Page 29 - Hurst FY20 Approved Budget

LONG TERM FOCUS

Multi-Year Financial Overview

The Multi-Year Overview is an essential component of each year’s budget process. Expenditures
are projected at an estimated growth rate reviewed each year, and funding strategies are
developed to provide for this growth. Potential revenue sources, cost-saving strategies, and debt
issuance are considered before property tax rate changes or utility rate changes are factored into
the plan to balance the projected budgets. Excerpts from the Multi-Year Financial Overview, and
the five-year summary of the long-term plan, are located in the Long Term Strategic Planning
Section of this document. The Multi-Year Financial Overview is presented to the City Council in
July or August prior to budget workshops held each year.

Capital Improvements Program

An important long term planning document is the Capital Improvements Program (CIP). The CIP
identifies existing and future needs, funding sources and project maintenance and operation
costs. The goal of the CIP is to identify and plan for future capital programs and to estimate
financial impacts. The plan is comprised of a complete listing of funded and unfunded capital
project needs that are identified by each operating department. The projects are prioritized and
ranked, taking into consideration the timing and immediate needs of the projects. A separate
CIP document has been prepared as of October 1, 2019, and is summarized as part of the 2019-
2020 budget document.

A funding source that addresses long-term capital project needs for the General Fund is the
Debt Service Fund, which pays principal and interest payments on General Obligation bonds
and Certificates of Obligation. From 1987 to 1994, the city chose not to issue bonds because
any new issue would require an increase in the debt component of the property tax rate. For
the ten years prior to 2006, the city was able to issue additional debt without raising the tax
rate because of increasing property values. However, community-based needs for capital
project funding changed the philosophy of no debt increases and the debt component of the
property tax rate increased from $0.0886 in 2005-2006 to $0.129897 for the 2008-2009 fiscal
year primarily due to voter-approved general obligation debt. The city has a strong history of
proactive management of our outstanding debt. Each year we evaluate capital needs, refunding
opportunities, and the bond market to ensure efficient use of debt where appropriate. The
city has issued voter approved debt for city facilities ranging from fire stations and the senior
center to infrastructure projects for streets and drainage. The debt rate peaked in 2012-2013 to
just over $0.16 to fund voter approved GO bonds for the construction of a parking garage and
Justice Center. Recently bonds have been issued for fire apparatus, road projects, and the voter
approved animal services center. The debt rate for 2019-2020 is $0.119063 and accounts for less
than 20% of our total tax rate.

As mentioned above, refunding has provided significant savings in debt service over the past
several years through low interest rates and no extension of maturity. Potential refunding,
or refinancing, of existing debt is evaluated on an ongoing basis and opportunities to take
advantage of lower interest rates will be exercised; however recent changes in federal laws have
limited the city’s flexibility in debt refundings. All city debt is issued with fixed interest rates and
provisions allowing for refinancing under favorable market conditions at certain time intervals.

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