Page 42 - CityofWataugaAdoptedBudgetFY24

MULTI-YEAR FINANCIAL FORECAST

INTRODUCTION

Each year the city conducts an evaluation of future planning years for primary
operating funds which comprise the majority of our annual budget. They also
deal with the major revenue sources of property tax, sales tax, water sales and
sewer sales. The following spreadsheets illustrate a brief history of each fund’s
revenues and expenditures including a three-year projection for the same
revenues and expenditures.

Any budgeting exercise that projects future budgets is based upon changing
variables outside the City’s control. Federal and state legislative changes can
impact future budget projections, as well as unforeseen events such as the
COVID-19 pandemic. Elections at all levels of government can affect revenues
and expenditures that range from federal economic policies all the way down to
local elections that can change the Council’s priorities year over year.

The City of Watauga’s Multi-Year Plan is presented on the following pages. Major
funds will show the estimated beginning fund balances, estimated revenues and
expenses, and ending fund balances. Staffing levels, estimated tax rates, and
estimated water and wastewater rate increases are also presented. The three-
year projections include a mix of assumed variables in both revenues and
expenditures as provided in summary on the following pages and discussed by
fund below.

Recommended reserve levels and designated reserves are reflected as required
by the City’s fiscal policies.

General Fund

Revenue increases are projected at conservative growth levels. Most revenue
items are projected at a 2% to 3% growth factor, based on trend data. Revenues
have recovered and increased from pre-pandemic levels in both property tax and
sales tax. Many positions that were eliminated during the pandemic were
restored in FY2022 and FY2023. Positions that were previously funded through
American Rescue Plan Act grant funds in 2023 were moved to the General Fund
in FY2024 and the remaining positions will move in FY2025. Property tax
valuations have increased substantially in the past few years ranging from a 7%
to 13% increase. Valuation increases are expected to continue, but at a slower
pace in future years. Assumed property tax revenue growth is assumed to be
limited to the state mandated 3.5% revenue growth. Sales tax growth is
assumed to increase at 2% as a conservative assumption as this revenue stream
is volatile and fluctuates and is beyond the City’s control. Operational
expenditures are generally projected to increase at 2% across the board on

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