Page 168 - CityofSouthlakeFY26AdoptedBudget

Operating Expenditures Figure 4
The City’s operating expenditures fall into three Consumer Price Index
broad categories: personnel, operations, and (CPI) Reporting
capital outlay. Managing these costs responsibly
is essential to sustaining service quality and All urban consumers, Dallas-Fort Worth
maintaining long-term financial stability. Month - FY 25 CPI Growth

Expenditure Management Philosophy. November 2.02%
Southlake’s financial management approach is
guided by the principle that the cost growth in January 2.80%
the General Fund for existing goods and services
should not substantially exceed the Consumer March 1.63%
Price Index (CPI) for the Dallas–Fort Worth area.
This benchmark covers contract increases, cost- May 2.28%
of-living adjustments, and other recurring costs
associated with current service levels. Costs for July 2.27%
new services or unfunded legislative mandates
Multi-year Operating Plan
are considered separately. The CPI is monitored
throughout the year and used as a key reference point when developing each annual budget (Figure 4).

Operational Cost Reviews. Each year, the City conducts a comprehensive review of operating costs to
ensure taxpayer dollars are used efficiently and effectively. This process begins at the department level,
where leaders assess all expenditures line-by-line, looking for ways to reduce inefficiencies, renegotiate
contracts, or reconfigure operations for better results at lower cost.

Departments are encouraged to explore whether processes can be streamlined, technology leveraged,
or resources shared across divisions to achieve service goals more efficiently.

Following these internal reviews, department leaders present their budget requests—whether to
maintain, enhance, or expand services—to the City’s leadership team. This group meets collectively to
evaluate all requests against citywide priorities, rather than considering them solely from a department-
by-department perspective. Each request is reviewed for strategic alignment, service impact, and cost-
effectiveness, and then ranked based on its overall benefit to the community.

The resulting recommendations are provided to the City Manager to guide final budget development.
This disciplined, cross-departmental approach ensures that funding decisions reflect the City’s broader
strategic vision and direct resources to the areas of greatest community impact. Over time, it has helped
Southlake maintain high service standards, even in the face of inflationary pressures and market cost
increases, without relying on significant tax rate increases.

Personnel Costs. As a service delivery organization, salaries and benefits represent the largest share of
the City’s operating expenditures. To manage these costs effectively and competitively, the City follows
an adopted compensation philosophy and pay system—first implemented in 2013 and amended in FY
2022. This system defines the labor market, market position, pay structure, and career progression plan,
ensuring a consistent, equitable, and financially sustainable approach. The City targets an average pay

168 FY 2026 City of Southlake | Budget Book FY 2026 City of Southlake | Budget Book 169