That being said, after spending much of the last week reviewing Kyle City Manager Scott Sellers’s proposed budget for FY2017-18, I could easily label it "the ideal budget for Kyle at this time." And I guess I really shouldn’t be surprised at that. Sellers proposed a budget one year ago was exactly the ideal budget for Kyle at that time. Although I don’t agree with Sellers’s methodology — I have been a strong proponent for budgeting for outcomes for more than a decade now — this city manager seems to have the knack for nailing exactly the right budget for Kyle at any point in time.
Mayor Todd Webster was even more definitive about Sellers’s proposed budget for the upcoming fiscal year.
"In all the budgets I have been associated with," Webster said at the conclusion of this morning’s special council meeting to discuss the manager’s budget proposal, "this is the very first one where I really felt that the budget was accomplishing everything I felt really needed to happen. On the whole, it’s light years above some of the budgets I’ve been looking at in terms of finally getting this community to a place where we’re getting ahead of this growth curve."
This year’s proposal provides funding not only for everything the city needs to manage its explosive growth, but also a lot of what the citizens have been wanting. And it rewards the efforts of groups such as KAYAC, who can look at this budget and realize their voice has been heard by those at the very top of the budget-formulating process as this proposal includes such KAYAC-promoted amenities as a skate park/water park. Not only that, Sellers managed to pull off this accomplishment while still recommending a half-cent reduction in the city’s property tax rate.
Then, at this morning’s special city council meeting during which Sellers officially unveiled his proposed budget, he told council members it’s possible that reduction can even be greater. In fact, he said, because of the 12.8 percent increase in property tax values, the number certified late Thursday evening by the Hays County Appraisal District, the property tax rate could conceivably be reduced by 3.3 cents per $100 valuation and still provide the same revenue. Specifically, Sellers told the council it could reduce the tax rate from its current $.5748 per $100 valuation to $.5418, a 6 percent tax rate cut.
"That would allow us to put forward the same budget that we have," Sellers told the council this morning.
Webster said he was surprised by the appraisal district’s number and called Sellers’s proposed cut "a lot better than I thought we would be able to do. As long as the budget is meeting what our priorities are, I can’t see a reason why we wouldn’t lower it to that number."
Council member David Wilson said the lower number "absolutely meets my expectations. That’s the number I had in my mind a month or so ago."
Council member and mayoral candidate (and so far, the only announced mayoral candidate) Travis Mitchell said "To be able to offer a lower tax rate while simultaneously increasing the services we’re providing is right in line with what I have as the highest ideal of what this council and this staff can deliver to our citizens. It’s a great thing, as I see it."
From Mayor Pro Tem Damon Fogley: "I am happy with the (new) rate also. I’ve always been a supporter of lowering rates since I got here," especially, he cautioned, because of new Emergency Service District’s taxes which, he said, "will kick in" sometime in November and will affect Kyle residents.
Interestingly, however, council member Daphne Tenorio cautioned against the reduction, saying she would "prefer to keep our tax rate steady."
"We have to be honest with what’s coming ahead and that’s what concerns me about lowering the tax rate three cents," she said. "We’re lowering the rate three cents right now but we’re going to add another $20 to your water bill. And that concerns me."
Finance Director Perwez Moheet acknowledged that while this proposed budget calls for no increases in rates or fees for city-provided goods and services, future hikes are inevitable. For example, he said, as he informed the council earlier this year, the Alliance Regional Water Authority will be issuing $60 million of debt between 2019 and 2022 to fund Kyle’s share of a project designed to provide water for Hays County communities.
"In 2019, we may have to adjust the water rate," Moheet said. "But we don’t know yet until I see the final structure of their financing. They had talked about getting state funding, Swift funding, which all have imbedded discounts."
But, down the line, he said, "we’re looking at between $31 and $36 per month (water rate) increase to a residential customer. That’s predicated on (the debt issuance) is going to happen on time, it will be the same amount and what interest rates will be at that time. That’s rough, preliminary numbers."
To help fund the expansion of the wastewater plant, Moheet said, in addition to the contributions from developers, "We’re looking at between a $5.50 and $7 per month increase. But that also depends on when we go into the bond market, what the actual size of the bond will be, what the interest rate will be and the term of the bonds that we decide to issue."
Webster said it is still to be determined whether water fees will "bear the entire burden" of paying off that debt. "You can cover some of that through the tax rate, the General Fund. So it’s not accurate to say a $36 water fee increase is actually going to happen."
Tenorio said, however, her concern was that "we did at one time lower the tax rate and then the very next year we had to up the tax rate. So I would prefer to keep our tax rate steady versus lowering it and then in 2019 having to up it again. We’ve lost our savings. We have no more cushion. I would love to see a three cent decrease in the tax rate but I’m worried that it’s a little premature."
Moheet said the city had not "lost our savings," and, in truth, was above the required fund balance.
Tenorio, however, appeared to do an about face at the end of the meeting, agreeing with the rest of the council to pass a resolution to place on a future council agenda an action item to adopt a tax rate not to exceed the rollback rate (currently estimated at that $.5418 number).
On another subject, Sellers informed the council about major savings the city found in the purchase of heavy equipment, which, he said, "the city is always in need of." Sellers said he set aside $100,000 for the purchase of one piece of heavy equipment that was needed, yet could only be used in limited situations.
"About this time we received an e-mail from military surplus saying ‘We have a discount on a lot of tow vehicles that we are basically giving away to governmental entities for $5,500 each’," Sellers said, "So we went down to the federal surplus yard in San Antonio and we looked through that yard and picked out a vehicle with an engine rebuilt in 2011. It runs extremely well. We drove up here with that and other pieces of equipment. We found a forklift we’ve needed for a long time for $4,500 which would have cost us over $40,000 through regular channels. We also purchased another vehicle we can use as a water vehicle that frees up a dump truck we were using as a water truck as well.
"So we initially had $100,000 budgeted for the truck and trailer," the manager said, "and now we’re going to have a truck, a trailer, a forklift and a water truck for $17,000."
Major concerns of the council members about the budget included:
- Mitchell’s recommendations for two additional, but unfunded, police positions in recognition of a recommendation in the soon-to-be released results of a Police Department audit.
- Council member Shane Arabie’s recommendation for the hiring of two new inspectors to be paid from the various utility funds.
- Council member Becky Selbera’s wishes for the city to do more to help augment charity drives conducted by non-profits. Other than establishing a fund for which various non-profits could apply for funds from, other council members suggested recommending specific charity-driven projects the city could, at least, partially fund through an RFP process.
- Selbera’s and Fogley’s desire to expedite by two years the required engineering services for the Post Road improvements and include that $250,000 into CIP budget for this fiscal year.
Click here to view the city manager’s slide presentation on his proposed budget for FY 2017-18. Click here to view his entire budget proposal.