Page 77 - CityofKennedaleFY23Budget

BUDGET OVERVIEW: DEBT SERVICE FUND

The Debt Service Fund pays for Debt that is secured by ad valorem (property taxes). Property
taxes account for 93% of the Debt Service Fund revenues, with the remainder coming from
Fund 4 Projects Fund (6%) and investment income.

As of the preparation of this budget, the Debt Service Fund had amassed approximately $650k
in unassigned fund balance, primarily due to property tax revenues being more than what was
needed to pay debt service requirements in prior years. This budget decreases the interest and
sinking fund portion of the tax rate by about 6 cents per 100 valuation to budget for less than
what is needed to pay debt service requirements with the anticipation that $200k of fund
balance reserves will be used for the additional needed payments.

It is anticipated that an additional $200k of fund balance will be used in the next two years to
fund debt service, at which time several bonds will fully mature and debt service payments will
be less with the hope that the lower interest and sinking rate will be adequate to meet the debt
service requirements in those subsequent years.

E X P E N D IT UR E S
All expenditures in the Debt Service Fund are associated with principal and interest payments
and paying agent fees. The bond rating for the City of Kennedale from Standard & Poor’s /
Moody’s is A+/A1, which is an excellent rating and will allow Kennedale to secure additional
debt if the need arises.

D E B T S E RV I CE RE Q U I R E M E N T S
The City has bond expenditures in three funds – 02 Debt Service, 10 Streets, and 15 EDC. The
below chart depicts all Bond payments for all 3 funds. On the next page, the $1,669,317 has
been programed into the total expenditure budget for Fund 02 Debt Service Fund. The
$293,390 for Fund 10 and $314,346 for EDC Fund 15, are shown later in the book with the
expenditures for those funds.

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