Page 71 - Hurst Budget FY21

Capital Budget Policies

New capital programs will not be budgeted and implemented until the full annual operating and maintenance costs
and financial impacts of the program are known. The replacement of existing capital that is worn out, broken or
costly to maintain will not be deferred in order to protect the City's capital investment. A multi-year capital
improvement plan is updated annually and is available as a separate document. The funded portion of the multi
year capital improvement plan is located in the Capital Improvements section of this document.

REVENUE POLICIES

Property Tax

The tax rate should fall within a reasonable range of comparable cities and should be adequate to produce the
revenues needed to pay for approved City services. The tax rate will not exceed the rollback rate as computed by
State of Texas Truth in Taxation laws. The Notice of Public Hearing on Tax Increase is located in the Appendix.
The City adopted a tax rate increase of approximately .028% cents to $.625159 per $100 valuation for 2020-2021.

Section 5.42 of the City’s Charter limits the maximum tax rate to $1.50 per $100 property valuation. This is one
dollar lower than the $2.50 allowed by state laws. The City’s total tax rate provides funding for general debt and
operations. So, any increase in operations or debt costs must be absorbed by growth in property values, any
offsetting reductions in costs, or by an increase in the tax rate. Debt issued for proprietary purposes shall primarily
be supported by associated revenues (e.g. water and wastewater fees for Enterprise Fund debt). However, the city
may pledge the City’s taxing authority to proprietary fund debt as a way to lower risk to investors and associated
costs.

Tax exemptions impact revenues generated from property taxes and debt service payments. The City grants a 20%
homestead exemption, $35,000 senior citizen exemption, $35,000 disabled citizen exemption, and up to a $12,000
disabled veteran exemption. The City has for many years granted the maximum homestead exemption, which
began at 40% and decreased by law to 20%. The senior citizen exemption and disabled citizen exemption
increased from $30,000 to $33,000 for fiscal year 1995-1996. The exemptions were increased again from $33,000
to $35,000 in fiscal year 2000-2001. These exemption changes are a direct result of the Anti-Crime Half Cent Sales
Tax implementation in 1995 which was renewed in May 2010 by the voters for an additional twenty years.

In addition to the exemptions offered by the City, senior and disabled residents will again benefit from an adopted
“tax limitation” this year. In September 2003, Texas voters approved a constitutional amendment that authorized a
local option tax limitation on residential homesteads of persons disabled or 65 years of age or older (seniors). The
City of Hurst exercised its local option by adopting the tax limitation on February 10, 2004. The tax limitation works
by ensuring that a senior or disabled homeowner will not have a municipal tax bill any higher than the amount owed
in the year in which he/she became eligible for the limitation (by turning 65 or becoming disabled). Those who were
65 or disabled when the tax limitation was adopted automatically became eligible to receive the tax benefit.
However, the law states that the limitation does not provide retroactive benefits. The City will continue to see a
compounding impact in future revenue due to this relatively new law. The senior and disabled tax limitation will
provide $1,400,000 of tax relief to eligible taxpayers in 2020-2021.

Sales Tax

Sales tax revenue projections shall be conservative due to the volatile nature of this economically sensitive revenue
source. The 2020-2021 sales tax projections, including the sales tax reserve, have been adjusted to account for
recent downward trends and other indicators related to sales tax. While still healthy, the sales tax reserve has been
reduced allowing for an increase in budgeted sales tax; however, we anticipate actual collections to decrease by
approximately -10.68%. During 2019-2020, the City saw monthly sales tax increases ranging from 2% to 12%.
Fiscal year 2020-2021 marks the nineteenth year of a 20-year sales tax sharing agreement with the developer of
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