Page 34 - Hurst FY19 Approved Budget

law enforcement. For the 2018-2019 budget, property tax revenue is expected to
increase overall by approximately 8.6% and is driven by increases in property values.
This increase is helping to offset decreases in other revenue categories and support
our economic development obligations; however, future laws may cap the amount
of property tax revenue received by cities. Sales tax revenue is budgeted for a minor
decrease but is essentially flat. The adopted budget includes a 1.5% allowance for
uncollectable property tax revenue and an 10.47% reserve for sales tax revenue. The
large reserve for sales tax revenue is driven by the quick and direct impact economic
conditions has on retail sales. There is no change in the city’s sales tax rate as it is already
equal to the maximum rate allowed by state law (2%). The property tax rate is slightly
lower than the prior year dropping from .58094 to .58 per $100 in valuation. The city also
budgets full employment costs for all positions, while vacancies will occur throughout
the year this budgeting approach mitigates against other economic impacts. The city
also maintains strong fund balances or reserves for emergency needs maintain an $8
million reserve in special projects in addition to maintaining reserves equal to 90 days
in the General Fund.

Property Tax Revenues

Each year the General Fund works through the challenge of setting the property tax
rate to fund services and programs. The proposed budget cannot be prepared without
the Certified Tax Roll received no later than July 25th from the Tarrant Appraisal District
(TAD). Once the roll is received, the tax rate is set based on both the debt rate needed
to pay for the city’s bonded indebtedness and funds necessary for maintenance and
operations in the General Fund. The tax rate distribution for 2018-2019 allocates 81.3% of
the adopted rate ($0.58) to operations and 18.7% to debt. This is a favorable distribution
given the benchmark set forth in our debt policy of a 25% maximum allocated to debt
service.

The tax roll values are unknown until TAD certifies the Final Roll. Property value
appraisals for next year’s budget will begin in January 2019. From tax years 2008 to
2018, values increased by $852 million and now total $3.62 billion. Values in tax year
2008 peaked prior to the recession where the city lost over $25 million in value before
bottoming out in 2011. Net taxable values in tax year 2018, which fund the 2018-2019
budget, increased 7.77% over the previous year. When exemptions, protested values
and the Senior Tax Freeze impacts are considered, the net taxable value increase of
approximately 6.68% is positive when compared to conservative budget projections
calling for value growth between zero and 2%. This year’s increase represents value
growth in Hurst due to an improving regional economy and Hurst’s premier location
in the Dallas/Fort Worth metroplex. The Council’s recognition of capital and economic
development needs, coupled with decreasing revenue in sales tax and court fines, led
the Council to exceed the effective rate. This means the city will see an increase in total

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