Page 302 - Southlake FY20 Budget

Debt Service Funds Expenditures

If all taxing entities hold their tax rates steady for
Strategies 2.78% FY 2020, 2.78% of the total tax bill for an average
Debt
residential property will go to support the City’s
annual FY 2018 debt payments. This is equivalent
to $474 annually or about $40 per month.

Cash Funding
$55M

Since 2006, the City
has used the Strategic
Initiative Fund to pay
cash for capital projects. What you should knoW about the City’s debt management
Over $55 million has
been allocated for this
purpose. This means less
borrowing. Additionally, $19.3M
this use of cash funding
when combined with The City continuously
aggressive amortization analyzes market conditions to
schedules has allowed determine if more favorable
interest rates are available
the City to reduce Some debt is necessary for existing debt. If it is, the Voter-approved special
tax levies have been
and appropriate to
its total outstanding ensure intergenerational City will refinance (or refund) pledged to pay for
property tax supported equity. In other words, existing debt. Most recently, bonds used to construct
debt by 61% since 2010. paying cash for 100% of the City refunded almost $19.3 facilities identified in the
capital projects would million in debt in FY 2019. This City’s parks and trails
front-load the cost of resulted in almost $2.9 million master plans, as well as
20-year assets on today’s in savings over the life of the public safety facilities.
taxpayer. debt.

Three highlights about FY 2020 debt

1. No new property tax supported debt
Aggressive For the sixth consecutive year, the City will use cash to fund all General Fund capital
Amortization needs. For FY 2020, $8.3 million in cash will be used to pay for these capital projects.
This means that property taxpayers will not see an increase in the amount of debt that
96% they are responsible for repaying.

The City’s conservative approach to managing debt, aggressive amortization, consistent
The City uses aggressive 2. City’s debt tax rate reduced for second consecutive year
amortization schedules. monitoring of favorable market conditions, and refinancing existing debt all contributed
As such, initial debt to reducing the debt portion of the City’s tax rate by 20% since FY 2018, bringing the
payments may be higher, proposed debt rate for FY 2020 to $0.08 per $100 valuation.
but borrowing costs are
lower and debt is paid 3. Property tax supported debt per capita reduced
off more quickly. Ninety- Through the City’s use of cash and aggressive amortization schedules when debt is
six percent of the total issued, the City has reduced the property tax supported debt per capita from $3,506 in
outstanding debt will be 2010 to $1,197 in 2020.
paid off within 10 years.

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