Proposed city budget reflects COVID-19 challenges

 

By Colin Killian, Public Communications Manager

COVID-19 has affected just about every aspect of our lives since mid-March. At the City of College Station, we expect that impact to continue well into our next fiscal year, which begins Oct. 1.

The city’s proposed Fiscal Year 2020-21 budget —presented to the city council Thursday night — takes a strategic approach to address our community’s short-term, mid-term, and long-term needs in these uncertain times. The council takes a more in-depth look at the numbers beginning with Monday’s first budget workshop, followed by additional sessions on Tuesday and Wednesday.

The budget workshops can be accessed through Zoom. We’ll post the presentations from each day here:

A public hearing on the budget and tax rate will be Aug. 13. The council will consider adopting the budget and tax rate on Aug. 27.

The continuing pandemic has created unprecedented challenges. The proposed budget’s overriding themes are to maintain the organization’s financial stability, provide vital core services to the community, and to recognize the economic stress COVID-19 has placed on our citizens, businesses, and institutions.

That’s why the proposed $312.6 million budget includes no property tax rate or utility rate increases and reflects a prudent 8.3% reduction in spending. The tax rate remains at 53.4618 cents per $100 of assessed value.

The budget includes $265.8 million for operations and maintenance and $46.7 million for capital projects. The governmental fund’s portion totals about $100.6 million and includes the General Fund, which pays for public safety, public works, parks, planning and development services, and administration.

Enterprise budgets, such as utilities, are about $145.7 million. Special revenue fund budgets such as hotel taxes, community development, roadway maintenance, and impact fees total about $19.6 million and have restricted uses.

Revenue sources for the General Fund include property and sales taxes, fines, service charges, and a transfer from enterprises such as utilities that are city-owned.

Sales Tax Revenues 

The sales tax rate is 8.25%, of which 6.25% goes to the state, 0.5% goes to Brazos County, and 1.5% goes to the City of College Station. Sales tax is a significant revenue source for the General Fund, accounting for about 31% of revenues.

COVID-19 has dramatically impacted sales tax revenue for FY 20 and beyond. Accommodations, retail, and food services have been hit especially hard — and they comprise about 68% of our sales tax base.

Year-end sales tax revenue for FY 20 is expected to be down almost 6% from FY 19. The estimated recurring sales tax is projected to fall another 13% to about $25.6 million in FY 21. That’s a drop of about $5 million from FY 19. The city doesn’t expect sales tax receipts to return to the FY 19 level until FY 25.

Property Values

Property valuations are determined by the Brazos Central Appraisal District on Jan. 1 and don’t reflect the economic impact of the stay-at-home orders and the COVID-19 pandemic. The total preliminary net taxable certified value of College Station property for 2020 is about $10.1 billion, an increase of over 2.05% from 2019. However, the estimated property value under protest is almost $1.1 billion. Final property values will be available near the end of July.

About $156.6 million in new value was added to the tax rolls, but existing values are projected to rise by less than a half percent. That means almost all of the 2020 increase in property value is attributed to the new value.

Property Taxes

The City of College Station’s property tax rate of $.534618 per $100 of assessed value is projected to remain in the lower third in Texas and is less than 24% of the total tax rate ($2.271034) paid by residents. The College Station Independent School District’s rate is $1.238916, while Brazos County is at $.4975.

The no-new revenue and voter-approved tax rates are not yet available from the tax office. The no new revenue rate is the rate that will raise the same revenues on the same properties this year as last year. The voter-approved rate (formerly known as the rollback rate) is the highest that can be adopted before the city is required to conduct an automatic election for voters to approve the adopted tax rate.

Given the uncertainties in property and sales tax revenue, the budget increases the electric utility transfer from 8.0% to 9.0% to help stabilize the General Fund.

Workforce

In March, the city instituted a flexible hiring freeze affecting as many as 60 positions across the organization. That action results in salary, benefits, and overtime savings of about $2.9 million. The budget reflects jobs that were reclassified, reallocated, or exchanged with other departments to meet service requirements in response to COVID-19.

City workers are being asked to do more than ever. The number of workers per 1,000 citizens has declined from 9.7 in 2011 to 7.88 after the hiring freeze. Dozens of police and fire professionals were added in the past decade, but their numbers are still below recommended levels.

City Services

In addition to the hiring freeze, city departments will reduce overtime, supplies, professional services, temporary help, travel, and training, resulting in $2.5 million in savings.

While that level of decrease isn’t sustainable in the long term, department leaders believe it is appropriate for the community under the circumstances. If these decreases continue beyond FY21, significant service level reductions could include public safety, public works, parks programming, utility services, and other city services.

Capital Projects 

The city is taking a measured approach when it comes to significant capital projects, which include a new city hall and a major wastewater treatment plant expansion. The development of a baseball/softball complex has been deferred, and the final phase of Veterans Park & Athletic Complex has been canceled.

The $46.7 million proposed for capital improvement projects is a decrease of about $15 million (34.3%). Funding sources include certificates of obligation supported by tax and utility rates, cash reserves, utility funds, impact fees, and the hotel tax fund.

The development of the City of College Station’s FY 21 budget has been like no other. The proposal reflects a strategic approach to accomplishing the community’s goals during a challenging time in our history. The city plans to remain as flexible as possible in dealing with the economic and societal effects of the COVID-19 pandemic.

 


About the Blogger

Colin Killian has been with the City of College Station since 2010 after serving 23 years as the associate media relations director for the Texas A&M Athletics Department. Killian has also worked as a reporter and editor for the Corpus Christi Caller-Times and Lewisville News. A native of Hobbs, N.M., he graduated from Texas Tech with a bachelor’s degree in journalism/political science.


 

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