Page 21 - City of Watauga FY22 Adopted Budget

BUDGET-IN-BRIEF

Fiscal Year 2021-2022 Financial and Economic Outlook

The financial plan as presented in the budget should be considered from the broad
perspective of the specific environment within which the City operates. The City of
Watauga is located in Tarrant County and is part of the Dallas-Fort Worth Metroplex that
has a total population of 7.6 million people. The City of Watauga encompasses 4 square
miles of which 96% is developed. The 2010 census reflects a population of 23,497, and
the 2021 population estimate from North Central Texas Council of Governments is
23,770.

Property tax revenues are a major revenue category for the City’s General Fund,
comprising 43% of all revenues. This heavy reliance on property tax revenues is a
significant challenge as the community is 96% built out. Over the past several years, the
City has seen property valuations increase. This year’s net taxable values as certified by
Tarrant Appraisal District came in at $1,708,914,183, an increase of 7% over prior year.

A significant portion (28%) of the
city’s general operating revenue is
derived from sales tax. In FY2019-
2020, sales tax collections were
expected to end the year down
approximately 8% from budget
due to the pandemic and related
restrictions on businesses.
However, sales tax recovered
during the last quarter of the year
and ended only 2% below the
original budget. Projections for
FY2020-2021 were estimated to
be approximately 6% down from prior year. However, sales tax receipts are currently
trending 17% over prior year. We have conservatively estimated sales tax at year-end to
be 7% over pre-Covid-19 levels (FY 2018-2019). For the FY2021-2022 budget, we are
forecasting revenues to be a 2.5% increase over FY2020-2021 year-end projections. The
City continues its economic development and redevelopment strategic planning that is
essential for the City to increase its sales tax revenues and reduce its dependency on
property taxes to fund basic City services.

During FY2020-2021, the Watauga Economic Development Corporation updated and
adopted its Five-Year Strategic Plan. The City’s economic development goals include
attraction of quality visually appealing businesses, as well as revitalization and investment
in areas that have seen some deterioration of economic activity. Efforts to maintain and
grow our sales tax base continue to be a high priority.

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