Tax and Utility Rates to Remain Unchanged in 2012/13, Employees to Get Average 3% Raise
The Lewisville City Council held its annual budget workshop Saturday and approved a budget for Fiscal Year 2012/13. The Council unanimously approved a budget, which is based on the same property tax rate as last year. Although the budget is approved, there will be two public hearings (August 27th, 6 p.m. and September 10th, 7 p.m.) to allow for public comment. The tax rate would then be approved at the following City Council meeting.
Lewisville's general fund revenue is derived from three sources, each contributing roughly one third of the budget: Sales Tax (33%), Property Tax (32%), and Other Revenues (35%). Other revenues are derived from user fees and fines.
Property tax rates will stay unchanged, at a combined rate of $0.44021 per $100 valuation. Although taxable property values gained slightly, moving from $6.31 billion in 2011 to $6.47 billion in 2012, the increase was largely based on commercial property, with multi-family and business personal property also gaining in valuation. Single-family home values decreased by an average of 2.86%. So although the tax rate is staying the same, single-family homeowners will pay an average of $18.59 per year less on the average home value of $153,296. A homeowner with that value would pay $674.82 in City property tax in 2013.
The property tax rate is composed of two components:
"O&M" - Operations and Maintenance, which goes to the general fund to pay for city services like police, fire, and government: $0.32289 per $100 valuation (Unchanged from last year)
"I&S" - Interest and Sinking Fund, which pays the debt service payments on the city's outstanding bonds for things like street and drainage improvements and major construction projects: $0.11732 per $100 valuation. (Unchanged from last year) In 2003, Lewisville voters approved a General Obligation bond package which had a target rate of $0.13469, which we are well below.
The combined property tax rate is among the lowest of area cities within Lewisville's group of survey cities. The City expects a greater than 99% collection rate, and is actually budgeting for 100% collection. This rate would bring in $29.1 million, of which $7.6 goes to debt service.
Sales tax revenues are picking up, due not only to the quarter cent voters added last November for Crime Control and Fire Prevention districts, but also to a recovering economy. Total sales tax collections for the current fiscal year are expected to end up at $20.2 million, up from $18.7 million in 2010/11. That $20.2 million estimate is being used conservatively for 2012/13, though there is some sense that even that number may increase.
On the fee side, there will be some slight adjustments to ambulance fees, with some decrease for Lewisville residents, and some increase for out-of-town users. Lenders and Realtors will pay a new $20 fee to participate in the city's homebuyer certification workshops. It is expected that there will be some growth in court fines ($61K), warrant fees ($82K), and landfill host fees (TWM: $69K, Allied: $88K). There are decreases expected in the Time Warner Cable franchise fee ($151K) and the Mixed Drink tax ($72K)
Total general fund revenues for FY 2012/13 are expected to be $63,209,223 - a $1.8 million increase over 2011/12.
Total operating expenditures for 2012/13 are $64,015,009, which includes $62.7 million in the City Manager's base budget, plus $1.3 million in discretionary extras that the Council agreed to fund through a combination of the increase in property tax receipts and fund balance draw-down.
The largest of these was $675 K for an additional 2% raise for city employees on top of the 1% that City Manager Claude King had written into the base budget. Council approved the 3% raises for positions funded by all of the city's funding sources. The raises will consist of a 3% market raise for police and fire plans, plus step increases which average 4% for eligible employees, and a 3% merit raise for general government pay plans. In addition to these raises, lifeguards at the city's aquatic facilities have already had pay increases due to a tight market that had made the positions hard to fill.
Health insurance and retirement funding costs both increased substantially, adding $565K and $131K respectively.
The city's largest expenditures are for police and fire services, which are roughly $20 million and $16 million.
The City maintains a fund balance, partially as a "savings account", and partially as a tool to manage fluctuating cash flows. The operating reserve is 15% of the yearly budget, and is expected to be $9.4 million. Undesignated reserves, over and above the 15% are expected to end the year at about $16 million. Numerous one-time projects will be funded by reserves, including $2.1 million for capital improvements and $1.3 million for one-time expenditures. It is interesting to note that the city has budgeted $350K in legal expenses related to intervention in the TCEQ landfill permit for Camelot landfill.
Lewisville's utility fund relates to the operation of water, sewer, and garbage collection. Revenues there are expected to be $27.4 million, up $606K from last year. Dallas Water Utilities (DWU), the sole supplier for Lewisville's treated and untreated water imposed only a modest increase this year that was not worth passing along to the ratepayers. However, it is expected that they could increase significantly in the coming years when DWU passes along the cost of new lakes coming online. Lewisville currently pays $0.4587 per thousand gallons of lake water, and that could increase to as much as $0.56.
There was discussion of a proposed $7 million water reuse project which could save the city over $281K per year in raw water costs by diverting 2.5 billion gallons of treated effluent back into Lewisville Lake in exchange for credit with DWU. Although the prospect of reusing that water may seem strange, there is nothing to be concerned about, since the effluent is generally cleaner than the lake water to begin with, and it would be re-treated at the intake to the city's water plant. Other sewer plants already discharge effluent upstream, so in effect we are already doing it. The debt for this would be sold next spring.
The utilities fund balance has a 15% reserve, expected to end 2013 at $4.1 million, and undesignated reserve of $10.4 million, some of which could be used for the water reuse project, although there is already $31 million in planned capital improvements scheduled from now through 2017, $6.3 million of which is planned to come from reserves.
The Council has expressed support for modifying the city's water rate structure to encourage conservation, and recover costs more fairly from large users, but city staff are still working on those options, and it is expected that will be part of the discussion at the February 2013 City Council retreat. The Council decided to leave water rates alone in the mean time, since they will likely change next year, possibly as early as Spring.
- 2013 Preliminary Budget
This report includes budget numbers presented in a Powerpoint presentation at the budget retreat, based on the preliminary budget. Some numbers were amended on-the-fly by the Council, so totals will change slightly to account for those effects. We will post a link to the final approved budget when that becomes available.