Page 23 - Hurst FY20 Approved Budget

work with our wholesale providers but have limited ability to impact their rates.

Under the city’s rate smoothing policy the Council considers small incremental rates
increases each year rather than more significant and infrequent rate increases. Each year the
city conducts a review of our operation and maintenance costs, debt service, and capital
needs and compares the required resources to our projected revenues. Utility revenue is
heavily affected by weather patterns and can cause large budget surpluses or deficits year
over year. The rate smoothing policy is intended to help mitigate similar changes in rate over
time. Over the last 20 years the average rate increase has been less than 4%. For 2019-2020
the Council approved a 2% rate increase under the rate smoothing policy that falls in line
with recent increase the past few years.

Personnel costs represent approximately 20% of Enterprise Fund expenditures. The
vast majority of costs are related to wholesale operations and system depreciation and
maintenance. The Enterprise Fund includes the same market rate increase of 2.5% for wages
that is included in General Fund. Other expenditures in the Enterprise Fund include meter
replacements and capital purchases for replacement vehicles and other equipment that
have reached the end of their useful lives.

Budgetary Objectives to Maintain City Services

Fiscal year 2019-2020 marked the final year before the impact of state legislation mandates a
3.5% property tax revenue cap. Additionally, 2019-2020 was affected by other state legislation
that eliminated certain public safety revenues and significantly reduced franchise fee revenues.
In order to maintain services and prepare for future budget years that will be subject to revenue
caps, the city placed a strong emphasis on maintaining services while evaluating programs. The
following short-term organizational objectives were achieved during the budget process and
contribute to the city’s financial sustainability.

• Maintain city services at the current level and enhance services only when justified,
and if funding is available. Funding is provided for city services such as public safety,
streets/drainage, community services, neighborhood services and water/wastewater
systems. City services expanded over the last two decades largely due to two separate
half-cent sales tax revenue sources approved by voters and dedicated to Community
Services projects and Police expenditures. Another significant special revenue source,
the storm water management fee, provides approximately $1 million per year. For FY
2019-2020 there were internal reorganizations to accomplish savings and improve
efficiencies. Some programs such as the crime victim’s liaison were expanded due to
grant funding while other programs like our animal services will be enhanced through
the approval of GO bonds to support the construction of a new animal services center.

• Provide for a competitive salary and benefit structure for city employees in order to
at-tract, and retain qualified staff to operate the city’s programs and services. The
operating budget continues to provide competitive wages and benefits for all employees.
Personnel salaries and benefits continue to be the major cost factor in the operating
budgets with 73.7% of the Gen-eral Fund Operating Budget being utilized for personnel
costs. As previously mentioned, the 2019-2020 budget includes a 2.5% COLA and other
market adjustments. Additionally, department di-rectors found efficiencies to help offset
health insurance increases. The city continues to fully fund our Texas Municipal Retirement
System (TMRS) plan and other key benefits important to at-tract and retain top talent.

7