Page 231 - ArlingtonFY24AdoptedBudget

Capital Improvement Program

Capital Budget vs. Operating Budget

Although the City’s Capital Budget and Operating Budget are adopted in two separate cycles during the fiscal year, they are
nonetheless connected. The City’s bifurcated tax rate is the most prominent example of this. As stated above, the City’s total
FY 2024 tax rate of $0.5898 is divided between an operating levy ($0.4080) and a debt service levy ($0.1818). In addition, both
the capital and operating funds are profoundly impacted by an increase or decrease in housing values. Additionally, it is
imperative to remember that most capital projects will increase the City’s operating budget expenditures as well, since the short-
term maintenance and operations of new capital is budgeted in the City’s operating funds.

While the debt service property tax levy does comprise the primary source of funding for the capital budget, the City supplements
these funds with other sources, such as impact fees, aviation fees, interest earnings, gas revenues, and park fees. These other
sources can either directly fund capital projects or help to fund debt service for certificates of obligation. For example, the
Convention and Event Services Fund and the Park Performance Fund both make transfers into the Debt Service Fund in order
to service certificates of obligation debt used for capital projects. For more information, a list of funding sources can be seen in
the individual capital project summaries.

Conversely, capital funds will annually make payments to operating funds for service charges. These service charges occur
when departments provide services that are paid for out of operating funds, such as building inspections or surveys, in
conjunction with ongoing capital projects. For Fiscal Year 2024, the City is currently budgeting for approximately a $2.4 million
in transfers from capital funds for service charges.

In addition to general obligation bonds and certificates of obligation, the City utilizes commercial paper, a short-term financing
instrument that typically matures within nine months, to assist in short-term cash flow for the immediate funding of capital
projects. After commercial paper has been utilized, the City will use a portion of its general obligation bond sale to refund the
commercial paper, effectively turning it into longer-term debt.

FY 2024 Adopted Budget and Business Plan 222 City of Arlington, Texas