 2- and 4-year debt issuances, but they still keep 8-year debt for specialized vehicles and equipment. That concludes the discussion on the budget.
Council discusses the Corporate Challenge opening ceremony, the new temporary city hall location, the Anand Bazaar India Independence Day Celebration, the Friends of the Library Book Sale, and the extremely hot weather. They also remind residents that the animal shelter is still full and is waiving adoption fees, and the meeting adjourns.