Item 01: Fiscal Year 2024-2025 Budget Policy

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COSM_Admin

Administrator
Staff member
Receive a Staff presentation and hold discussion regarding the Fiscal Year 2024-2025 Budget Policy for the City of San Marcos, and provide direction to the City Manager.
To view the Budget Policy Workshop Packet in PDF: Click Here
To view the Budget Policy Workshop Packet in Interactive Agenda:
Click Here
 
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JHughson

CoSM Members
Slide 14. Did we determine that both of the apartment complexes bought by TxSt are in the Downtown TIRZ? Appears so to me but that's now what we said right after the sale.

Slide 33. To what do we attribute the Outlet Mall sales continuing to drop?

For Slide 34, do we have a slide that shows the difference in sales tax actual income to budget?

I see the focus on Property and Sales tax income. How much do we bring in regarding fees, etc.? (I know it is small in comparison)

Slides 47 and 48 are confusing. Same title, different numbers. $888,920 or $11.1M? Slide 48 can use more explanation.

Slide 50, last bullet. Are these property value increase assumptions?
I can't even begin the questions on slide 51 - Forecasted Debt Tax Rate. Assuming all will be explained on Thursday.

Is slide 51 our tax base across the city?

Slide 60 is IF we do more exemptions or a freeze? - Giving us the potential impact?

Same for slide 61?
THANKS for the HSAB and CDBG summaries! May I have these in spreadsheet form?

Slide 67. How do we know what the fund balance will be in future years since it increases by leftover/unused dollars from the budget?

Slide 70. How does the ratio of M&O to Debt affect these numbers?

Slide 70. #7. Continue budgeting revenues based on historical trends?
Define "historical" trends as in which time period. We have pre-covid, during-covid (assuming not that one), immediately post-covid and last year. And we have the change in viewpoint on sales tax for a couple of years now that turned out to not be good, although we had no reason to think that.

Slide 70 - Decision pt. 4. Keep tax rate between No-New-Revenue Rate and Voter-Approval Rate? Remind us of what each of those rates are.

Slide 76. Electric fund balance. What does "Required Fund Balance, Evaluate 90 days" mean?
What would be the fund balance for each of those years? Is that what is shown? If so how close to 90 days is each of those (all utilities)? For decision point of working toward 90 days, where are we now, in days? 50? 60? 85? for each of the utilities and other funds such as HOT.

Slide 97. Please remind us of the monthly average impact of the rate increases last year (this budget year) on an average house or use $200,000 because it's easier to extrapolate. (We used $100,000 in the 1990's which was close to average and easy to extrapolate.)

Slide 117 Hotel Tax - what do you mean by capacity?
Still on 117 - – Continue budgeting revenues based on conservative historical trends?
Define "historical" trends as in which time period. We have pre-covid, during-covid (assuming not that one), immediately post-covid and last yet.

What did we decide on funding the two people working downtown that are now paid from that TIRZ?

In several places we have "If capacity allows?" What does that mean? I know it means if we decide we can afford to pay from the General Fund but how do we make that decision?
 

COSM_Admin

Administrator
Staff member
Responses provided by Jon Locke, Director of Finance:
Slide 14. Did we determine that both of the apartment complexes bought by TxSt are in the Downtown TIRZ? Appears so to me but that's now what we said right after the sale. Yes, both Sanctuary Loft and Vistas are located in TIRZ #5.

Slide 33. To what do we attribute the Outlet Mall sales continuing to drop? Outlet mall sales in 2024 are keeping pace with 2023 sales. Since 2021, outlet mall sales are holding steady around $8 million.

For Slide 34, do we have a slide that shows the difference in sales tax actual income to budget? The budget is $14.4 million and actuals are $13.7 million through January.

I see the focus on Property and Sales tax income. How much do we bring in regarding fees, etc.? (I know it is small in comparison) For FY24 Adopted, sales tax = $42M, Property tax = $37M, and other revenue = $32M. Of the $32M, approximately $5.9M is generated from fees and permits. The majority of the remaining $26.1M comes from franchise fees, indirect costs and interest income.

Slides 47 and 48 are confusing. Same title, different numbers. $888,920 or $11.1M? Slide 48 can use more explanation. The two slides are illustrating the equivalent impact of shifting a penny of the tax rate between the operations component and the debt component.


Slide 50, last bullet. Are these property value increase assumptions? Yes, these are the assumptions used in forecasting the taxable values and the same assumptions used in the general fund forecast.


I can't even begin the questions on slide 51 - Forecasted Debt Tax Rate. Assuming all will be explained on Thursday. Absolutely, will be explained today.

Is slide 51 our tax base across the city? Yes, forecasted taxable values, excluding TIFs across the City.

Slide 60 is IF we do more exemptions or a freeze? - Giving us the potential impact? Yes, all of these scenarios are in addition to the exemptions the City already provides.

Same for slide 61? Yes, all of these scenarios are in addition to the exemptions the City already provides. The slide is showing what the lost revenue could have funded and the additional value that needs to be added to offset the lost revenue.



THANKS for the HSAB and CDBG summaries! May I have these in spreadsheet form? Attached.

Slide 67. How do we know what the fund balance will be in future years since it increases by leftover/unused dollars from the budget? The revenues and expenses shown for each year are based on the assumptions provided for the General Fund forecast on slides 27 and 28. The fund balance fluctuates based on those forecasted revenues and expenses.

Slide 70. How does the ratio of M&O to Debt affect these numbers? Decision point 6 would increase the debt component of the tax rate by 1% from 27% to 28% in FY 2025. This would move $536K from operations to debt.

Slide 70. #7. Continue budgeting revenues based on historical trends? Define "historical" trends as in which time period. We have pre-covid, during-covid (assuming not that one), immediately post-covid and last year. And we have the change in viewpoint on sales tax for a couple of years now that turned out to not be good, although we had no reason to think that. Historical trends is referencing a 3-year and/or 5-year average. Each revenue source is independently evaluated to take into consideration recent changes impacting trends.

Slide 70 - Decision pt. 4. Keep tax rate between No-New-Revenue Rate and Voter-Approval Rate? Remind us of what each of those rates are. FY 2024 - No-New-Revenue Rate = 53.05¢ and Voter-Approved Rate = 68.87¢. The No-New-Revenue rate is the tax rate that will produce the same amount of tax revenue as the previous fiscal year on properties taxed in both fiscal years. The Voter-Approval rate is the maximum rate allowed by law without voter approval and is calculated by increasing the operation component of the NNR by 3.5% and adding any unused increment from the prior 3 years.

Slide 76. Electric fund balance. What does "Required Fund Balance, Evaluate 90 days" mean? Short hand for the FY24 budget policy, “Electric Utility Fund: Evaluate increasing the minimum fund balance requirement from 60 days of recurring operating expenses to 90 days of recurring operating expenses.”
What would be the fund balance for each of those years? Is that what is shown? What is shown is what would be needed to meet the 90 days of recurring operating expenses. If so how close to 90 days is each of those (all utilities)? Stormwater and Electric are both set at working towards 90 days. Water is to maintain 90 days, which is exceeding the 90 day requirement, shown on slide 80. Stormwater, shown on slide 84, is just shy of the 90 days in FY25, but exceeds it for the remaining years. Electric is at about 75 days for FY24, but this then goes down to around 60 days for FY25 and beyond. For decision point of working toward 90 days, where are we now, in days? 50? 60? 85? for each of the utilities and other funds such as HOT. Resource Recovery, Transit, HOT and Community Enhancement do not currently have fund balance requirements. They each have the decision point to consider creating them at 60 days.

Slide 97. Please remind us of the monthly average impact of the rate increases last year (this budget year) on an average house or use $200,000 because it's easier to extrapolate. (We used $100,000 in the 1990's which was close to average and easy to extrapolate.) The ratepayer impact statement has a monthly dollar change of $8.66

Slide 117 Hotel Tax - what do you mean by capacity? State law limits hotel tax expenditures for historic restoration and preservation to 15% of hotel tax collections. In FY23, the City collected $3.7 million in hotel taxes, making the 15% cap $553K. Available capacity is referring to two things, 1) being within the 15% cap and 2) remaining capacity after funding other programs (i.e., Convention and Visitors Bureau and Tourism).


Still on 117 - – Continue budgeting revenues based on conservative historical trends? Define "historical" trends as in which time period. We have pre-covid, during-covid (assuming not that one), immediately post-covid and last yet. Historical trends is referencing a 3-year and/or 5-year average. Each revenue source is independently evaluated to take into consideration recent changes impacting trends.

What did we decide on funding the two people working downtown that are now paid from that TIRZ? This item ended up ranked number 12 out of 23.


In several places we have "If capacity allows?" What does that mean? I know it means if we decide we can afford to pay from the General Fund but how do we make that decision? We are trying to determine Council’s priorities of the items that should be funded first if revenues come in higher than expected and capacity increases.
 

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