18 - Proposed Budget Discussion and Direction

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out line items like we have today. If the Governing Body were to prefer a much more summarized budget, we could certainly look in to what would need to be done to accomplish this for FY21/22, but please know that by doing this, you do lose transparency. At the same time, there can come a point to where you have too many line items such that every expense becomes its own line. I believe our budget has found the happy middle ground — not to say there could be some improvement as I become more familiar with it in time. In addition, while I trust our Departments to faithfully and frugally handle their budgets no matter the approach, I also know that having detailed broken out line items has the natural impact of forcing departments to pay careful attention to each and every purchase. If at any time the reader of this Memorandum has any questions, please contact my office at City Hall. I will be more than happy to answer any questions you have. Summary Prior to getting started with the substance of this Memorandum, I would like to present to you the summary results. Of greatest interest to most any Council Member and Citizen is the impact of the proposed budget to the Property Tax Levy. I will discuss this more later in this Memorandum, but the Operational and Maintenance as well as the Debt Service Tax Rates are decreasing in FY20/21. The following represents a comparison of FY 18/19 vs. FY 19/20 vs. FY20/21 Tax Rates: Year O&M µDebt.......... Total FY18/19 $0.43831 $0.11364 $0.55195 FY19/20 $0.40868 $0.10740 $0.51608 FY20/21 $0.40229 $0.08290 $0.48519 Preliminary Difference -$0.00639 -$0.0245 -$0.03089 FY19/20 vs. FY20/21 Difference -$0.03602 -$0.03074 -$0.06676 FY18/19 vs. FY20/21 The Proposed FY20/21 Tax Rate will be the lowest Tax Rate for at least the last five years. The reasons for the above Tax Rate will be explained further in this Memorandum. This Tax Rate is, to the best of our determination using the Comptroller's Forms, in full compliance with Senate Bill 2, also known as the Texas Property Tax Reform and Transparency Act of 2019, approved by the Texas Legislature in 2019. Among other things, this Act is designed to restrict the City's ability to raise property taxes. This is a double edged sword. I will provide more details regarding this Act later in this Memorandum, nevertheless, given the restrictions this Act places upon Municipalities, it is strongly recommended that the City of Paris utilize the allowed restricted growth passed by the State Legislature in order to keep up with the vital services we offer the citizens. To fall behind under this Legislation could eventually prove irreversible thus detrimental to the desired operations and services the citizens expect of the City. Next, the second key element of interest would be the balancing of the Operational Funds. The City of Paris has numerous Funds, the vast majority of which are Special Purpose Funds which will be discussed later in this Memorandum. The Operational Funds though are Fund 01 — General Fund, 10 — Water and Sewer Fund, and 45 — Sanitation and Landfill Fund. These three funds make up the vast majority of the financial accounting and are what the City operates out of to perform its daily tasks. In addition, these three funds are unique from other funds in that they are supported primarily from Taxes, Fines, Fees, and Utility Rates, thus the importance to balance them. Through the hard work of many City Staff, we have completely realigned most every line item in order to capture and repurpose available funds for efficiency and to become even more effective in the duties we are tasked with performing, all while keeping the Property Tax Rate low. Basically, we are finding new ways to use the same funds, with a little growth as allowed by the Senate Bill 2, to get more accomplished as discussed in the Budget Message below. Page 2 of 15