Answers to the City Budget.
The Brownwood City Council is proposing a tax rate increase for the first time since 1999. Two of our largest revenue sources have decreased greatly, while expenses outside our control have increased dramatically. Extensive cuts were made to the proposed budget, but cuts alone could not balance the budget.
New state mandated TCEQ wastewater treatment regulations required the City to upgrade the fifty year-old wastewater treatment plant, costing $6.5 million. Funds were issued from a Certificate of Obligation with an annual debt service payment of $338,516. In addition, the City of Early is building their own wastewater treatment facility, which will result in the reduction of revenue to the City of Brownwood of approximately $252,000 per year.
Employee health insurance rates increased 14% or $271,457. There is no cost of living raise for city employees in the proposed budget.
On the revenue side, changes in consumer buying habits and water use have impacted the City significantly. The drought from 2011-2014 taught us how to conserve water, and water usage is now 23% less than pre-drought levels. We are projecting a revenue reduction of $317,000 in water sales. Historically, water sales made up 21% of the city budget. That amount is now about 18%.
Shopping habits have changed globally. Increased online shopping caused several national retailers to close small market stores, including five stores in Brownwood. Sales tax revenues have historically funded 17% of the budget. With the overall reduction in sales tax revenues, we now anticipate this to be approximately 15% which is a reduction of over $412,000.
In order to create a balanced budget the City can no longer depend as heavily on water sales and sales tax revenues. Our residents are conserving water and shopping has been revolutionized by technology. We have to fund the revenue gap another way.
Replacing Revenue: Fees vs Tax Rate.
Council considered several options to replace the revenue shortfall. One was a 5-10% increase in fees, such as water, sewer, sanitation, landfill, facility rentals, permit fees, etc. One was an increase in property tax rates only, and one was a combination of fees and taxes. The Council determined a combination of small fee increases and the first property tax increase in 18 years as the most equitable solution.
Since 1999, the property tax rate has decreased from $.7946 to the current rate of $.7463. We are proposing going back to the 1999 tax rate, which is an increase of 6.5%. The primary reason is because property tax is a more stable funding source. It does not fluctuate like water sales and sales tax revenues. Secondly, it is more equitable to all citizens. Residents with lower property values will actually pay less in property taxes than they would in across-the-board fee increases. Seniors and disabled who qualify for a tax freeze will not be impacted by the tax increase, benefiting people on a limited income. After analyzing several households based on property values and utility use, we discovered many citizens will actually pay less with a property tax increase and small fee increases than if water, sewer and sanitation rates were all increased by 5-7%.
Sanitation & Landfill
The fee increases proposed include a 4% increase in Sanitation rates to cover the cost of two new trash trucks and increased maintenance on an aging fleet of trash trucks. This would add .84¢ per month to a residential bill. Sanitation rates have not changed in five years. We are also proposing an increase in the landfill gate rate from $40 per ton to $42 to dispose of waste at the landfill. The landfill rate has not increased in nine years.
Water Consumption & Sewer
A small increase of 1.8% on the water consumption rate will be required to cover the Brown County Water Improvement District water rate increase. That will raise the average residential water bill (10 units) by 40¢ per month. The sewer rate will go up 8.4% or 26¢ per 100 cubic foot, raising the average residential sewer payment $2.08 per month to pay for the plant renovation.
Overall Monthly Impact.
The overall monthly impact of the proposed 2017-2018 tax and fees is about $7.05 per household. This is based on the average property value of $92,750 and average water and sewer use.
Continuing Our Progress.
Over the past few years, we have paved over 26 miles of streets and invested in multiple park improvements including a new walking trail, skate park and renovated Cecil Holman Park. A new soccer complex has been constructed, splash pads are under construction and miles of aging water and sewer infrastructure has been improved. New restaurants and retail projects have been recruited and established in the community. Thousands of residents have been served by our Fire and Police personnel. All of this has occurred with no property tax increase for more than 18 years.