Page 352 - Southlake FY24 Budget

Southlake Sustainability Plan: Financial Wellness

[SOUTHLAKE 2030] Sustainability Master Plan

demands. Knowing where the City stands today better equips policymakers and staff to manage costs and provide
feasible solutions for future needs.

Approach Taken
A financial model is inherently complex due to the number of calculations that can easily approach a million or more
mathematical inputs, formulae and results. Yet the Southlake model is no black-box-trust-me mystical algorithm. Every
Appendix
number has been hand-calculated for verification purposes. The model incorporates the most basic logic into simple
linkages. Land Acreage-Land Use-Densities-Absorption Rates drive population and employment. Those factors drive
rooftops and square-footages, which in turn work with infrastructure capacity and service demands. Dollars are
attached in every step of these linkages. And like a one-year budget, a multi-year financial plan has to be balanced and
any gaps have to be identified. Another benefit, and risk, of looking forward is that it is impossible to ignore the aging
process.

The approach also included an all-in feature. The goal was to include just about everything where data existed in GIS
systems, accounting systems, spreadsheets and existing master plans. Not only was there a look-back of at least ten
years, but the model incorporated a fairly exhaustive level of detail including:

• Tax Base Evaluation by Subdivision.
• Sales Tax Analysis by Sector and individual business.
• All Other Revenues at the line-item level.

• Staff levels by position.
• All other Expenditures at the line-item level.
• Capital Equipment Replacement by equipment item.
• Debt Capacity Analysis.

• Infrastructure replacement/renewal based on segment inventory.
• Economic Development Incentives consideration.
• Inflation considerations.
• Fund balance Preservation.

Findings and Results
The results of the model were very promising. In fact, there were almost entirely positives with few negative findings.
After careful review, the analysis revealed that Southlake’s financial condition is strong. This can be attributed to
Southlake’s commitment to build reserves, keep pace with repair and rehabilitation needs, shorten debt maturities and
pay for some major facilities out of cash. The review ascertained that these past actions that are benefitting Southlake
citizens today will do so into the future. A foregone conclusion when looking far ahead is that the compression of
revenues being outstripped by expenditures will reveal shortfalls. While Southlake is not immune to many
uncontrollable factors, such as a recession, it appears that almost all the identified project and programs needs in the
future can be handled though continued good management of City resources. Specific findings include:

• The tax base is expected to grow significantly although the incremental values for new construction will
diminish while the gains from revaluations will increase by at least 3% each year.

• The sales tax base will increase significantly through growth in population and CPI. However, there is
likely to be a slight decrease in the portion of the sales tax that comes from outside the City as adjacent

Ordinance No. 1104, Adopted February 17, 2015 [SOUTHLAKE 2030] 62

352 FY 2024 City of Southlake | Budget Book