The proposed FY 2022 Budget has been submitted by City Manager Shana Yelverton to the City Council for consideration.
The proposed operating budget totals $104.6 million and includes a 1.5 cent tax rate decrease, reducing the total rate to $0.390. The tax rate reduction means a revenue reduction to the City of $1.23 million.
Southlake’s 20% homestead exemption continues for FY 2022, the highest amount allowed by law. The 20% homestead exemption means homeowners of an average-valued home in Southlake will receive the equivalent of an approximate eight-cent tax rate reduction.
“For more than a decade the City Council has delivered on our continued promise of providing tax relief,” Mayor John Huffman said. “This tax rate reduction gives an extra boost to our residents with the continued 20% homestead exemption. Everyone understands that appraisals are constantly going up, so to have a new tax rate that’s below the effective rate, and still offer the 20% homestead exemption to our residents, is important to the families that call Southlake home.”
The City Council has been working strategically for meaningful tax relief for homeowners, managed with the consideration that as Southlake continues to grow, and infrastructure will need to be created and maintained. View a timeline of tax relief initiatives.
How did the City come up with this budget?
Throughout the fiscal year, in preparation for the budget, staff monitors several data sources to help project revenue. Using data from the residential and commercial sectors, employment numbers, consumer spending, and the impact from COVID-19, staff analyzes various economic scenarios to make financial projection decisions accordingly.
In spring 2021, departments begin preparing for the FY 2022 budget. Using a modified zero-based budget process, department directors prepare plans to fund the services the city will offer. Proposed expenses are carefully vetted before they are included in the budget proposal.
As a practice, the City limits operation budget growth to a benchmark reflective of the consumer price index. This means the cost of existing services shouldn’t exceed the cost growth of services in DFW. For FY 2022, the proposed General Fund budget growth is 2.4%.
More information about the budget process and assumptions can be found in the Budget Overview section of the FY 2022 Proposed Budget.
What is included in the budget?
The budget includes project recommendations from the comprehensive plan and prioritizes Capital Improvements Plan (CIP) projects according to the Master Plans and the City’s ability to fund them. Cash will be used to pay for most of the important capital improvement projects. The City will issue bonds to supplement cash payments.
The amount budgeted for capital projects is $32.8 million. Planned capital improvement projects include improvements for sidewalks, drainage, parks projects like the Southlake Sports Complex improvements, as well as traffic and intersection safety initiatives. Additionally, this budget sets aside funding for the Municipal Service Center and Public Safety Training Tower.
The conservative budget sets up Southlake with an eye towards the future given the COVID-19 pandemic while maintaining essential services like streets, water and sewer, as well as envisioning other projects to make Southlake the ideal place to live, work and play. A full overview of the FY 2022 budget can be found in the Transmittal Letter section of the FY 2022 Proposed Budget.
What about reducing debt?
The total debt fluctuates depending on projects funded during the year. Since 2010, the City’s property tax-supported debt has been reduced by 78%. The remainder of the current property tax debt obligations will be paid off in less than ten years.
“This is an important gauge of the City’s fiscal health and an important indicator that bond rating agencies review when determining the rating they will assign to city debt,” Chief Financial Officer Sharen Jackson said.
The debt reduction prepares the City to handle projects that will require bonds in the future, such as a new library, a potential open space program, CIP projects, and updating aging infrastructure.
Is the City dipping into savings to pay for operations?
Structural balance is a guiding principle to budget creation in Southlake. The City does not draw down from its reserves to pay for operating expenses and projected revenue must cover all planned expenses. Through this mindset, the City has paved the way to achieving optimum reserves and exceed the optimum fund balance to create an opportunity to pay cash for large projects.
What about providing quality services?
The outlined budget aims to continue the Southlake tradition of quality services not only with projects but with hiring and keeping world-class employees. Even with a tax reduction, the City of Southlake does not anticipate pay cuts, layoffs, or service reductions.
The proposed budget ensures the City of Southlake retains and recruits world-class employees. Under the General Fund accounts, more than 70% goes toward labor-related costs. This includes compensation and benefits that are market competitive but holds the line on costs. In 2022, the City proposes a cost of living adjustment of 2.5%, as well as a merit increase of 0-2% consistent with the City’s policy on compensation.
What’s the financial plan during so much economic uncertainty?
Most importantly, the budget is sustainable for the future.
Following the financial guiding principles positions the City for budget stability, even during difficult economic times.
“The decisions we make today affect our financial situation in the future,” City Manager Shana Yelverton said. “We must continue to provide outstanding service to the community today and ensure that we can cover these costs down the road.”
Learn more about the FY 2022 budget at www.CityofSouthlake.com/FY2022.