Page 219 - City of Arlington FY19 Adopted Operating Budget

Capital Improvement Program

certificates of obligation debt principle annually. As this debt is retired, it allows the City the capacity to issue more bonds to fund
new capital projects for future bond elections.

Capital Budget vs. Operating Budget

Although the City’s Capital Budget and Operating Budget are Adopted in two separate cycles during the fiscal year, they are
nonetheless connected. The City’s bifurcated tax rate is the most prominent example of this. As stated above, the City’s total
FY 2019 tax rate of $0.6348 is divided between an operating levy ($0.4428) and a debt service levy ($0.1920). In order for the
City to increase the operating levy and keep the overall tax rate the same, the debt service levy would have to decrease. This
translates to fewer dollars that can be utilized for debt service, as well as less dollars that can be spent on capital improvements.
In addition, both the capital and operating funds are profoundly impacted by an increase or decrease in housing values.
Additionally, it is imperative to remember that most capital projects will increase the City’s operating budget expenditures as
well, since the short-term maintenance and operations of new capital is budgeted in the City’s operating funds.

While the debt service property tax levy does comprise the primary source of funding for the capital budget, the City supplements
these funds with other sources, such as impact fees, aviation fees, interest earnings, gas revenues, and park fees. These other
sources can either directly fund capital projects or help to fund debt service for certificates of obligation. For example, the
Convention and Event Services Fund and the Park Performance Fund both make transfers into the Debt Service Fund in order
to service certificates of obligation debt used for capital projects. For more information, a list of funding sources can be seen in
the individual capital project summaries.
Conversely, capital funds will annually make payments to operating funds for service charges. These service charges occur
when departments provide services that are paid for out of operating funds, such as building inspections or surveys, in
conjunction with ongoing capital projects. For fiscal year 2019, the City is currently budgeting for approximately a $1.7 million
impact to the General Fund from capital funds for service charges.
In addition to general obligation bonds and certificates of obligation, the City utilizes commercial paper, a short-term financing
instrument that typically matures within nine months, to assist in short-term cash flow for the immediate funding of capital
projects. After commercial paper has been utilized, the City will use a portion of its general obligation bond sale to refund the
commercial paper, effectively turning it into longer-term debt.

Capital Project Updates

Below is a list of recent capital project competitions that resulted in budgetary savings.

 Water SCADA Data Management Upgrade Project – New Server and development of enhanced operational reports to
improve data collection for Water Treatment. Original Budget $270,982; expended to date $135,491; estimated project
savings $134,491.
 Arlington Municipal Airport Drainage Improvements Project – Drainage improvements at the Arlington Municipal Airport
to mitigate flooding at some of the airport hangers. Original budget $353,052; expended to date $308,378; estimated
project savings $44,674.

2019 Adopted Budget and Business Plan 204 City of Arlington, Texas