Page 52 - City of Watauga FY22 Adopted 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, FY2020
and FY2021 experienced some revenue decreases and expenditures were
controlled by measures such as unfunded/frozen positions. Many of these
positions are restored in FY2022 and FY2023. 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 1.5% to 13% increase. Valuation increases are expected to
continue, but at a slower pace in future years. In FY2023 through FY2026, a
projected increase of 2% is included. In May, 2021, an additional ¼ cent sales
tax was approved by voters that increased revenues to the General Fund. This
¼ cent sales tax was previously allocated to the Street Maintenance Fund. Sales
tax is projected to grow approximately 2.5% to 3% annually thereafter based on
re-development and continued recovery in other sectors. 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. The City’s 5 year Personnel
Improvement Plan includes positions requested by all departments. These
positions have been included in FY2022 and FY2023 in the operating
expenditures but are included as supplemental in future years and will be funded
if revenue growth allows. The Personnel Improvement Plan is included in this

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