Page 17 - Southlake FY22 Budget

TrAnSMITTAL LETTEr

LONG-TERM DEBT DEBT AS % OF ASSESSED VALUATION
3.50% $120,000,000
Desired Range
3.00%
3.01% $100,000,000
2.79%
2.50% $80,000,000
PERCENTAGE OF VALUATION 2.00% 2.36% 2.07% 2.00%

1.71% $60,000,000 DOLLARS
1.50%
1.46% 1.49% 1.51% 1.49%
1.37%
$40,000,000
1.19%
1.00% 1.12%
0.92%
0.72% $20,000,000
0.50% 0.58%
0.44%
0.34%
0.27% 0.22%
0.00% $-
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
FISCAL YEAR
Figure 3: Long-term debt as a percentage of assessed valuation
For FY 2022, a one and a half cent reduction of the tax rate has been adopted as another method of providing
tax relief. The tax rate decrease will complement the exemptions adopted by Council, including the 20%
homestead exemption.

Debt management has been a key financial principle that has guided the development of the City’s budget.
The City of Southlake has been able to manage debt so that 100% of the City’s current tax-supported debt
will be retired in less than 10 years.

Methods used to reduce the City’s debt obligations include:

• careful budgetary management;
• the use of voter-approved special revenue funds;
• aggressive amortization schedules;
• ongoing attention to refunding opportunities; and,
• the use of cash for projects when possible.

These techniques and strong bond ratings have allowed for a reduction in the City’s property tax-supported
debt by 78% since 2010, in spite of ongoing infrastructure development. Debt as a percent of assessed
value has decreased from over 3% in 2003 to a projected 0.22% in 2022. The FY 2022 budget proposes the
use of cash to fund a portion of the General Fund capital improvement projects for the year. Certificates of
obligation will be used to supplement project funding. Figure 3 shows trend information for Southlake’s debt
as a percent of assessed valuation.

Another important financial goal is ensuring the maintenance of optimum fund balances in operating funds,
in accordance with City policy. Maintaining proper reserves increases the organization’s ability to absorb
or respond to temporary changes in the environment or circumstances, such as an unanticipated event or

16 FY 2022 City of Southlake | BUDGET BOOK
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