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BUDGET MESSAGE FOR FY2023-2024

September 11, 2023

To the Honorable Mayor Arthur L. Miner, Members of the City Council and the
Citizens of Watauga:

The City Manager’s Annual Budget for the Fiscal Year beginning October 1, 2023, and
ending September 30, 2024, is presented for your review and comment, as required by
the City of Watauga’s Home Rule Charter. It presents, in summary form, the revenues
and expenditures for each of the City’s Funds, departmental highlights, accomplishments
and expenditures, as well as the five-year Capital Improvement Plan (CIP). The Annual
Operating Budget represents the single most crucial management tool of the governing
body and staff. The Annual Operating Budget reflects the general short-term policies
and incorporates the City Council’s long-term Strategic Plan. The Budget Summary
section that follows this message provides a concise summary of the Budget with
summaries of revenues, expenditures, and fund balance.

During FY2022-2023, the economy continued to improve, but was greatly impacted by
inflationary pressures and supply chain issues. The City experienced significant staffing
shortages, most notably in the Public Works and Police Department.

In preparing the FY2023-2024 fiscal year budget, we strived to provide funding for
continued excellent service to our citizens and the retention of our talented and skilled
workforce while addressing inflationary pressures.

Highlights of the budget are presented below:

• Property tax revenue has been based on maintaining or reducing the City’s current
tax rate of $0.5702 per $100 of assessed valuation. Senate Bill 2 adopted during
the 2019 legislative session limited the growth of property tax revenues but allows
a city to “bank” the portion of the tax rate that is less than the voter approved rate
calculation. This amount can be banked for each year for three years and the
three-year rolling sum can be added to the voter-approval rate. The 2023-2024
recommended tax rate of $0.5702 includes $0.014 of the unused increment. This
property tax rate allows the City to bring in more revenue in the operating budget
to cover cost increases and debt service payments, to include the 2023 Certificates
of Obligation that will fund street projects and public safety equipment.

• Sales tax growth is forecasted at a moderate increase of 2.0% over FY2022-2023
forecast. Through May, sales tax receipts are trending approximately 4% above
prior year and 2.5% over original budget expectations due to economic recovery

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