Though we were unable to have our pre-budget planning retreat this year as we normally would, from the outset of the process the City Council expressed its expectations and defined some parameters for the development of a proposed budget. That direction to staff was what you’d expect, particularly given current economic conditions: No new taxes from existing properties, no reduction in services, and make that happen by continuing to find efficiencies and cost savings. What staff have come back with not only meets but exceeds those criteria, by cutting taxes rather than simply keeping them flat.
In presenting his proposed fiscal year 2021 budget, Assistant City Manager Brant Gary, who next week takes the helm as Interim City Manager, introduced it with the theme of doing more with less by working smarter, not just harder. Council’s objective of no new taxes would mean maintaining the same total revenue from existing properties year over year, by building the budget around the “no new revenue” tax rate (formerly known under state law as the “effective rate”). Instead, the proposal goes even further by leaving the nominal rate unchanged, which will result in some $300,000 less in tax revenue next year, accompanied by a two percent expense reduction in the General Fund and the elimination of three employee positions.
That’s where working smarter comes in, as all city departments were challenged to look hard and thoughtfully at their needs and at new ways of doing things to meet affordability targets provided to them. Incidentally, if there has been a positive aspect to the pandemic’s having forced changes in how we do business, it’s the efficiencies we’ve gained in moving online many of the services that have traditionally been provided in person. We’ll continue looking for ways to move in that direction, while still delivering the level and quality of services our residents and other stakeholders expect.
By lowering those recurring expenses we improve our long-term affordability, which is reflected in the revised fiscal forecast presented alongside the proposed budget. On the revenue side it remains conservative, such as by assuming less growth from new development than in prior years, but the real difference is on the expense side, as projected General Fund recurring expenditures are held constant over the next five years. The forecast is structurally balanced throughout, and our 60-day minimum reserve would not be implicated until FY 2024. Of course, those projections are based on what we know now and will tend to change over time, whether due to economic conditions or to our own decision making.
The proposed budget does not include any new capital spending for streets and drainage, as a lack of clear direction from Council suggests our 20-year commitment to systematic local infrastructure improvements will soon come to an end. The last remaining projects under our current bond program are on track to start construction this fall, but with no successor program planned. Thanks to federal grant funding, unused sidewalk money and cost savings from earlier phases, there is some bond authority left over, and the proposed budget and fiscal forecast do conservatively assume a bond sale in August 2021. But that would happen only if there should be an opportunity for participation in regional drainage projects.
Among the issues we still have to contend with before adopting a budget are a cost of living adjustment and merit-based compensation step increases for employees, to ensure our continued competitiveness in the marketplace. Those costs, which are not included in the proposed budget, could be absorbed in the ending fund balance without impacting the tax rate, but because they’re recurring in nature they would have a cascading effect on the fiscal forecast in the years to come. We’ll also be looking at potentially carrying over from the FY 2020 budget some projects that have been deferred, including a police department management audit and a comprehensive fee study, and our annual contributions to the Vehicle and Equipment Replacement Fund. Those would also come out of the ending fund balance, but as one-time expenditures.
Council will consider those items, and any other budget-related questions that may come up, in workshop sessions before final adoption of the budget in September. The public hearing on the proposed budget has been called for August 10, and will be conducted telephonically unless by some miracle the COVID-19 situation in Harris County makes a surprise turnaround before then. Public comments may also be submitted in writing care of the City Clerk.
In presenting his proposed fiscal year 2021 budget, Assistant City Manager Brant Gary, who next week takes the helm as Interim City Manager, introduced it with the theme of doing more with less by working smarter, not just harder. Council’s objective of no new taxes would mean maintaining the same total revenue from existing properties year over year, by building the budget around the “no new revenue” tax rate (formerly known under state law as the “effective rate”). Instead, the proposal goes even further by leaving the nominal rate unchanged, which will result in some $300,000 less in tax revenue next year, accompanied by a two percent expense reduction in the General Fund and the elimination of three employee positions.
That’s where working smarter comes in, as all city departments were challenged to look hard and thoughtfully at their needs and at new ways of doing things to meet affordability targets provided to them. Incidentally, if there has been a positive aspect to the pandemic’s having forced changes in how we do business, it’s the efficiencies we’ve gained in moving online many of the services that have traditionally been provided in person. We’ll continue looking for ways to move in that direction, while still delivering the level and quality of services our residents and other stakeholders expect.
By lowering those recurring expenses we improve our long-term affordability, which is reflected in the revised fiscal forecast presented alongside the proposed budget. On the revenue side it remains conservative, such as by assuming less growth from new development than in prior years, but the real difference is on the expense side, as projected General Fund recurring expenditures are held constant over the next five years. The forecast is structurally balanced throughout, and our 60-day minimum reserve would not be implicated until FY 2024. Of course, those projections are based on what we know now and will tend to change over time, whether due to economic conditions or to our own decision making.
The proposed budget does not include any new capital spending for streets and drainage, as a lack of clear direction from Council suggests our 20-year commitment to systematic local infrastructure improvements will soon come to an end. The last remaining projects under our current bond program are on track to start construction this fall, but with no successor program planned. Thanks to federal grant funding, unused sidewalk money and cost savings from earlier phases, there is some bond authority left over, and the proposed budget and fiscal forecast do conservatively assume a bond sale in August 2021. But that would happen only if there should be an opportunity for participation in regional drainage projects.
Among the issues we still have to contend with before adopting a budget are a cost of living adjustment and merit-based compensation step increases for employees, to ensure our continued competitiveness in the marketplace. Those costs, which are not included in the proposed budget, could be absorbed in the ending fund balance without impacting the tax rate, but because they’re recurring in nature they would have a cascading effect on the fiscal forecast in the years to come. We’ll also be looking at potentially carrying over from the FY 2020 budget some projects that have been deferred, including a police department management audit and a comprehensive fee study, and our annual contributions to the Vehicle and Equipment Replacement Fund. Those would also come out of the ending fund balance, but as one-time expenditures.
Council will consider those items, and any other budget-related questions that may come up, in workshop sessions before final adoption of the budget in September. The public hearing on the proposed budget has been called for August 10, and will be conducted telephonically unless by some miracle the COVID-19 situation in Harris County makes a surprise turnaround before then. Public comments may also be submitted in writing care of the City Clerk.
