Page 249 - Southlake FY23 Budget

DEBT SERVICE FUnDS ExPEnDITURES

The City issues general obligation bonds, certificates of obligation, combination tax and revenue certificates of
obligation and tax notes to provide for the acquisition and construction of major capital facilities and infrastructure.
Certificates of obligation are used to fund construction of city facilities such as buildings, roads and sidewalks.
Revenue bonds are used to fund construction of city infrastructure such as water and sewer system improvements as
well as park improvements.

We want to help you understand the City’s use of debt by explaining the types of projects that we fund by borrowing
money, and what kind of bonds we use. This section will also help you understand the obligations the City currently
has, and how we balance the need to implement the City’s master plans with fiscal responsibility.

It is important to note that our debt management strategies receive a rigorous annual review from bond rating
agencies tasked with letting potential borrowers know how credit-worthy the city is. Right now the City has three
AAA ratings — a strong external endorsement of the City’s financial management.

Tax Supported vs. Self-Supporting Debt
As you can see in Figure 1 (below), less than half of the City’s debt service for FY 2023 will be funded through bonds tied to
the City’s property taxes. For FY 2023, property tax supported debt service is about $6.7 million. Property tax supported
debt is primarily used for the construction of local roads and sidewalks.

So, what does this mean for Southlake property owners? Figure 2 (next page) shows the total tax bill for an average
residential property in Southlake, reflecting a annual cost of $459 for property tax supported debt. For this, the City
is able to provide necessary infrastructure.

Going back to Figure 1, the remainder of the City’s debt service (56%) for FY 2023 will be funded by self-supporting
debt. These debt payments will be made from special revenue, such as voter-approved sales tax levies. FY 2023
debt service to be paid as self-supporting debt is $8,546,467. Why is it important to make the distinction between
tax-supported and self-supporting debt? Because self-supporting debt has a specific revenue streams, many of

PROPERTY TAX SUPPORTED
DEBT
44%

SELF-SUPPORTING DEBT
56%

Figure 1: FY 2023 Total Debt Service

248 FY 2023 City of Southlake | BUDGET BOOK
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