The proposed FY 2021 Budget has been submitted by City Manager Shana Yelverton to the City Council for consideration.
The proposed budget totals $105.2 million and includes a ½ cent debt tax rate decrease, reducing the total rate to $0.405. The tax rate reduction means a revenue reduction to the City of $388,500.
Southlake’s 20% homestead exemption continues for FY 2021, 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 8.1 cent tax rate reduction.
“Several years ago, the Council set tax cuts for our citizens as a goal,” Mayor Laura Hill said. “At the end of the day, our taxpayers expect us to manage tax dollars responsibly and it is important that the City is a good steward and using the funds for the betterment of the community.”
The City Council has been working strategically for meaningful tax relief for homeowners, managed with the consideration that 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?
Chief Financial Officer Sharen Jackson presented the FY 2021 Budget Guiding Principles at the August 4 City Council meeting, sharing the strategy map to deliver on six focus areas: Safety and Security, Mobility, Infrastructure, Quality Development, Partnership and Volunteerism and Performance Management and Service Delivery. Watch the presentation.
“In preparation for the budget, I look at several data sources to help project revenue,” Jackson said. “Using data from the residential and commercial sectors, employment numbers, consumer spending, and the impact from COVID-19, I analyze various economic scenarios to determine what we can expect in the future and make financial projection decisions accordingly.”
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.
The budget includes project recommendations from the comprehensive plan and prioritizes 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 short-term bonds to supplement cash payments.
The amount budgeted for capital projects is $13.7 million. Planned capital improvement projects include improvements for drainage, parks projects like the Southlake Sports Complex improvements, as well as traffic and intersection safety initiatives.
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.
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 69%. 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,” 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 the aging infrastructure.
How is the City managing expense growth?
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 2021, the proposed General Fund budget growth is 1.5%.
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 quality public servants. Even with an estimated revenue reduction, the City of Southlake does not anticipate pay cuts or layoffs.
The proposed budget ensures the City of Southlake retains and recruits world-class employees. Under the General Fund accounts, about 70% goes toward labor-related costs. This includes compensation and benefits that are market competitive but holds the line on costs. In 2021, the City proposes a cost of living adjustment of 1.5% consistent with the City’s policy on compensation.
What’s the financial plan during so much economic uncertainty?
Most importantly, the budget presented is sustainable into 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,” Yelverton said. “We must provide outstanding service to the community while balancing our ability to pay in the coming years.”
Learn more about the FY 2021 budget at www.CityofSouthlake.com/FY2021.