Page 166 - CityofSouthlakeFY26AdoptedBudget

Revenues

Southlake’s ability to provide exceptional services depends on a diverse and stable revenue base,
supported by strategic use of reserves. The largest sources are ad valorem (property) and sales taxes,
followed by franchise fees, charges for services, and usage fees.

Taxes. Taxes, both property and sales, are levied to fund governmental activities and are distinct from
fees in that they are not tied directly to a specific benefit received by an individual or property. The
majority of the City’s tax revenues are collected in the General Fund, which supports essential services
such as police, fire, road maintenance, library, and parks. Taxes account for nearly 86% of General Fund
revenues. In addition to the General Fund, a portion of sales tax supports the Crime Control Prevention
District, Southlake Parks Development Corporation, and Community Enhancement Development
Corporation, as authorized by state law. Details for these funds can be found in the Special Revenue
Fund section of this document.

Fees. Service fees are another important revenue source. These charges recover all or part of the City’s
costs for providing specific services, granting access to public property, or mitigating the impact of
certain activities on the community. Fees are set to cover the reasonable cost of providing the related
Multi-year Operating Plan
service or facility and are subject to legal restrictions that often require them to be accounted for in
separate funds. The largest category is utility fees for water, wastewater, and solid waste collection. Other
significant categories include development-related fees and impact fees. Impact fees are especially
volatile because they are tied to the pace of new development and are restricted to infrastructure
construction, renovation, or upgrades—not ongoing operations.

Forecasting. Accurately and conservatively forecasting key revenues is essential to maintaining a
balanced budget today and in the future. In addition to the annual budget preparation process, the
City continuously monitors and updates revenue forecasts as economic conditions, market trends,
or environmental factors shift. Figure 3 outlines the City’s approach to gathering and analyzing local
economic information to inform projections.

Figure 3

Economic Information Used for City Financial Projections

Economic Labor & Housing and Consumer
Indicators Employment Commercial Spending
Growth

Interest Rates Wages Building Permits Retail Sales
GDP Growth Unemployment Home Values Projections
Fuel Costs Healthcare Costs Top Taxpayer Meetings

166 FY 2026 City of Southlake | Budget Book FY 2026 City of Southlake | Budget Book 167