Page 15 - NRH FY20 Approved Budget

Rights of way are properties that are required in order to provide public services such as streets
and utilities. State law also allows certain privately owned utilities to utilize city-owned rights of
way through the payment of franchise fees. In the recent Texas legislative session a bill was
approved and signed into law that gives telecommunication companies that provide both
television and telephone services the ability to not pay the lower of these two franchise fees.
We anticipate a reduction of $238,000 in franchise fees from this change.

Capping property tax growth was a primary objective of the 86th session of the Texas
Legislature. The final result was a bill that requires voter approval for growth in the Maintenance
& Operations (General Fund) taxes by more than 3.5% annually. This tax cap does exclude
taxes collected to pay for Debt Service as well as revenue produced from new construction
added to the tax rolls. While this law does not go into effect this year, it does impact the FY
2019/2020 budget and the setting of the tax rate.

Fire and Police Service Additions

Growth in our population over the past decade is a positive factor, however, more citizens
equates to increased demands for public services. In the FY 2018/2019 Budget funding was
approved to hire six new firefighters to staff a fourth ambulance to offset the steady increase in
calls for emergency medical services. In order to spread out the cost of adding the fourth
ambulance, the firefighters were not hired until midway through the fiscal year. Including funding
for these firefighters for a full year increases the FY 2019/2020 budget by $257,000. A similar
situation exists in the Police Department where two police officers were added midway through
FY 2018/2019 to address the growth in calls for service. Funding these positions for a full year
in FY 2019/2020 increases the budget by $89,000.
Competitive Job Market

The City of NRH is primarily a service business and most of our services are provided directly
by people. While inflation is running under 2%, this does not accurately correlate into the growth
rate in City expenditures. In trades, labor and administrative positions we are often competing
with both governmental and private sector employers. While it is hard to compete with some of
the private sector salaries, we are able to attract employees who are interested in our solid
benefits, primarily health insurance. Public safety positions remain challenging to fill with
qualified candidates due to an overall decline in the number of individuals interested in going
into these fields. As other governmental entities scramble to attract qualified employees,
salaries are pressed upward. In FY 2018/2019 we increased sworn public safety salaries by 4%
across the board in an attempt to catch up the market for comparable area cities. Unfortunately,
many of these comparison cities also increased their salary ranges to the point that we are in
approximately the same market position as we were last year.

Market comparisons indicate that a 2%-3% increase is warranted for general government
employees and a 3%-4% increase is warranted for sworn Fire and Police positions. The budget
includes a 2% increase for general government employees on their merit date. Sworn Fire and
Police employees will receive a 2% increase on October 1, 2019 as the pay ranges are adjusted,
then employees moving through the step structure will receive a 4% step increase on April 1,
2020. Approximately 70% of Fire and Police employees are eligible for a step increase.

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