Page 18 - CityofSouthlakeFY25AdoptedBudget

CPI is tracked throughout the fiscal year and is averaged during the budget preparation process to provide
an expenditure growth guideline. For preparation of this budget, the average CPI growth during the fiscal
year was approximately 5%. However, the Executive Leadership Team established a goal of 3.5% for year-
to-year growth and through their collaboration in evaluating the budget holistically, the leadership team
identified opportunities for process improvements, cross-department collaboration and support and other
efficiency gains to reallocate for existing budget needs. As a result, this budget limits the existing growth
of goods and services within the General Fund to 3.5%, further demonstrating staff’s fiduciary commitment
to expenditure discipline. It’s important to note that while this strategy was successful in preparing the FY
2025 without impacting service levels, it is not anticipated that a similar approach in the future would come
without impact.

Goal: Tax Rate Management and Tax Relief
Tax rate management and tax relief has been a guiding financial management principle that Southlake has
Budget Overview
strategically implemented over time, beginning in 2009 with the adoption of a homestead exemption. Since
that time, Southlake has annually implemented tax relief, first in the form of the homestead exemption and
then beginning in 2019 with tax rate reductions. New development and strong sales tax revenues combined
with expenditure management have made it possible to implement thirteen relief initiatives since 2009.

On August 6, 2024, City Council considered and provided direction on establishing the property tax rate for
FY 2025. Staff prepared two tax relief options, which included a tax rate reduction below the FY 2024 tax
rate of 0.319 shown in the table below:

Rate
Tax Rate
Facility
Reduction Reduction Average General Maintenance Vehicle Technology
Valued
Fund
Options Tax Rate from - Revenue Home CIP Cash Reserve Replacement Infrastructure
Current Transfer Transfer
Tax Rate Impact Tax Bill Funding Transfer
No New
Revenue $0.3050 $0.014 ($1,578,522) $2,702 $4,500,000 $1,500,000 $3,000,000 $1,000,000
Limited
New $0.3150 $0.004 ($451,006) $2,781 $3,500,000 $1,500,000 $3,000,000 $1,000,000
Revenue

As a result of that discussion, City Council selected the No New Revenue property tax rate option; therefore,
this budget has been prepared with a property tax rate of $0.3050. With this rate adoption, the City will
be implementing its fourteenth tax relief measure. This long commitment has helped offset increasing costs
for property owners.

In an additional effort to target tax relief to Southlake homeowners, the City is continuing to provide for the
maximum allowable 20% homestead exemption in the adopted FY 2025 budget. The ongoing use of the
20% homestead exemption will complement the current over-65 exemption of $75,000, disabled exemption
of $75,000, and the over-65 tax freeze. The continuation of these exemptions offers additional tax relief.

A 20% homestead exemption will reduce the taxable value of an average-valued home in Southlake by
$218,883. The property owner of an average-valued home will see the equivalent of a tax rate reduction of
approximately 6.4 cents per $100 valuation with the exemption applied.

With the homestead exemption in place, and considering the tax rate reduction, the equivalent residential
tax rate on an average-valued home is $0.241.

Tax relief and strategic tax rate management has been and will continue to be a guiding framework for

18 FY 2025 City of Southlake | Budget Book