City Council Meeting

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G.5.

Meeting Date:	09/21/2021
Contact:	Tracy Cormier, Managing Director of Financial Services

COUNCIL ACTION

Motion by Councilmember Brown-Patrick with a second by Mayor Pro Tem Byrd to approve the FY 2022 budget as presented. Motion passes 6-1.

Motion by Councilmember Brown-Patrick with a second by Councilmember Chism to approve the property tax revenue increase as reflected in the FY 2021-2022 Annual Operating Budget when compared to the FY 2020-2021 Annual Operating Budget. Motion passes 7-0.

AGENDA ITEM:

Conduct a Public Hearing and consider an Ordinance adopting the FY 2022 Budget, Capital Improvement Plan, Business Plan, Civil Service Roster, and Setting Certain Fees for FY 2021-2022 Pursuant to Article VII of the City of Desoto Charter

a. Consider approval of a property tax revenue increase as reflected in the FY 2021-2022 Annual Operating Budget when compared to the FY2020-2021 Annual Operating Budget

BACKGROUND:

The proposed Budget and Capital Improvement Plan (CIP) were presented to City Council at a Special Council Meeting held on July 8, 2021. Discussions on the proposed items were held during budget workshops on July 22 & July 23, 2021. The City Council Business Plan was reviewed and discussed at the City Council Summer Retreat held on August 13 & 14, 2021.

The proposed General Fund and Debt Service Fund budgets were also discussed at that time. The tax rate necessary to pay debt obligations and provide the level of operating services as proposed in the budget is 70.1554 cents per $100 valuation, which is the same rate as Tax Year 2020.

The proposed rate is composed of two parts, the debt service rate and the maintenance and operations rate. The debt service rate is 12.5019 cents per $100 valuation, which is a reduction from Tax Year 2020 rate of 15.1394 cents. The maintenance and operations rate is 57.6535 cents per $100 evaluation, an increase from Tax Year 2020 amount of 55.016 cents. The overall proposed tax rate is the same as Tax Year 2020. Adopting this tax rate will enable the City to cover the cost of additional personnel and associated benefits, supplies and equipment costs, contractual services, and professional fees.

The summaries of the FY 2021-2022 Budget, CIP, and Council Business Plan are available on the City's website at www.desototexas.gov and at the Desoto Library, Senior Center, and the Action Center of the Desoto Jim Baugh Government Center.

FINDINGS:

Staff is proposing a tax rate of 70.1554 to fund debt and general fund obligations, which is higher than the no-new revenue rate of 65.8695 and lower than the voter-approval rate of 70.9314. With the proposed rate being lower than the voter approval rate, the City is not required to hold an election. The FY 2021-2022 budget will raise more revenue from property taxes than last year's budget by an amount of $3,037,622, which is an 8.52% increase from last year's revenue budget amount. State law requires that Council acknowledge this fact after adoption of the Budget Ordinance and before considering the Tax Rate Ordinance. The property tax revenue to be raised from new property added to the tax roll this year is $756,686. The budget and all supporting schedules are on file with the City Secretary and are open to the public for inspection.

Annually, the City approves the 5-Year Capital Improvement Plan. The FY 2022-2026 Capital Improvement Plan has been established. Projects identified for FY 2022 and beyond are currently unfunded, with a funding source to be established at a later date. The FY 2021-2022 Business Plan is also submitted as part of the budget process.

Under Section 102.007 of the Local Government Code, after approval of the budget and before approving the Tax Rate Ordinance, City Council will need to take a separate vote to ratify a property tax revenue increase of $3,037,622 as reflected in the FY 2021-2022 Annual Budget when compared to the FY 2020-2021 Annual Operating Budget. This year's budget utilizes more property tax revenue than last year's budget.

FINANCIAL IMPACT:

The total tax rate required to finance this budget is 70.1554 cents per $100 of valuation, with the maintenance and operating rate of 57.6535 cents per $100 valuation and the debt service rate of 12.5019 cents per $100 valuation. This overall tax rate is the same as Tax Yar 2020.

The Sanitation Fund budget for FY2021-2022 has a proposed 4% increase in the monthly sanitation rate from the current rate of $23.39 to $24.33. The increase is proposed to maintain current service levels and cover increased recycling costs incurred by the City.

This budget will raise more total property taxes than last year's budget by $3,037,622 or 8.52%, and $756,686 of that amount is tax revenue from new property added to the tax roll.

RECOMMENDATION:

Staff recommends that the City Council conduct the Public Hearing as scheduled and then consider two separate motions:

a) Staff recommends that the City Council approve the Ordinance adopting the FY 2022 Budget, Business Plan, Capital Improvement Plan, and Civil Service Position Authorization.

b) Staff recommends that the City Council move to ratify a property tax revenue increase as reflected in the FY 2021-2022 Annual Operating Budget, when compared to the FY 2020-2021 Annual Operating Budget. This budget will raise more total property taxes than last year's budget by $3,037,622; or 8.52%.

MANAGEMENT REVIEW

Attachments
FY22 Budget Ordinance
Budget Ordinance Exhibit A
Budget Ordinance Exhibit B CIP
Budget Ordinance Exhibit C Civil Service Positions
Budget Ordinance Exhibit D City Council Business Plan
City Manager Summary
FY 22 Budget Presentation