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services, primarily accounted for in the General Fund, to services that are operated more like a
business such as the Utility Fund.

The following offers a general summary of major issues in each of the major city funds:

General Fund

Revenues to the General Fund increased by $1.76 million or 3.8% when compared to
the FY 2017-2018 adopted budget. Property tax revenue accounts for 36% of total
revenues to the General Fund. Sales Tax brings in almost 21.5% of revenues to this fund,
and the remaining 42.5% comes from other fees, fines, permits, licenses, and charges
for service. Revenues from property taxes are proposed to increase by approximately 7.7%.
This assumes a tax rate of $0.585 per $100 valuation. The increase in property tax revenue
results from increases in valuation on existing properties as well as the addition of new
construction. In addition, Tax Increment Financing District (TIF) #1 will be closing this
year and the incremental value has been added to the tax roll.

We are projecting a modest 2% growth in sales tax revenue this year, primarily due to Babe’s
Chicken Dinner House and Alamo Draft House opening in the coming fiscal year. Sales tax
numbers have remained relatively flat over the last several years even with the addition of
businesses as people are doing more and more of their shopping online.

Revenue from licenses and permits remains strong as a result of the continuing construction
boom. We anticipate construction activity will begin to decrease over the next few years as the
availability of platted lots decreases.

Revenue from franchise fees shows a modest decrease, as we continue to see a decline in
telephone access line fees as well as cable franchise fees as more and more residents are
reducing their use of wire based television programming and phone service and moving to
internet and wireless based programming and phone service.

Revenues from fines are essentially flat compared to the adopted budget. We are also
decreasing the contribution from the City Hall project reserves as planned.

Expenditures have increased by approximately 3.8% when compared to the prior year adopted
budget. This includes increases in the cost of providing the services that the city currently
provides along with additional patrol officers, additional firefighters to allow for staffing an
additional ambulance, and increasing funds for street maintenance. These budget
additions are outlined in more detail below. The adopted budget also includes a 2% market
adjustment and 3% merit increase for general service employees, and a 4% market
adjustment and 4% step increase for sworn public safety employees. Also included is an
increase in the city’s share of health insurance costs.

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