Page 16 - CityofSouthlakeFY25AdoptedBudget

information provided later in this section includes specific details on strategic investments made with this
budget.

Goal: Alignment with Financial Policies and Financial

Management Guiding Principles
The adopted operating budget is structurally balanced and reflects the City’s commitment to quality,
sustainable financial management through:

Structural balance and strong net revenues. Structural balance is fundamental to the City’s budgeting
standards. A structurally balanced budget with strong net revenues is crucial for maintaining the long-term
financial stability and sustainability of the City. It ensures that ongoing expenditures are matched by reliable
revenue streams, preventing deficits and enabling the City to invest in essential services, infrastructure, and
Budget Overview
community development. Strong net revenues also provide a buffer against economic downturns, allowing
the city to respond effectively to unforeseen challenges and opportunities. The FY 2025 adopted budget is
structurally balanced and provides for net revenues that align with financial management principles.

Optimum fund balances. Maintaining proper reserves increases the organization’s ability to absorb or
respond to temporary changes in the environment or circumstances, such as an unanticipated event or
changes related to operating revenues. This budget provides for optimum fund balances in operating funds,
in accordance with City policy. Financial policies can be found in the Appendix of this document. As an
example, per the Fund Balance Policy, the undesignated fund balance in the General Fund should range
between 15% and 25% of operating expenses. For FY 2025, 25.64% of General Fund operating expenses are
reserved for unanticipated or emergency needs. See Figure 2 for a full picture of the City’s reserves and
learn more in the Multi-year Operating Plan section of this document.

Strategic use of debt and cash funding of capital projects. Debt management has been a key financial
principle that has guided the development of the City’s budget. The City of Southlake has been able to
manage debt so that 100% of the City’s current tax-supported debt will be retired in less than ten years.

Debt reducing techniques and strong bond ratings have allowed for a reduction in the City’s property
tax-supported debt by 66% since 2010, despite ongoing infrastructure development. Debt as a percent of
assessed value has decreased from over 3% in 2003 to a projected 0.21% in 2025. The FY 2025 adopted
budget continues the use of cash to fund a portion of the capital improvement projects, continuing to
carefully and strategically balance debt and cash funding. Cash allocated as part of the Capital Improvements
Program (CIP) totals $18.5 million across all funds and will advance city comprehensive plan goals. Cash
is currently planned to fund 41% of the City’s capital improvement program needs projected for FY 2025.
Final cash and debt allocations will be adopted when the City Council considers the adoption of the CIP in
February 2025.

Limited expenditure growth. At the beginning of each budget preparation cycle, City staff identifies
expenditure growth demands related to existing contracts, standard goods and services required to
support core services, and other basic needs that require ongoing expenditure support to ensure that there
are no service level reductions for the City’s customers and citizens. This includes cost drivers related to
personnel, service contracts such as regional dispatch and jail services, infrastructure maintenance such
as street paving or storm water infrastructure management, utilities and other critical services such as
technology support. Understanding cost drivers is important but managing their impact requires several
operational strategies, beginning with ensuring that the cost of existing goods and services do not exceed
the growth of the Consumer Price Index (CPI) for the Dallas / Fort Worth Area. As a key data point, the

16 FY 2025 City of Southlake | Budget Book