Page 8 - NEXT YEAR BUDGET DETAIL REPORT

These reserves earn interest, bolster cash flow, and are available for unanticipated expenditures or
emergencies. As a non-recurring revenue source, beginning fund balances are used to fund capital
or other one-time expenses only. The City Council has provided direction to maintain at least a
100-day operating reserve in the General Fund and Utility Fund, with any excess reserves or
operating surpluses transferred to the Capital Projects Fund and Utility Capital Projects Fund,
respectively, to be used for capital projects. The Drainage Fund and Debt Service Fund carry
higher reserve levels, with those reserves occasionally drawn upon to cash fund a drainage capital
project or down payment on the lease-purchase of vehicles and major apparatus.

BUDGET STRATEGY & DEVELOPMENT

Strategy in Action and FY24 Tax Rate Implications

Preparation of any budget requires the allocation of finite resources. Staff’s role is to guide the
process by creating and managing a budget that reflects the City Council’s and the community’s
priorities. Development of the Fiscal Year 2024 budget was guided by the priorities outlined in the
City of Colleyville’s Strategic Work Session, held on June 20, 2023. Every new effort and element
of the City’s budget, including existing programs, is tied to one or more of the goals, strategies,
and objectives identified.

Major Initiatives and Cost Pressures

Over the past six years, Colleyville has undergone major shifts in its operational philosophy.
Among these shifts is a commitment to operate as lean and efficiently as possible. As a part of this
initiative, the City strategically reduced certain management positions, allowing them to go
unfilled or combining them with other positions when they became vacant while also eliminating
other budget redundancies. This, coupled with favorable health insurance rates and growth in sales
tax revenues, gave Colleyville the ability to adopt the no-new-revenue property tax rate (a rate
designed to keep tax bills flat year-over-year) for five years in a row, ultimately making it the
lowest rate among neighboring cities. However, new initiatives and pressures for the next several
years necessitates property tax adjustments to provide higher revenues for the City. Those
initiatives and cost pressures are summarized as follows:

 High projected increases to health insurance costs: coming into this year’s budget cycle,
the City’s health insurance provider proposed an initial rate increase of more than 40%.
Thankfully, staff was able to negotiate this increase down significantly to around 15%.
However, this is an indication that Colleyville is likely to be confronted with higher
insurance re-rates to contend with each year, and this possibility has been incorporated into
the City’s financial forecast.

 Higher debt service costs associated with the newly acquired recreation center and
forthcoming Fire Engine lease: Colleyville has been proud to maintain a low debt profile,
preferring to pay for most capital projects through cash-on-hand. However, this past year
the City was met with an opportunity to acquire a property that could be renovated for a

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