Page 71 - Southlake FY22 Budget

BUDGET OVErVIEW

BUILDInG THE BUDGET

Forecast Revenues
Forecasting these key revenues correctly and conservatively is critical to ensuring the budget is balanced for the coming
fiscal year and for the health of future budgets. In addition to preparing a forecast prior to the adoption of the annual
budget, the City of Southlake continually forecasts throughout the year as trends in the market, economy, or other
environmental factors are observed.

Major revenue assumptions in the forecast include the impacts of Senate Bill 2, the economic impacts of COVID-19,
decline in permit revenues as the city reaches build out, and the cost to purchase water from Fort Worth. For the
period of FY 2022 to FY 2026, major revenue growth rates were forecasted as follows:

five year finanCial fOreCasT revenue assumPTiOns
fy 2022 - fy 2026

revenue fy 2022 adOPTed fy 2023 fy 2024 fy 2025 fy 2026
BudgeT* fOreCasT fOreCasT fOreCasT fOreCasT

Ad Valorem Tax 4.3% 0.5% 0.5% 0.5% 0.5%

Sales Tax 1.5% 1.5% 1.0% 0.5% 0.5%

Franchise Fees 3% -1.4% -2.5% -3.0% 0.0%

Permit Fees -1.0% 6.6% 9.0% 5.4% -2.4%
Other Revenues 7.0% -1.0% 1.0% 1.0% 1.0%

*Growth rates compared to the FY 2021 Estimate as of August 2021
Figure 6: Five-Year Financial Forecast Revenue assumptions for FY 2022 - FY 2026.
PrOVIDInG CITY SErVICES

City expenditures fall into three broad categories: personnel, COnsumer PriCe index (CPi) rePOrTing
operations, and capital outlay. As a service delivery organization, less fOOd and energy
salaries and benefits costs for personnel make up the majority fy 2021
of operating expenditures. The City of Southlake implements
a number of strategies to manage the growth of expenditures. CPi grOwTh

Expenditure Growth November 0.94%
As a service delivery organization, personnel expenses make up
more than 70% of the City’s General Fund budget. Managing January 1.58%
total compensation costs is a key component of long-term
financial sustainability. To manage the growth of salaries, the March 2.51%
City Council has set a policy to aim for Southlake’s pay plan to
compensate employees at the 60th percentile and the 80th May 4.82%
percentile for public safety employees. This is just one strategy
that the City uses to manage cost growth. The FY 2022 Adopted Average
(Used to calculate
Budget contains several assumptions to related to the rising General Fund Services 2.50%
cost of health care and other benefits. Growth)
Figure 7: Consumer Price Index Bimonthly reporting
Another strategy that the City uses to manage General Fund changes for FY 2021 used to project FY 2022 General
cost growth is to mirror the cost of existing services to the growth Fund Growth.

70 FY 2022 City of Southlake | BUDGET BOOK
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