Page 12 - CityofColleyvilleFY23AdoptedBudget

this new growth is crucial to maintaining that goal. Each year, careful consideration is given to the amount of revenue
(and associated tax rate) needed, as opposed to simply maintaining a tax rate that brings in additional revenue due to
increased property values. The City Council’s budgeting strategy is that any tax rate above the no-new-revenue rate
must be fully justi ed for speci c programs or services. For reference, the no-new-revenue rate is a tax rate that aims to
keep the average property owner’s tax bill static from year-to-year, meaning only brand new property that didn’t exist
in the previous year can result in new revenue. Fiscal Year 2023 represents the fth consecutive scal year in which the
budget is funded with the no-new-revenue tax rate.

Sales tax is the second largest General Fund revenue source. The City’s primary commercial corridor is located on
Colleyville Boulevard (SH26), which has recently completed its construction (expanding from four-to-six lanes with
medians) and beauti cation efforts. Our biggest sales tax earners tend to be large grocers and liquor stores. As those
businesses carry items many shoppers consider to be essential, their sales tend to uctuate much less than other
economic sectors. However, about 11%, or $1.3 million worth of tax does come from our restaurant/bar industry, which is
much more susceptible to economic pressures such as a recessions or, in the case of 2020-2021, government
shutdowns. COVID-related closures did have an impact on this industry, but sales tax as a whole did not decrease.
Rather, Colleyville saw 36% growth in this revenue from 2020 through 2022. This amounts to an extra $2.7 million in
resources to fund the City’s operations. In fact, FY22 was the rst year the City’s sales tax came in over $10 million. For
the purposes of budgeting conservatively, however, staff balanced the FY23 budget with a more modest outlook.

In keeping with its history of being proactive and creative in supporting local establishments during business
interruptions, the City has continued to utilize grants and it’s new a gift card program to try and spur consumers to
patronize local restaurants and retailers. These programs were heavily utilized during the pandemic and were very well
received by all involved, so staff intends to keep them active for the foreseeable future. It is important to note that
these efforts have been lauded by the Texas Municipal League and the Texas Economic Development Council for their
creativity and innovation.

Colleyville continues to prioritize and address the City’s critical infrastructure including streets, water, wastewater,
sidewalks/trails, and parks. This budget includes a robust 5-year Capital Improvement Plan (CIP), completely funded
with cash, to insure infrastructure is maintained and built new where needed to maintain an exceptional quality of life
for residents and businesses.

As fortunate as the City has been, Colleyville isn’t without its revenue issues. Among them is a marked increase in the
number of properties that qualify for a property tax exemption. While Colleyville does not currently have a homestead
exemption as some surrounding areas do, the City does offer a property tax exemption for citizens aged 65 and older.
When applied, this exemption discounts the taxable value of the residence by $65,000 and subsequently freezes the
tax bill owed on the property for as long as the exemption is in place. Growth in the amount of exempt properties each
year further suppresses any total assessed value growth, reducing the amount the City can raise from its tax rate. Over
a ten-year period, these exemptions went from being 12% of the total assessed value to 25.2% as of the most recent
assessment. For a City that prides itself on keeping its property tax rate low, this trend will continue to present a
challenge.

City of Colleyville | Budget Book 2023 Page 12