Lewisville City Council approves budget for FY 17, leaves tax rate steady

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Mayor Rudy Durham (left) and City Manager Donna Barron (right) go over the budget with the rest of the City Council, and city directors and department heads. The meetings are sparsely attended by anyone but city staff, although the public is invited. There will be two more budget hearings before the approved budget becomes official.

By STEVE SOUTHWELL
steve@LewisvilleTexan.com

The Lewisville City Council approved a $460 million budget for the 2016-17 fiscal year at its annual budget workshop Saturday. The property tax rate will remain steady at $0.436086 per $100 valuation— the same rate as this past year. Utility rates will see a 3.5 percent increase.

Lewisville uses fund budgeting, which accounts separately for things like general operations, utilities, capital purchases, and others. Each fund may have different legal sources of revenue, including taxes, transfers from other funds, or special taxes by district or special purpose. The General Fund is the largest fund, and is supported by tax dollars.

With this budget, Lewisville stays the course on achieving goals from the Lewisville 2025 plan, while maintaining tax rates near the bottom of its comparable survey cities.

Property values and taxes

The property tax rate consists of a maintenance and operations (M&O) rate of $0.318766 and an interest and sinking fund (I&S) rate of $0.117320. The M&O tax goes towards the regular activities of city government, while the I&S fund pays down bond debt used for prior construction and public works projects.

This year’s certified tax roll, at $8.5 billion puts values at 7.91 percent over last year’s final rolls.

The average home value in Lewisville for 2015–16 was $180,132. In 2016–17 it is $197,659. Although tax rates are staying the same, the rise in property value would cost the owner of the average home a $76.43 increase.

Rising property values mean that even at the same tax rate, the city will take in $1.9 million more property tax revenue.

The base budget was prepared based on a property tax rate of about 2.2 cents lower than the prior year, but council members elected to keep the tax rate steady, using the extra funds to invest in various unfunded priorities.

The city’s General Fund, the largest fund in the budget, will have a total revenue of $81 million. Sales tax receipts will account for $25.3 million, and property taxes will be about $35.6 million.

An improved economy means that sales tax receipts from the city’s 1 percent sales tax are also predicted to increase by $1.9 million.

The remainder of the revenue that makes up the General Fund comes from licenses, permits, fees, fines, charges for service, and other.

Although the property tax rate stayed the same this year, next year’s budget will likely have an increase of about 1.4 cents to the I&S property tax rate, to account for debt service on new bonds that voters approved in 2015 for public safety improvements, streets, and parks and recreational facilities.

Expenditures

The majority of the city’s General Fund budget goes towards salaries for the city’s 771 full-time employees, which accounts for 62% of the budget. Police and fire department personnel constitute the majority of those positions, and the largest part of the city’s General Fund budget.

The City Manager’s base budget included a 3 percent raise for city’s general government employees, and a 3.3 percent raise for police and 3.4 percent for firefighters. The City Council added 2 percent to that figure for market and merit raises.

Like most employers, the City of Lewisville is facing rising healthcare costs for its employees and their dependents. City Manager Donna Barron told the Council that healthcare costs are set to rise by 25 percent for the coming year. The city is budgeting $12,353 in healthcare costs per employee.

The city will spend $4.3 million for streets, signal, and drainage and sidewalk improvement and rehab.

Seven new full-time positions were added in this budget, including a new civil engineer, economic development manager, planner, sustainability specialist, library assistant, bilingual librarian, and human resources coordinator.

The council provided additional funding for other unfunded items, such as a new Mobile City Hall—which will use a fire department motor home to bring city services to remote parts of the city—various street and road repairs, new equipment for the fire department, and two part–time positions.

Budget process

Budget development starts each year in April, and is guided by city council priorities, the 2025 plan and other council-adopted plans. According to the presentation given to the City Council, each department conducts an analysis of strengths, weaknesses, opportunities, and threats, which is critical to the process.

Each year in August, the City Council meets in workshop session to go over the budget presented by the city manager, who typically presents a recommended base budget and tax rate, along with options. Those options include alternate tax rates, and unfunded priorities for the council to possibly fund. This year’s budget workshop was held Aug. 13.

At the workshops, council discusses options and chooses a tax rate, funding any unfunded items, if revenue can be found. In addition to the workshop, the council will hold public hearings at its Aug. 24 special meeting, and the Sept. 12 regular meeting. The budget and tax rate will get final approval at the Sept. 19, 2016 meeting.

Water and Sewer Utility

Lewisville’s Utility Fund is supported by water and sewer utility ratepayers, and provides the infrastructure and manpower necessary to deliver clean water, and treat sewage.
For 2017, it is projected to bring in $28.9 million. Revenue in the water utility is based on a normalized year, but may be higher or lower depending on the amount of rain the area receives, since a large portion of residents’ water usage is for irrigation.

The city’s water utility is facing increased costs this year, not just in compensation and healthcare costs for employees, but also for the water it purchases from Dallas Water Utilities, which is increasing by about $399,190. There are also various upgrades and equipment replacements, and the city will spend $377,000 to upgrade its payment system so that users can make automatic payments by credit card. These costs will come from the operating budget.

The utility fund will also spend $9.2 million in infrastructure investment, including various new water mains, line replacements, pump stations, and water treatment plant equipment. Of that, $2.5 million relates to water lines required to be moved due to proposed modifications to the dam.

The City Council discussed a program to change out water meters throughout the city. Faulty and aging water meters under-report usage, and are estimated to cost the city $577,289 per year in lost revenue. Although city staff proposed an $14 million Advanced Meter Infrastructure system where water meters would send data wirelessly, the council did not agree that the payback would be worth it. Instead, the council chose to approve a five-year program to replace water meters with manual read meters at a cost of $5.9 million.

Utility rates for the upcoming year will have a 3.5 percent increase, costing the average customer about $2.13 more per month. This amount covers the increased costs due to the meter changeout program, and various requests that had been unfunded, such as compensation plan adjustments (2 percent above the 3 percent already funded).

For More

The city budget lays out many more items of interest than can possibly be presented in this space. Look for more articles in coming editions of The Lewisville Texan Journal on specific programs funded in the coming year’s budget. For more details on the budget, you can read the preliminary budget online here.

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