Page 324 - HurstFY23AnnualBudget

APPROVED BUDGET FISCAL YEAR 2022-2023

Current Bond Ratings
Moody’s Investor Services Standard & Poors
General Obligation Bonds Aa2 AA
Water & Sewer Obligations Aa2 AA
Half-Cent Sales Tax Bonds Aa3 AA

Debt Management

The state of Texas allows home rule cities to levy up to $2.50 per $100 assessed valuation;
however, the Hurst Charter sets a limitation on the maximum total tax rate at $1.50 per $100 of
valuation. Any increase in the debt component will decrease the funds available for maintenance
and operations. Currently, one cent on the tax rate generates approximately $380,000 in revenue
equating to approximately $58.3 million in debt service capacity at the City’s maximum tax rate.
Several factors influence the city’s annual debt management plan. Factors include property
values, the tax rate, the amount of existing debt, capital needs, and the timing of issuance. Over
the years the city has issued various debt instruments which impacted the tax rate. In May 2012,
voters approved a $16.5 million General Bond Election for the construction of a new Justice
Center and related parking area which resulted in a tax rate increase of about 3 cents. As the city
refunded existing debt into a more favorable interest rate and property values increased the debt
rate was reduced accordingly. The most recent debt issues, including both voter approved
general obligation debt and tax supported certificates of obligations have not increased the tax
rate. The debt rate has been reduced the past few years as property values have increased and
debt service obligations have either remained flat or decreased slightly. In the following pages
you will find information on outstanding debt supported by the City’s debt rate. You will see a
long-term trend of decreasing debt obligations. This also indicates capacity for new debt should
capital needs necessitate new bonds or voters approved expanding existing facilities. The City’s
continues to follow a conservative debt management policy which includes:

• Monitor compliance with bond covenants.
• Maintain communications with regulatory agencies.
• Periodic review and analysis of long-term financing activity that shows the impact on
current and future budgets for debt service and General Fund operations.
• Evaluate bond issues and debt position each year to prioritize projects.
• Benchmark annual debt service at less than 10% of the General Fund operating budget
• Benchmark the annual debt service tax rate at less than 25% of the total tax rate.
• Benchmark the ration of tax supported debt to taxable value at less than 2.5%

The debt issuance policy will continue to be addressed in the City Council’s annual strategic
planning retreat.

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