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Tyler City Council adopts FY 2017-18 budget

September 18, 2017

Press Release
For Immediate Release
Sept. 13, 2017
 
Tyler City Council adopts FY 2017-18 budget


The Tyler City Council adopted the 2017-18 budget at the regularly scheduled City Council meeting on Wednesday morning, and approved the plan to increase the current tax rate of 23 cents to 24 cents per $100 valuation.
 
“This increase will move us one step closer to stabilizing our revenue stream for general City functions, primarily public safety, streets and traffic maintenance, and parks and recreational programming,” said City Manager Ed Broussard. “This is necessary so that we may continue to provide the services our citizens expect and value.”
 
The proposed budget highlights the City’s property tax rate-by far the lowest in the state for a city its size- and the city’s dependency on sales tax to operate. Sales Tax makes up 41 percent of the General Fund – which provide for public services such as Police, Fire, Library and Parks.   

“As a result of increased online shopping and a decline in the oil and gas sector, Sales Tax has not increased in the last two years,” said Broussard. “We are budgeting less from sales tax this year than we did in Fiscal Year 2014-15. This stagnation has been devastating to city operations .”
 
The City is currently projecting to be $867,572 below budgeted Sales Tax revenues for the General Fund, with two months remaining in the fiscal year. The City has maintained a hiring freeze on General Fund positions since the spring of 2016, as well as deferred replacement and maintenance on City equipment, such as computers and vehicles, to balance the current budget. 
 
 
The City is currently projecting to be $867,572 below budgeted Sales Tax revenues for the General Fund, with two months remaining in the fiscal year. The City has maintained a hiring freeze on General Fund positions since the spring of 2016, as well as deferred replacement and maintenance on City equipment, such as computers and vehicles, to balance the current budget. 
 
 “We are a lean organization,” said Broussard. “While we were able to balance our budget in the short-term through hiring freezes, budget cuts and delayed expenditures, we can no longer sustain these practices and still provide the same level of service to our citizens.”
 
At Tyler’s new rate of 24 cents per $100 valuation, a home valued at $150,000 would be assessed City property taxes of approximately $360 per household per year, or $30 per month.
 
“At 24 cents, Tyler’s property tax rate will remain- by far-the lowest in the State of Texas for a similarly sized city,” said Broussard. “In fact, the City would have to add 16 cents to the property tax rate, taking it up to 40 cents, just to match the second lowest: Midland, TX.
 
Tyler’s tax rate of 24 cents, with Midland landing closest at 40 cents. Other cities of similar size are the City of Waco with a tax rate of 78 cents per $100 valuation; Denton at 68 cents, Abilene at 71 cents and Beaumont at 69 cents, according to information from the Texas Municipal League. 
 
Property taxes make up 29 percent of Tyler’s General Fund revenues – which provide for public services such as Police, Fire, Library and Parks.
 
“When homeowners pay their property taxes, only a little over 10 percent is for the City,” explained Broussard. “The other 90 percent goes to Tyler Independent School District, Smith County and Tyler Junior College.”
 
Tyler will continue its property tax freeze for those over 65 and disabled who have applied for the benefit. 
 
Besides sales and property tax, fines and fees make up eight percent of the General Fund revenue, and have been in decline for the past two years. This is largely a result of changes made to the collections process, including affordable payment plan options and the ability to pay fines after warrants are issued, but before the papers are served, cancelling the warrant.
 
“We have modified our collections system with the goal of improving our customer service,” said Tyler Mayor Martin Heines. “As citizens, we must obey public safety laws, and be held accountable when we do not. But that does not mean we treat people like criminals for having a ticket.”
 
The City is also proposing funding cuts to outside agencies, requesting that those with fund balances, revenue allocated by the City and unspent by the agencies in years past, utilize those balances for operating this coming year.
 
“I will also be requesting that the City and other local governments come together and collectively audit outside agencies receiving tax-payer funded allocations on an annual basis,” added Heines.
 
 
Budget Details
 
In the General Fund, City Council has approved the increase of fees for many departments, including the Parks and Recreation Department.
 
“We are a lean organization, but to best match a high level of quality for our citizens, usage fees need to increase,” said Broussard. “By increasing rates in certain areas, those paying to utilize City services will shoulder a more equitable portion of costs with taxpayers.”
 
In the Parks Department, fee increases will be seen in the athletic field rental rates, Glass Recreation Center and Bergfeld Amphitheater rental rates. Athletic rates will increase to $1000 per field per season for baseball and softball and $700 per field per season for soccer until the Fall 2018 season, where they will be increased to $1000 per field per season. The fees to rent the newly renovated Bergfeld Amphitheater and Centene Stage are increasing to $300 per day.
 
The 2017-18 City budget also proposes rate increases within Enterprise Funds. Tyler has several departments that are considered Enterprise Funds, meaning they do not receive tax revenue and must generate their funding through fees for services they provide. This funding is then returned to the operation in the form of maintenance, repair and replacement of equipment.
 
Tyler Water Utilities (TWU) is one of those departments. This year, TWU is proposing a $1 water and wastewater base rate increase, as well as a 1.5 percent increase for volumetric rates over 25,000 gallons of consumption per month on both water and sewer services.
 
This increase will generate an additional $1,143,880 in revenue, and will be used for capital improvements on both the water and wastewater infrastructure in the coming year.
 
“Overall, we anticipate spending close to $100 million dollars over the next 10 years on 100 projects to improve our water and wastewater systems,” said Broussard. “We anticipate approximately two-thirds of these improvements will be paid for with cash.”
 
The City has already begun many upgrades to both the water and sewer system in 2016. Projects totaling more than $10 million dollars have been completed or are underway at the Lake Palestine Water Treatment Plant and the Golden Road Water Treatment Plant, including a new Booster Pump station on Troup Highway. Tyler Water Utilities is in the process of inspecting and modeling its sewer system to prevent overflows caused by tree roots and fats, oils and grease in the system. 

 

“As a community, it is our ethical responsibility to reinvest in our aging infrastructure,” said Heines. “If maintaining the high-quality of our drinking water is important to us, if making sure that preventable sewer system overflows do not occur, then we must be willing to invest in our infrastructure today and not pass the buck to future generations.”

With these changes, the average customer that uses 10,000 gallons of water per month will see an increase of $2 per month. Despite the increase, Tyler’s rate remains one of the lowest among cities of comparable size. This increase will bring Tyler’s combined rate* to $72.72 as compared to Waco’s at $101.90, College Station at $77.43 and Brownsville at $76.61. (*This rate does not include storm water, water quality or water service fees.)
 
“We increased the volumetric rates, as well as base rates, so that larger commercial enterprises are investing equitably into the water and wastewater systems they use,” added Heines. “We do not want residential consumers, especially those living in smaller homes and utilizing less water and sewer services, over-burdened.”
 
Consumers will also see a new $1.28 regulatory compliance fee on their bills, which will generate $522,240 in revenue restricted to service debt issued for EPA regulatory compliance.
 
The total monthly increase, with all fees included, for customers who use less than 25,000 gallons will be $3.62 per month.
 
Solid Waste is also recommending an increase to residential rates this year, proposing a $2 increase for twice weekly residential trash pickup. This will be the first rate increase in six years. Residential trash pickup has been historically subsidized by commercial trash services.  
 
Building services, development services and fire inspection are also proposing fees to cover the cost of service provision and maintenance. The City’s annual budget does not include projects paid for by half-cent sales tax funds. The half-cent annual budget is adopted via a separate process.
 
“Over the years, the City has been reluctant to raise rates and fees, even as the cost to provide services became more expensive,” said Broussard. “We are at the point where we must begin to recover these costs due to the inability of the General Fund to subsidize these programs.”
 
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