Page 125 - Microsoft Word - Budget FY 19

CITY OF FOREST HILL

DEBT SERVICE FUND

The Debt Service Fund (Interest and Sinking Fund, or I&S) was established for the purpose of servicing the City’s
general obligation debt. Revenue sources for the fund include the interest and sinking (I&S) portion of the
annual ad valorem tax levy, tax collections penalties and interest, interest earnings, and interfund transfers.
Debt service payments are forwarded to the designated paying agent bank as semi‐annual principal and interest
requirements come due for each debt issue.

AD VALOREM TAX RATE AND DEBT SERVICE LIMIT

The maximum total ad valorem tax rate for home rule cities in the State of Texas (including the maintenance
and operation and interest and sinking portions of the ad valorem tax rate) is limited by statute to $2.50 per
$100 of assessed valuation. A portion of the $2.50 maximum is used for the maintenance and operations
portion of the tax levy. For the issuance of new debt, the State Attorney General limits the total I&S tax rate to
$1.50 (at a 90% collection rate).

The I&S portion of the proposed ad valorem tax rate for 2018‐2019 is $0.130965 per $100 of assessed valuation,
or 10.41% of the total adopted tax rate of $0.992873 per $100 valuation.

DEBT SERIES AND FUNDING COMMITMENTS

Funding percentage commitments for outstanding debt series are as follows:

Debt Series Debt Service Fund Inter‐fund Transfer Water and Sewer Utility
(I&S Ad Valorem Tax Community Fund
Levy) Development (Utility Rate Supported)
Corporation Fund
(Sales Tax Supported)
2007 Certificates of 100% 0% 0%
Obligation
2009 Certificates of 100% 0% 0%
Obligation
2011General Obligation 57% 0% 43%
Refunding
2014 General Obligation 100% 0% 0%
Refunding

DEBT SERVICE APPROPRIATIONS

Appropriations for the Debt Service Fund are adopted on an annual basis as part of the annual operating
budget.

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