Page 17 - Southlake FY20 Budget

Transmittal Letter

For FY 2020, a 3.7 cent reduction of the tax rate has been proposed as another method of providing tax relief.
The tax rate decrease will complement the exemptions adopted by Council, including the 20% homestead
exemption which is the maximum percentage allowed by State law.

Debt management has been a key financial principle that has guided the development of the City’s budget.
The City of Southlake has been able to manage debt so that 96% of the City’s current tax-supported debt will
be retired in 10 years.

Methods used to reduce the City’s debt obligations include:
• careful budgetary management;
• the use of voter-approved special revenue funds;
• aggressive amortization schedules;
• ongoing attention to refunding opportunities; and,
• the use of cash for projects when possible.

These techniques and strong bond ratings have allowed for a reduction in the City’s property tax-supported
debt by 61% since 2010, in spite of ongoing infrastructure development. Debt as a percent of assessed value
has decreased from over 3% in 2002 to a projected 0.34% in 2020. The FY 2020 budget proposes the use of
cash to fund all General Fund capital improvement projects for the year. Figure 3 shows trend information
for Southlake’s debt as a percent of assessed valuation.

Another important financial goal is ensuring the maintenance of optimum fund balances in operating funds,
in accordance with City policy. Maintaining proper reserves increases the organization’s ability to absorb
or respond to temporary changes in the environment or circumstances, such as an unanticipated event or
changes related to operating revenues. This budget provides for optimum fund balances, see Figure 4.

Approximately 70% of the City’s General Fund budgeted expenditures are related to personnel costs. It is the
City’s goal to provide for a fair compensation and benefit program to ensure a stable and high performing
workforce. Long-Term Debt Debt as % of Assessed Valuation
3.50% $120,000,000
Multi-year financial planning is 3.29% Desired Range
another budget development 3.00% 3.01% $100,000,000
consideration, perhaps one of the 2.79%
most important. The multi-year 2.50%
Capital Improvements Program 2.36% $80,000,000
(CIP) identifies the projects that will Percentage of Valuation 2.00% 2.07% 2.00%
be undertaken for the upcoming 1.71% $60,000,000 Dollars
five-year period, as well as projects 1.50%
beyond that timeframe. The 1.46% 1.49% 1.51% 1.49% 1.37% $40,000,000
operational impact of all identified 1.00% 1.19% 1.12%
projects is evaluated, and those costs 0.92%
are incorporated into future budget 0.50% 0.72% 0.58% $20,000,000
projections. Trends that depict the 0.44% 0.34%
long-term financial health of the City 0.00% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $-
are monitored and ultimately used Fiscal Year
to make deliberate decisions in order Figure 3: Long-term debt as a percentage of assessed valuation
to reach financial and service goals.

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