Page 24 - Hurst Budget FY21

sales). As such, local taxing units, not the state, can lose tax revenues under a scenario where taxable
sales delivered out of a taxing unit’s jurisdiction exceeds the value of taxable sales delivered into their
jurisdiction. Recent decisions by the U.S. Supreme Court now allows states to require online retailers
to collect sales tax but his has not had a significant impact on our sales tax revenue. Additional actions
by the Texas Comptroller related to online sales have prompted a significant discussion on
consummation of a purchase and of those sales tax dollars will be allocated to the origin or the
destination of the online purchase. The Comptroller made a final ruling on the issue that will be effective
October 1, 2021 with the express intent to allow for interested parties to seek a legislative change
during the 2021 session. As it currently stands, the ruling would likely be favorable to the City of Hurst;
however, legislative changes could overrule the Comptrollers position on the issue.

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, 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;
however, the pandemic altered those plans resulting in an abbreviated session with the Council during
our annual budget workshop. The uncertainty and ever changing nature of the impact of the pandemic
underscores the inherent weakness in multi-year planning; however, the city remains committed to
considering the future impact of current revenue and expenditure decisions, inclusive of the current
conditions associated with the existing pandemic.

Capital Improvements Program

An important aspect of long term planning 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 listing of funded 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. For more information, please see the CIP section of this 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 market to ensure efficient use of debt. 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

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