Page 429 - Hurst FY19 Approved Budget

Debt Service Fund Summary

Moody’s Investor Standard &
Services Poors
General Obligation Bonds Aa2 AA
Water & Sewer Obligations Aa2 AA
Half Cent Sales Tax Bonds Aa3 AA

Debt Management

The Hurst Charter sets a limitation on the maximum total tax rate at $1.50 per $100
of valuation. Any increase in the debt component will decrease the funds available
for maintenance and operations. Currently, one cent on the tax rate generates
approximately $220,000 in revenue equating to $33 million at the City’s maximum tax
rate.

Several factors influence debt management, such as property values, the tax rate, the
amount of debt, and the timing of issuance. In fiscal year 1997-1998, property value
increase of about $34.4 million dollars decreased the debt rate from $0.129541 to
$0.12951. For fiscal years 1999 and 2000, the debt ratio continued to decline, with
increases in property values of $58.7 million and $80.4 million offsetting a reduction in
the tax rate and the issuance of bonds in both years. For the 2000-01 budget year, the
City’s bonded indebtedness rose; however, the debt rate decreased to $0.112334 due to
a $176 million increase in total taxable value. The most dramatic value increase occurred
for fiscal year 2001-02. The debt rate decreased from $0.112334 to $0.11045 because
of a $254 million increase in property values; however, the annual principal and interest
payments increased by $221,835 or 13.4% over the previous year. The debt issuance
that year conservatively utilized funds that could have been used for the General Fund
operating budget. The property tax rate also decreased by one cent, which limited the
funds available for the General Fund. A conservative approach in debt management
will continue to be used in future years. Property values declined during the recent
recession, but they have stabilized over the past two years. Over the last decade debt
rate increases have been associated with the issuance of voter-approved debt. Voters’
approval of an $11.7 million bond election in 2005 resulted in a tax rate increase of
3.6 cents. Debt proceeds were used to construct a new fire station and senior center.
Street/Drainage and Library improvements were also included in the 2005 bond
election. In May 2012, voters also approved a $16.5 million General Bond Election for
the construction of a new Justice Center and related parking area. The issuance of this
debt resulted in a tax rate increase of 3 cents. Savings associated with several bond

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