Richardson City Council Work Session August 19th, 2024
OPENING & BUDGET REVIEW
All councilmembers are present as well as City Manager Don Magner and City Secretary Aimee Nemer.
One speaker is present. She speaks about a group called Pray Richardson.
Now, the only item on tonight’s agenda. Council will review the proposed budget for FY25 published on August 15th. City Manager Don Magner presents. As a reminder, this budget was covered in detail at the Aug. 5th and 6th budget sessions. Don notes two factors affecting revenues, a $5M sales tax shortfall and a 9% reduction in certain commercial property values. FY25 revenues are projected to increase approx. $1M. Inflation and high interest rates are factors affecting business and consumer spending. The FY25 budget estimates 3% less sales tax revenue than the previous year. Don also reiterates the struggling aging office market and the city’s plan to make aging office buildings a target for placemaking redevelopment. He also reiterates the retail strategies of revitalizing existing shopping centers and assisting owners and tenants with improvements to ensure retail success.
Don announces a partnership in the IQHQ between UTD, Verizon, and AT&T. This partnership will occupy 70% of the remaining space in the IQHQ and will facilitate testing and development of wireless network infrastructure.
Don explains that current economic and real estate cycles are predicted to stabilize after another two years. He then highlights property tax rolls and commercial/residential ratios covered at the budget sessions. He also reminds viewers of the proposed tax rate of .0054218. Improvements to employee vacancy rates are highlighted again. Don also cautions, however, that 272 employees are eligible for retirement today. (Development Services Director Sam Chavez is apparently one of those.) This year’s 3% pay increase puts the minimum hourly wage for a city employee at $20. Increases to the public safety budget and economic development funding are also highlighted.
The total operating budget for FY25 amounts to a 1.8% increase, or a $7M increase, over the FY24 budget. Don highlights details from the five main budget funds. Don then gives an opportunity for Council to ask questions about any of the other funds such as the internal service and special revenue funds. About 20 of these funds are listed on slide 122 of the handouts.
COUNCIL FEEDBACK
Councilwoman Justice asks that the Solid Waste Fund’s fund balance policy be changed. Currently, the policy is 60 days building to 90. She suggests making it a 90-day fund balance. Don says they will review the policy. She then asks for details on a $250K transfer out in the Solid Waste Fund’s special projects line. Don explains that these are unallocated dollars for the implementation of the Solid Waste Master Plan. She also asks about the Solid Waste Fund’s nondepartmental expenditures line. Budget Officer Bob Clymire answers that this covers expenses like insurance premiums and administrative charges. Councilwoman Justice asks for details on some of the funds not usually highlighted, starting with the Essential Services Fund. Bob answers that this fund covers mail service, records storage, warehouse, printers, etc.
She then asks about keeping a fund balance for the Drainage Fund. This fund covers costs to maintain drainage culverts. CFO Kent Pfeil answers that revenue is restricted by the state in how it can be used for these types of funds. Operational costs are not significant for this fund. So, they shouldn’t keep a fund balance. Mayor Pro Tem Shamsul asks about funding methods for the Drainage Fund. Drainage projects are currently funded through bond debt as the Drainage Fund does not provide enough revenue to cover these costs. Don answers that funding strategies include federal grant opportunities, General Fund year-end savings, and a likely upcoming drainage bond proposal. The Drainage Fund currently can only fund small projects. The goal of the increased drainage fee is to enable it to start funding bigger projects. Don adds that this increase will also allow increased preventive maintenance.
Councilman Dorian asks about the Community Services budget for screening walls. Don answers that this funding provides for pressure washing or painting, not improving current screening walls. He adds that this could be something added to a bond program for neighborhood vitality. Don offers that he could present some funding options for improving screening walls at a future meeting. Councilwoman Justice adds her support to this suggestion.
Councilwoman Justice continues her line of questioning about the other funds. She asks about the necessity of maintaining a $2,500 municipal jury fund and other small funds. CFO Pfeil answers that these funds are mandated by the state. She asks now about the Special Police Funds line. Bob answers that these funds are also mandated by the state. The three areas covered are a state fund for officer training, a child safety fund, and state seizures. She asks about the TIF #2 Fund changes. Don explains that one of the two payees, DART, has not requested their reimbursement for some years. So, they are reserving those funds in anticipation of when that request comes.
Councilman Barrios asks questions about several funds. Bob explains the changes are due to some staff positions being recategorized. Councilman Hutchenrider asks about the dependence on FEMA funds for storm recovery efforts. He asks if they should consider maintaining a fund for disaster recovery. Don answers that they could look at utilizing a fund other than the currently used capital projects-special projects fund. They will report on options at a future meeting.
FY25 DEBT PLAN & CAPITAL PROJECTS FUNDS
Don presents the final portion on the FY25 debt plan. 2021 and 2023 bond programs continue as well as projects presented in the summer departmental budget prep presentations. Don presents slide 129 which shows about a dozen capital projects funds and asks for questions on those funds.
Councilwoman Justice asks about the Water & Sewer Rate Stabilization Fund. Don answers that this fund now serves as a security blanket for some of the wholesale rate increases from the water district. He says they can review how they view the purpose of this fund and whether they need to increase it.
Councilman Corcoran asks about the percentage of debt taken on for water and wastewater projects. He asks if there is any goal to increase or decrease this percentage of debt for funding projects. Don answers that he doesn’t see this percentage decreasing because infrastructure is reaching its usable age. In fact, since more infrastructure is reaching a critical point, he sees it likely that the percentage may increase. Don adds that funding these projects with debt helps the city not increase the water rate as much. Additionally, since these infrastructure improvements will benefit multiple generations, Don sees it as appropriate for those costs to not fall completely on today’s residents. (In other words, the debt strategy is to spread out the impact of infrastructure replacement. If this was all paid for this year by ratepayers, the increased costs would be extreme.)
Councilman Corcoran asks what would’ve happened if sales tax had been worse this year. Would that have impacted the debt strategy? CFO Pfeil answers that they would’ve likely delayed debt issuance until a future year and looked at refinancing opportunities. The city utilized this strategy roughly 20 years ago. Councilman Corcoran asks how historic records would be recorded given the category changes for many positions over the last decade. He is considering how these records would look through a public records request. Don answers that existing records would not change but they could explain which lines correlate with each other.
In closing, the proposed new rates will result in an increase of $213 for the average ratepayer. Public hearings will be held on the tax rate and budget Sep. 9th and Sep. 16th respectively.
Council discusses the Leadership North Texas program, a Council Education Committee meeting, and Dog Splash Day, and the session adjourns.