Page 20 - CityofSouthlakeFY27Budget

TABLE OF CONTENTS

Structural balance and strong net revenues. Maintaining structural balance is foundational to
Southlake’s budgeting standards. The FY 2027 budget once again matches recurring expenditures with
reliable revenue streams, producing strong net revenues that reinforce long-term stability and preserve
capacity for strategic investment. By protecting this balance, the City can sustain essential services,
absorb economic shifts, and act decisively when new opportunities emerge.

Optimum fund balances. Healthy reserves strengthen the City’s ability to respond to unexpected events
and revenue fluctuations. In accordance with policy, the FY 2027 budget provides for optimum fund
balances across all operating funds. 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 2027, 25.78% of General Fund operating
Budget Overview
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 is one of Southlake’s
core financial guiding principles. The City’s approach blends rapid amortization with aggressive pay-as-
you-go funding to control long-term obligations:

Accelerated payoff schedule. All existing tax-supported debt will be retired within ten years, well ahead
of industry norms.

Reduced leverage. Since 2010, property-tax-supported debt has fallen by 53% even as major infrastructure
has been added. Debt as a share of taxable assessed value will be an estimated 0.29% in 2027, well below
policy guidelines and reflecting prudent borrowing and the disciplined management of debt over time.

Cash commitment. The FY 2027 budget continues the use of cash to fund capital project needs by
allocating $21,050,000 across all funds for parks, roadways, and utilities projects. Cash funding reduces
interest expense, shortens project delivery timelines, and preserves borrowing capacity for future high-
value projects. Final cash and debt allocations will be set with the Capital Improvements Program
adoption in February 2027.

Data-driven planning. How the City plans its capital program is as important as how it pays for it. A
collaborative, data-driven approach brings Public Works, Engineering, and Finance together early in
the process and draws on regional cost trends and industry data to forecast project costs and allocate
resources accurately. Capital projects increasingly hold to their established budgets from the earliest
stages of planning, a standard the City has worked toward for several years, and the North Central Texas
Council of Governments has invited the City to share its approach with other North Texas communities.

Collectively, these measures protect the City’s low debt ratios, fully fund priority infrastructure through
a balanced mix of pay-as-you-go cash and strategic borrowing, and keep the capital program agile
enough to respond to emerging needs.

Managed expenditure growth. Updating the multi-year financial forecast is an integral part of every
annual budget cycle. During the budget process, staff refreshed the multi-year projections for FY 2027
and analyzed the cost drivers that shape the budget each year. These remain concentrated in three areas:
personnel, which makes up roughly 70% of the General Fund; the ongoing renewal of infrastructure such
20 FY 2027 City of Southlake | Budget Book FY 2027 City of Southlake | Budget Book 21