Page 173 - CityofSouthlakeFY27Budget

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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. Multi-year Operating Plan

For FY 2027 through FY 2031, revenue projections incorporate the following factors:
• Inflationary impacts on purchasing power and operating costs.
• Slowing pace of new development as Southlake approaches build-out, which affects related fees and
taxes.
• Pass-through costs of utilities that influence service fee rates.

This disciplined forecasting approach helps ensure that financial plans are realistic, sustainable, and
aligned with the City’s long-term strategic priorities. For the period of FY 2027 to FY 2031, major
revenue growth rates were forecasted as follows:

Five Year Financial Forecast Revenue Assumptions -
General Fund FY 2027 - FY 2031
Revenue FY 2027 FY 2028 FY 2029 FY 2030 FY 2031
Source Budget Forecast Forecast Forecast Forecast

Ad Valorem
(Property Tax) -4.9% 3% 1% 3% 1%

Sales Tax 8.8% 2% 2% 2% 2.5%

Franchise Taxes 4.2% 1.5% 1.5% 1.5% 1.5%

Charges for 28.3% 1.5% 1.5% 1.5% 1.5%
Services

Permit Fees 1.2% 1% 1% 1% 1%

*Growth rates compared to the FY 2026 Adopted

FY 2027 City of Southlake | Budget Book 173