Page 283 - CityofWataugaAdoptedBudgetFY24

DEBT SERVICE

The Debt Service Fund, also known as General Obligation Interest and Sinking Fund,
was established to provide for the payment of bond principal and interest and for the
payment of fiscal agent fees as they come due. Property tax rates and tax levy are
required to be computed and levied to provide the money required to pay principal and
interest as it comes due. Revenues are collected in the General Obligation Interest
and Sinking Fund for the payment of general long-term debt, principal, and interest.
The General Obligation debt is financed by property taxes and interest earned on
investments. The FY2023-2024 tax rate was adopted at $0.5702 per $100 valuation,
of which $0.21049, or 37% funds the FY2023-2024 debt service payments. The Utility
Debt Service fund is funded through a transfer from the Water and Sewer Operating
fund from revenues received from residential and commercial utility customers.

Debt issuance finances the City’s purchase of land, buildings, land improvements,
parks, and the construction and reconstruction of streets and drainage facilities. In
addition to infrastructure, debt issuance finances large dollar capital outlay items such
as fire trucks and public works heavy equipment.

The fund is accounted for on the modified accrual basis of accounting. Revenues are
recorded when available and measurable, and expenditures are recorded when the
liability is incurred.

Debt Management

The Watauga Charter provides that any limitation on the tax rate shall be determined in
accordance with the statutory provisions of the Texas Property Tax Code, as now or
hereafter amended by the state legislature, but does not set a limitation on the debt
component.

Outstanding Debt Service by Issuance

During FY2006-2007, the City issued $3,400,000 of Combination Tax and Limited
Pledge Revenue Certificate of Obligation bonds, which are paid from property tax
levies. This issuance funded the renovation of the City’s public safety facilities,
including police, fire, and emergency medical services, and various street
improvements.

In FY2013-2014, the City issued $3,500,000 of Combination Tax and Limited Pledge
Revenue Certificate of Obligation bonds, which will be paid from property tax levies.
This debt opportunity was available without any increase in the tax rate since the City’s
total debt obligations decreased the end of FY2013-2014. The expansion of the
existing Community Center to provide for an updated Senior Center facility and
improvements to Bursey Road, a major thoroughfare in the City were funded by this
issuance. Both projects were completed by FY2016-2017.

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