Page 13 - CityofHaltomFY23Budget

BUDGET COMPONENTS

Each major fund begins with a Budget Summary of revenues and expenditures. This summary provides
an overview of the budget as proposed. The summary sheets provide information on the Prior Year
Actual, Current Adopted Budget, Projected Year End Budget, and the Adopted Budget for FY 2022-2023.
The ending fund balance is also included and should be considered a key element in the decision-making
process for each of the larger funds.

The total FY 2022-2023 budgeted revenues are $88,836,735 while the total operating expenditures are
$84,194,907. Capital project expenditures (mostly funded by debt issues) are $53,342,500.

One of the major revenue sources of the budget is property taxes. The FY 2022-2023 proposed budget
was prepared using the tax proposed rate of $.608162 per $100 of net taxable value and an estimated
Net taxable value of $3,143,425,219. The rate for maintenance and operations is $.376427 per $100 of
net taxable value and debt service is $.231735 per $100 of net taxable value. The property tax rate is the
lowest the City has seen since 2009-2010. Continued economic growth will broaden the tax base which
will help to decrease the city’s property tax rate in the future or at least keep it from increasing.

With the signing of Senate Bill 2 (Texas Property Tax Reform and Transparency Act of 2019) into law, the
bill makes various changes to the appraisal process and how property taxes are set. As a reminder, the
lowered the Voter Approved Tax Rate (was termed Rollback Rate) from 8 (eight) percent to 3.5 (three
and a half) percent. The bill went into effect January 2020 and applies the 3.5 percent limits to the 2022-
2023 budget year.

The “No-New Revenue Tax Rate” (was termed Effective Rate) refers to the tax needed to raise the same
amount of maintenance and operations property taxes on existing properties as the previous year. The
“Voter-Approval Tax Rate” is the rate necessary to raise 3.5 percent more maintenance and operations
tax revenue as the previous year before accounting for appraisal fluctuations. If the adopted rate
exceeded the 3.5 percent Voter Approval Rate, the City would be required to hold an automatic election.

Sales tax is another significant revenue source for the city, with over $15 million in collections predicted
for FY 2022-2023. Due to the types of businesses that make up our sales tax base, we were fortunate
to have had minimal impact to our sales tax revenues compared to some other cities during the Covid
pandemic. Sales Tax has continued to increase this fiscal year by an average of 9% over last year. The City
receives 2% sales tax, and the allocation is 1.375% for General Fund, 0.375% for Streets, and 0.25% for
Crime Control and Prevention District.

The expenses consist of two major components. The first is the base budget. The base budget provides
each department and division with similar funding as the prior fiscal year, less any one-time costs. The
base budget also includes all capital projects, equipment replacements, and non-discretionary items
such as necessary price adjustments and commitments.