Page 65 - Southlake FY23 Budget

BUDGET OvERvIEw

BUILDInG THE BUDGET

ForecASt reVenueS

Forecasting these key revenues correctly and conservatively is critical to ensuring the budget is balanced for the
coming fiscal year and for the health of future budgets. In addition to preparing a forecast prior to the adoption of
the annual budget, the City of Southlake continually forecasts throughout the year as trends in the market, economy,
or other environmental factors are observed.

Major revenue assumptions in the forecast include the impact of rising inflation, the economic recovery of
commercial industries, decline in permit revenues as the city reaches build out, and the pass-through costs of
utilities. For the period of FY 2023 to FY 2026, major revenue growth rates were forecasted as follows:

FiVe year Financial Forecast reVenue assumPtions
Fy 2023 - Fy 2027

Fy 2023
reVenue ProPosed Fy 2024 Fy 2025 Fy 2026 Fy 2027
budget* Forecast Forecast Forecast Forecast
Ad Valorem Tax 1.2% 0.5% 0.5% 0.5% 0.5%

Sales Tax 1.0% 1.5% 1.0% 0.5% 0.5%

Franchise Fees .4% -2.5% -3.15% 0.4% 0.5%
Permit Fees -39.5% 8.7% 5.2% -2.3% -5.8%

*Growth rates compared to the FY 2022 Estimate as of August 2022
Figure 6: Five-Year Financial Forecast Revenue assumptions for FY 2022 - FY 2026.
ProViding citY SerViceS
City expenditures fall into three broad categories: personnel, operations, and capital outlay. As a service delivery
organization, salaries and benefits costs for personnel make up the majority of operating expenditures. The City of
Southlake implements a number of strategies to manage the
growth of expenditures. consumer Price index (cPi)
rePorting
exPenditure growtH

As a service delivery organization, personnel expenses all urban consumers, dallas-Fort Worth
make up more than 70% of the City’s General Fund budget.
Managing total compensation costs is a key component of month cPi groWth
long-term financial sustainability. To manage the growth
of salaries, the City Council has set a policy to aim for November 7.45%
Southlake’s pay plan to compensate employees at the
70th percentile and the 85th percentile for public safety January 7.83%
employees. This is just one strategy that the City uses to
manage cost growth. The FY 2023 Proposed Budget contains March 9.05%
several assumptions to related to the rising cost of health
care and other benefits. May 9.14%

Another strategy that the City uses to manage General Fund July 9.35%
cost growth is to mirror the cost of existing services to the
growth of the Consumer Price Index (CPI) for the Dallas/Fort Average 8.56%
Worth Area, less food and energy. This includes any contract (Used to calculate General Fund
existing Service Growth)
increases, salary increases, or any expenses that relate to the
Figure 7: Consumer Price Index Bimonthly reporting
changes for FY 2022 used to project FY 2023 General
Fund Growth.
64 FY 2023 City of Southlake | BUDGET BOOK
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