Page 7 - FY 2009 Proposed Budget

Manager’s Message
Table of Contents
Table of Contents

and demonstrate an acceptable good-faith effort toward achievement of targeted MWBE utilization. During the third quarter of
FY 2020, the City achieved its aspirational goal of 25% MWBE participation in contracted procurements. However, spending
with African American contractors clearly lags the progress made in other demographic categories. Our social equity initiatives
also include continued support for patrons of our parks and recreational facilities. In FY 2021, the General Fund’s social equity
support for programs in the Park Performance Fund will double, from $140,000 to $280,000. This will reduce the upward
pressure on fees charged to participate in our recreational programs.

Managing the Economic Challenges
One of the potential longer-term impacts of the pandemic and resulting job losses will be the effects on housing values. By the
time the pandemic began in late winter 2020, most property tax revenue for the fiscal year had already been received. However,
with rental evictions and mortgage foreclosures expected to rise in the coming months, property values could see declines for
FY 2021 and beyond. In addition, statutory changes (S.B.2, 2019) passed by the state which limit property tax revenue growth
have constrained the rate flexibility typically available to municipal governments. Taken together, these conditions pose
significant challenges to the General Fund’s largest single source of revenue.

Sales tax revenues could also struggle to regain their footing throughout 2021 and 2022. These revenues showed strong growth
over the past few years, although there were signs that growth was slowing even before the onset of the pandemic. The jobs
lost in this recession, already beyond the levels seen during the recession of a decade ago, could take even longer to return.
Many of the job losses will be permanent, as the already-struggling brick-and-mortar retail economy is facing accelerated store
closings as more retail activity migrates to the online environment. The loss of disposable income, and reduced ability to afford
the City’s entertainment, hospitality and retail opportunities, could result in a downward trend of even more closed businesses,
lost jobs, and less travel. This in turn would have implications for almost all of the City’s revenue sources, particularly those
related to construction, development, and recreation.

Despite the challenges, the City is fortunate to have options that are not available to many other cities. Revenues received by
the natural gas funds, in addition to the potential for funding through the Arlington Tomorrow Foundation, create flexibility to
address the community’s needs. In April, the City Council adopted revisions to the Park Fee Fund ordinance that allow the use
of these fees to support operating and maintenance costs associated with the City’s parks. The City has also modified its fiscal
approach in several areas to minimize the impact of the downturn. Council’s approval to move forward with the sale of pension
obligation bonds, at a time when interest rates are at historical lows, will allow the City to meet its unfunded pension obligations
at substantially reduced costs. The bond sales necessary to support the City’s Capital Budget are structured to emphasize
maintaining our public infrastructure while maximizing the tax revenues available for operations and maintenance costs in the
General Fund. Negotiations are currently in progress for modifications to the City’s landfill lease agreement with Republic
Waste Services that could shift future financial obligations associated with closing and maintaining the site in an environmentally
safe manner to Republic if an agreement can be reached.

New challenges can lead to new opportunities. The pandemic has accelerated our use of new technologies for working remotely
and communicating with each other. In talking with our department directors and managers, my sense is these efforts have
been more successful than I would have imagined, and I expect these new technologies will feature more prominently in our
everyday work lives long after the pandemic and economic downturn have been successfully navigated.

Despite the downturn, our obligations to the state will continue in FY 2021. As in years past, the City sends a notable amount
of the revenue it collects to Austin. In the current fiscal year, these included sales tax collection service fees of $2.34 million,
fines and fees collected by the Municipal Court of $4.23 million, and payments to other state agencies of $1.19 million, totaling
$7.76 million in FY 2020. We expect similar amounts to be payable to the state in FY 2021.

Although we have made every effort to minimize costs in FY 2021, business operations require certain expenditure increases
that we cannot avoid. These will include costs for the Tarrant Appraisal District to appraise property values ($39,753), insurance
premium increases ($121,615), and other contractual obligations for software maintenance, mowing services, and fleet
maintenance totaling $205,645. The Budget also includes $708,984 for public safety increases, primarily for forensic testing

2021 Adopted Budget and Business Plan iv City of Arlington, Texas