Page 353 - Southlake FY24 Budget

Southlake Sustainability Plan: Financial Wellness

[SOUTHLAKE 2030] Sustainability Master Plan

cities grow their retail base. There are high expectations that economic development efforts will
continue to provide incremental results for the City.
• Hotel tax revenues are expected to rise significantly in the early part of the plan due to two additional Appendix
hotels being added to the singular hotel now in Southlake. These additions will also benefit the Public
Art Fund, a recipient of 15% of the hotel tax revenues.
• Staffing is projected to increase but the large increases have been funded with the last fire station and
the future recreation center being accounted for in the staffing tables.
• Debt will continue to be issued in shorter lengths in order to maximize the debt capacity for future
needs.
• Reserves are currently at very strong levels and are projected to be sustained at very respectable levels.
Related, while recession forecasts are not recognized by specific year in the financial plan, there is every
expectation that the average of one every 5.86 years will likely cause Southlake to handle at least two
and perhaps three recessions during the planning period. It is important to follow through with the
City’s financial policy documents to effectively anticipate and manage unpredictable events such as a
recession. For that reason, the City applies these foundational practices to its budgeting efforts, even
adopting economic/fiscal wellness recommendations to guide the City’s budgeting into the future.
These financial recommendations guide the development of the City budget, while simultaneously
serving as an accountability tool.
• Other than recessions or other major catastrophic events not within the control of Southlake, the most
significant threat is the aging of $619 million in depreciable assets now entering the critical 20+ year
benchmark. While the City acknowledges these challenges and is proactive in addressing these needs,
there is reason to be cautious. The infrastructure aging process has an exponential characteristic even
though it is often measured as a straight-line issue. The most critical actions will be focused on delaying
the impact of or at least preparing for that stage in the future when the depreciation of these assets
starts to accelerate.
• The service level expectations by the Council and citizens are set at a very high level in Southlake, an
aspect of the difference that sets the City apart from other cities. These expectations are manifested in a
quality that is not inexpensive whether it be public safety response times, park amenities or median
maintenance. However, the communication mechanisms the City has through SPIN groups and other
means should allow for expectation management efforts to adjust as needed through periods of
revenue pressure that may occur with economic cycles.

Conclusion
Southlake is well-governed and well-managed with the proof being sound infrastructure, high service levels and good
financing condition that exists today and is directly associated with responsible decisions made over recent years. The
City is positioned to have many options and to adjust when necessary (following strong financial management
principles) so that no abrupt changes are likely to ever be required. The City communicates well with citizens, allowing
governance and financial realities to work together in lock-step. The well-educated, high-income constituency, and the
governing body that embraces conservative financial practices, positions Southlake to have a sound and sustainable
financial plan to wrap around the other elements of a master plan. As such, at the current taxing structure, the City is in
the position to maintain current level of services and implement the recommendations of the Southlake 2030 Plan
through a combination of cash and limited debt service. Following this section please see “Supplement A” which is a
summary of the City’s fund structure and the data that supports the findings and conclusions.

The following page contains the recommendations developed for the Economic/Fiscal Wellness section.

Ordinance No. 1104, Adopted February 17, 2015 [SOUTHLAKE 2030] 63

FY 2024 City of Southlake | Budget Book 353