Page 292 - Watauga FY21 Budget

FIVE YEAR FINANCIAL FORECAST

INTRODUCTION

The City of Watauga’s Multi-Year Plan is presented on the following pages. Major
funds will show the estimated beginning fund balances, estimated revenues and
expenses, and ending fund balances. Staffing levels, estimated tax rates, and
estimated water and wastewater rates are also presented.

Due to the volume of information included in the General Fund and the Water and
Wastewater Fund, separate executive summaries have been provided that
highlight significant assumptions.

Capital items recommended and funded have been included in the Proposed
Capital section of each fund’s presentation in the Capital Projects Section of this
budget document.

Recommended reserve levels and designated reserves are reflected as required
by the City’s fiscal policies.

General Fund

Revenue increases are projected at conservative growth levels. Most revenue
items are projected at a 1% to 3% growth factor. Due to the pandemic related
revenue declines, FY2020-21 budgeted revenues as well as expenditures are
lower than prior years due to pandemic related loss of revenue which were offset
by unfunded/frozen positions. Revenue and expenditure categories are expected
to return to pre-pandemic levels over the next several years. Property tax
valuations have increased substantially in the past few years ranging from a 9%
to 13% increase but began to slow in FY2019-2020. Valuation increases are
expected to continue, but at a slower pace in future years. In FY2021-22, a
projected increase of 1% is included, and a 1-3% increase in future years. Sales
tax is projected to grow approximately 6% in FY2021-22 and 2% annually
thereafter based on re-development and continued recovery in other sectors
beginning in FY2021-22. Departmental expenditures include an increase of a
conservative 1% increase with annual increases for salary plan adjustments and
health insurance increases. Certain unfunded/frozen positions will be funded
based on revenue growth and departmental operational requirements.

General Obligation Debt Service

The debt component of the tax rate includes debt service requirements for all
general debt currently outstanding and projected in the next five years. Under the
multi-year capital plan, debt issuance is proposed in years in which previous debt
falls off for major projects such as street projects and parks projects.

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