Page 132 - City of Watauga FY22 Adopted Budget

BUDGET-OVERVIEW

Fund (GF) revenues. The City has experienced better than anticipated sales tax and we
are forecasting FY2020-2021 sales tax revenues to end the year approximately 7% higher
than FY2019-2020 actuals. Sales Tax for FY2021-2022 is projected to be 2.5% above
the current year forecast for the one cent sales tax.

In May 2021, voters approved a one and one quarter cent sales and use tax for general
government services. This allows for additional revenue to operate and provide public
services. The additional ¼ sales tax, sales tax is anticipated to be $814,000. Total sales
tax is budgeted at 28% above current year forecast.

Sales Tax revenue for the
City is subject to the general
economic environment of the
DFW Metroplex. The retail
industry is constantly
changing, and economic
conditions continue to slow for
this sector. However,
Watauga does not have a
large presence of malls,
specialty, or up-scale
businesses, which are
generally more susceptible to
fluctuations in sales. The
Comptroller enforces the
collection on sellers whose
only activities in the state are the remote solicitation of sales. The City continues to see
growth in economic activity for current businesses, attraction of new businesses, and
online sales tax growth.

Other taxes - Include receipts from the operation of bingo halls in the City.

Utility Franchise Fees – This revenue category consists of a percentage of local gross
receipts remitted to the City by each privately owned utility (electric, telephone, gas, waste
and recycling collections, and cable) providing services to Watauga citizens for their use
of the City’s right-of-way. This can be the right-of-way used by the companies for their
utility lines or the use of our streets for their vehicles. Revenues are based on terms of a
franchise agreement between the City and each utility. The majority of franchise revenue
is based on a percentage of gross revenues from the utilities.

Projected revenues for these fees are generally based on population estimates. Recently,
weather conditions and the economy have been significant factors in a decline of
revenues as citizens have been more frugal in utilization of resources, which has led to
lower utility revenues. In addition, the Texas Legislature passed Senate Bill 1152 which
undercut the collection by cities of right-of-way rental fees from companies that provided
both cable and telecom services. Beginning January 1, 2020, these companies now pay
the greater of the two charges measured on a statewide basis, but not both and the City

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