City Council

Killeen City Council members listen as Killeen Finance Director Jonathan Locke discusses the 2017 mid-year budget and fiscal year 2018 preliminary budget Tuesday during the Killeen City Council workshop at the Killeen City Utilities Collections building.

When the Killeen City Council passed a balanced annual budget in September 2017, it capped a new era of relative stability in the city’s finances.

The budget also set the defining tone on Killeen City Manager Ron Olson’s tenure: The city would not rely on reserve funds to pay for a deficit budget and — most importantly — hard cuts would be made when necessary.

However, Olson told the council last year, the balanced spending plan in 2017 relied on a number of short-term solutions and cuts that would likely not be replicable if general fund revenues continued to flag into the future.

That future is today.

The city is expecting less money for operating expenses in the coming fiscal year budget than last year, according to preliminary figures provided to the council May 22. That’s a problem considering the city’s continued growth and a number of general fund departments that have already been cut to the bone.

Last year, those cuts took the form of community services being scaled back and 25 police vacancies being eliminated. But what happens when there are few vacancies left to cut?

That’s the reality the council could be facing when hard budget talks begin in early August.

On top of those immediate concerns, the city is facing an existential crisis of sorts when it comes to disabled veteran property tax exemptions, a state-mandated revenue drain largely responsible for a quarter of Killeen’s properties being off limits for taxation.

Although the city receives a little more than $1 million in disproportionate impact aid from the state, those exemptions stripped around $3.5 million from the city’s budget in 2018.

Although the city has not received hard figures on its taxable base and has not yet formed solid departmental budgets, the council could find itself cutting to the bone this year, and in future years, if revenues do not make a turn around.

Where to cut?

According to a city budget schedule, departments will enter the “balancing phase” in June — the period in which all departmental revenue and expenditures are added up to create a proposed budget for council approval.

Fiscal year 2017 was the first time the city has worked a balanced budget in years, after the council adopted a series of deficit budgets over the course of the 2000s and early 2010s.

That system came to a halt in summer 2016, when a preliminary budget showed an $8 million shortfall in the city’s operational fund. Results of a special audit reported in September 2017 showed years of mismanagement by some former city officials.

After months of cuts, the council eventually balanced the general fund budget in January 2017, largely due to the uncommon move to transfer $1.67 million from the solid waste reserve fund to the general fund.

In the act of balancing an operational fund predicted to be millions of dollars in the red in 2019, the most likely result is expense cuts. If recent history is an accurate marker, those cuts could include community activities, public facility hours or city personnel.

In 2017, the council approved an annual budget that built in broad program cuts throughout the community services department — most notably in the elimination of morning hours at the Killeen Community Center, an activities and events hub next to the Bob Gilmore Senior Center at East Veterans Memorial Boulevard and South W.S. Young Drive.

The community center offered 30 hours per week of open gym time free to the public, according to a presentation. The center’s new hours, which begin at noon each day, cut most of those free gym hours. The community center also closed on Mondays.

At Lions Club Park’s Family Recreation Center, the department cut half of its free classes for its 356 members amid declining membership rates in 2016. The recreation center offered 26 fitness classes a week, including Zumba, yoga and indoor cycling. The center now offers 13 classes.

The city also cut four sports from the adult team sports program, which had 117 registrants in the 2017 fiscal year. The cuts included the volleyball, basketball, flag football and kickball leagues. The city kept slow-pitch softball.

Police department

The most significant personnel cuts in the current budget were in the police department, where 20 vacant commissioned officer positions, three vacant noncommissioned positions and two vacant animal services positions were eliminated.

In 2017, then-interim Police Chief Margaret Young said the cuts could have a “slowing impact” on criminal investigation as the department underwent a reorganization to allocate more resources to patrol.

According to Killeen Director of Communications Hilary Shine, the department currently has 24 officer and 27 civilian vacancies.

With fewer vacancies left to cut, the department could be forced to eliminate filled positions in the coming budget — particularly as federal grant money to help support police personnel is phased out of the budget over the next two fiscal years.

According to city projections, the amount of intergovermental revenue into the general fund as a whole is expected to drop from $3,965,295 to $2,112,806, a more than $1.8 million cut, in fiscal year 2019 — mostly tied to the expiration of a 2015 COPS grant from the U.S. Department of Justice. Killeen City Manager Ron Olson has previously said the city would limit its reliance on federal grants without first identifying a long-term funding source for personnel or other continuing expenses paid for by a grant.

The challenges facing the department were enough for Councilman Juan Rivera, who campaigned for his May 5 re-election on public safety, to say he was “very concerned” by the possibility of new cuts.

“If your plan was to worry me, you did that,” Rivera told Olson on May 22. “If we don’t do nothing right now, we’re not going to have the services we need to provide.”

Troubling trends

As the council will inevitably search for new revenue in the coming years, property taxes could be largely off limits.

According to city figures, total property tax exemptions now encompass an estimated 24 percent of the city of Killeen’s taxable base — meaning the city cannot draw property tax revenue from nearly a quarter of properties within city limits.

The total value of exempt property in city limits has nearly doubled since fiscal year 2014 — from $4,918,147 to an estimated $9,744,080 in the coming fiscal year.

Although that total includes tax exemptions for nonprofits and churches, among others, Olson said the single largest drain was the disabled veteran property tax exemption, which has grown exponentially in the last few years.

“The rapid increase over the past couple years has been almost completely disabled veteran property tax exemptions,” Olson said.

Per state law, veterans with a Veterans Affairs-approved, 100-percent disabled veteran designation are exempt from paying property tax on their homesteads. Veterans with lower disability designations receive pro-rated discounts on their property taxes.

In the current fiscal year, the city is scheduled to lose $3,848,134 from the 100-percent exemption alone. Nearly $1.1 million of that total will be reimbursed from the state — still leaving the city behind by around $2.7 million.

Of concern for the city is the exponential growth of those exemptions since they were approved by Constitutional amendment in 2010.

The amount of taxable property exempted for 100-percent disabled veterans in Killeen has more than tripled since 2014, with more than $513 million in property off limits in 2018. In 2014, that total was around $168 million.

According to estimates, the disabled veteran exemptions will put 14 percent of all Killeen properties off limits for taxation in fiscal year 2019.

Exact exemption values will not be available until the city receives certified valuations from the Bell County Appraisal District on July 25.

Long-term concerns

With all those short-term challenges on the docket, a group of looming financial hurdles are fast approaching.

Among the multi-year issues the city administration is facing:

Killeen’s civil service employees — including police and fire — are paid approximately 7.5 percent below market average. Non-civil service employees make a whopping 13.29 percent below market value on average.

The employee retirement fund, established through the Texas Municipal Retirement System, is only 85 percent funded with little future growth projected, and city contributions are expected to skyrocket over the coming decades.

The city’s deferred street maintenance costs — somewhere in the range of $35 million — is only about 17 percent funded in the 2018 budget. A 2013 survey of the city’s road infrastructure recommended the city budget about $1.8 million per year for maintenance expenses; however, the city only budgeted $300,000 in 2018.

Of the city’s 43 buildings, 27 will need roofs over the next 20 years, Olson said. On top of that, the city is legally obligated to replace HVAC units at all of its facilities — a cost of $360,500 in fiscal year 2018 alone.

On May 22, Olson said he wanted to begin tackling those issues starting in the 2019 fiscal year budget, likely beginning with complete tear-downs and rebuilds of some of those city programs. Olson has said all of those programs need thorough reviews prior to the city and council taking action to address them.

The most pressing, Olson said in January, is the city’s employee compensation plan, for which Olson recommended a complete re-imagining.

“In order to fix the issue, we’ve got to do this different than we’ve ever done it,” Olson said Jan. 12. “Our system is so far out of whack that it needs to be rebuilt.”

However, it remains unclear how far the city can push its annual expenditures without making a balanced budget out of reach.

According to rough estimates from a city graphic, the general fund will be nearly $2 million in the hole — without addressing any of the four issues above.

Despite those challenges, Olson said he would bring a balanced general fund budget to the council without losing sight of the city’s core mission of providing adequate services to residents.

“We are absolutely going to balance the budget and do it in a responsible way,” he said.

kyleb@kdhnews.com | 254-501-7567

(4) comments

Choosewisely

There are some very easy places to start cuts. Stop putting money into the GKCC and KEDC until they can be effective. Cut all of the vehicle allowances. Stop paying the Schleuter Group for "consulting". Stop paying for all other external consulting without specific, itemized approval from the council. Don't plan on building roads for developers and other outside entities. Just a start....

depraveddegeneracyCity

Owner:
GRACE CHRISTIAN CENTER


% Ownership:
100.0000000000%


Total Value:
$4,064,884


Entity
Description
Tax Rate
Appraised Value
Taxable Value
Estimated Tax


CAD
TAX APPRAISAL DISTRICT, BELL COUNTY
0.000000
$4,064,884
$0
$0.00


CB
BELL COUNTY
0.421200
$4,064,884
$0
$0.00


JCTC
CENTRAL TEXAS COLLEGE
0.139900
$4,064,884
$0
$0.00


RRD
BELL COUNTY ROAD
0.029900
$4,064,884
$0
$0.00


SKIL
KILLEEN ISD
1.110000
$4,064,884
$0
$0.00


TKI
CITY OF KILLEEN
0.749800
$4,064,884
$0
$0.00


WCLW
CLEARWATER U.W.C.D.
0.003850
$4,064,884
$0
$0.00


WWC6
BELL COUNTY WCID #6
0.030000
$4,064,884
$0
$0.00



Total Tax Rate:
2.484650






Taxes w/Current Exemptions:
$0.00




Taxes w/o Exemptions:
$100,998.14

That is just one property they own. Just go to Bellcad and do a property search.

How many Veterans and Gold Star spouses can say they get away with not paying over 100k in taxes a year.

depraveddegeneracyCity

I find it hard to belive that the Our Men and women that serve our country are the drain. Maybe the city should look at this. This is just a handfull of non-profits that hold property in Killeen that should be taxable. The city and city council needs to stop blaming the vets and put the blame where it lays. Al these non-profits. Just this handful of churches own more then $15,567,126. The biggest offenders are Grace Christian Center @ $5,244,819 That is just property they have in Killeen and FIRST UNITED METHODIST CHURCH KILLEEN @ $$8,190,242 also just what they have here in Killeen tx.
Many large cities and small cities have and are issuing Pilot programs to target these types of churches, because they are a drian on the tax payers and the city.
One must remember they also use the services that you the average tax payer also use. From Fire to Police, from roads to sewer system. They use are Parks and many other things that we tax payers pay for out of our own pockets.
Before blaming one, one should blame those that violate under the disguise of Gods work.
Here is a list, you also can go to http://www.bellcad.org/ and do a property serach and see for yourself. There are many more that are pushing up to 20 and 30 million dollars just in Killeen alone.
Remember God needs no money, he gave you the greatest church in the world, it is free to go to. Just open your front door, look up, look around you. Every Tree, bird, blade of grace are a gift from your God. The sky is the churches roof and it didnt need to be painted and even Michelangelo himself could not paint one better.
42473
0171780000
Real
1401 E ELMS RD KILLEEN, TX
GRACE CHRISTIAN CENTER
$4,064,884

239671
Personal
1401 E ELMS RD KILLEEN, TX
GRACE CHRISTIAN CENTER
$77,463

122408
0494270000
Real
1101 E ELMS RD KILLEEN, TX
GRACE CHRISTIAN CENTER OF KILLEEN TEXAS INC
$176,183

129762
0494290000
Real
WINKLER AVE KILLEEN, TX
GRACE CHRISTIAN CENTER OF KILLEEN TEXAS INC
$576,661

396373
0494270600
Real
1101 E ELMS RD KILLEEN, TX
GRACE CHRISTIAN CENTER OF KILLEEN TEXAS INC
$349,628

20197
0159493200
Real
1410 S 2ND ST KILLEEN, TX
CHURCH OF JESUS CHRIST OF
$1,282,856

39733

Personal
WILLIAMSON DR KILLEEN,
CHURCH OF OUR LORD JESUS CHRIST, THE
$12,750

42996
0195181600
Real
3119 COMMERCE DR KILLEEN, TX
CHURCH OF THE DELIVERANCE INC
$220,880

60415
0195181700
Real
3121 COMMERCE DR KILLEEN, TX
CHURCH OF THE DELIVERANCE INC
$122,005

60418
0503350000
Real
3401 E RANCIER AVE KILLEEN, TX
CHURCH OF THE DELIVERANCE INC
$191,798

35580
0054700000
Real
1117 W AVE H TEMPLE, TX
FIRST ASSEMBLY OF GOD
$171,109

239651

Personal
3209 ATKINSON AVE KILLEEN, TX
FIRST ASSEMBLY OF GOD CHURCH
$46,500


459986
0201052166
Real
7432 TRIMMIER RD KILLEEN, TX
FIRST ASSEMBLY OF GOD INC
$33,817

459987
0201052169
Real
7434 TRIMMIER RD KILLEEN, TX
FIRST ASSEMBLY OF GOD INC
$50,350

415886
0171517002
Real
2801 E ELMS RD KILLEEN, TX
FIRST UNITED METHODIST CHURCH KILLEEN, TEXAS
$8,190,242

I voted for Holly Teel, she has the facts and knows that District one is not the blight on the city. It is the city council and those that wish to make money off those that seek God in desperation. If your church charges you part of your pay check ( any % ) then it is no longer a church, it is a business dealing in sheep stealing!

Wake up and I hope to see her run again, she has my vote every time she runs!

Alvin

This is the personal opinion of this writer.

Copy: 'When the Killeen City Council passed a balanced annual budget in September 2017, it capped a new era of relative stability in the city’s finances.' End of copy.

We've been over this road before and I still can't see why you are saying this city had a balanced budget when everyone, or almost everyone knows this city's budget was not in any way 'balanced'. For it to be said that this city had a balanced budget, it would have to be said that this city started with a cost effective and balanced budget from when the budget first started on October 1, 2017 and it still has a range of zero dollars from the budget on September 31, 2018, and we all know that this was and is not the case.
One thing that tears a hole in the balanced budget is this city forecast a sum of $1.8 million for road repairs and to date this city has only been shown to be spending the total sum of $300,000 dollars. This city has gone on record of allowing the funding, after the fact, for roadways and a bridge that total's $9 million dollars and counting. And this city has gone on record of allocating almost $500,000 dollars and pulling the funds out of hotel fees and such. Why are we charging such an outrageous sum for a hotel tax when you are withdrawing these funds to build/refurbish the city council chambers????
I say, 'drop the new road bridge construction' and insert the given funds in a more challenging way, on the upgrade of all of the roadways in Killeen. It will be a start on the delinquent $20 to $30 million in negative funding that exists today.

Copy: 'The city is expecting less money for operating expenses in the coming fiscal year budget than last year, according to preliminary figures provided to the council May 22. That’s a problem considering the city’s continued growth and a number of general fund departments that have already been cut to the bone.' End of copy.

As just said, it's not the necessary funding that is spent on required funding that is used to keep this city operating, but the 'fringe benefits' that this city keeps on funding, and shouldn't. To wit: the roadways and bridge to the tune of $9 million dollars, the remodeling of the city council chamber, and the tax cuts that the KISD has authorized in property taxes, to name a few.

Copy: 'Last year, those cuts took the form of community services being scaled back and 25 police vacancies being eliminated. But what happens when there are few vacancies left to cut?' End of copy.

Those 25 vacancies that were eliminated, first,if you funded the 25 vacancies, did not fill them, but spent the funds elsewhere, this city was in error as if the vacancies were not filled, there should have been a surplus of money in the KP Departmental funding. If there was not any funding provided and the positions were not filled, then it was a push, zero in-zero out so where the elimination of funds depicting on the 25 positions????

Copy: 'On top of those immediate concerns, the city is facing an existential crisis of sorts when it comes to disabled veteran property tax exemptions, a state-mandated revenue drain largely responsible for a quarter of Killeen’s properties being off limits for taxation.' End of copy.

Yes that is a problem, but a problem of each city in Texas, and one, if you know it's coming, you have to deal with it. As they say, 'there's no reason to cry over spilled milk'.

And in all certainty stop work on the water plants, both fresh drinking water and sewage. You may have to pay a fine for stopping work, but in the long run, it will pay off.

Copy: 'That system came to a halt in summer 2016, when a preliminary budget showed an $8 million shortfall in the city’s operational fund. Results of a special audit reported in September 2017 showed years of mismanagement by some former city officials.' End of copy.

This was noted long before the 'special audit' and who what are the names of 'mismanagement by some former city officials' and are they employed by this city now.

And speaking of cuts made necessary, why are all of the cuts listed as 'community activities, public facility hours or city personnel'. These individuals from the above listing have expenses, and they have to make a livable wage too. There's been a great amount of talk about our police and fire department getting pretty big bucks the last few years, some of them earning in the hundreds of thousands of dollars. What is being done about the inequity of salary's and overtime????

Copy: 'Police department' End of copy.

We've already covered this line of inquiry.

Copy: 'With fewer vacancies left to cut, the department could be forced to eliminate filled positions in the coming budget — particularly as federal grant money to help support police personnel is phased out of the budget over the next two fiscal years.' End of copy.

Yes, this is what happens when you fall into the trap of using federal money and then when the federal money rubs out, we/you are expected to fill the gap.

Copy: 'Of the city’s 43 buildings, 27 will need roofs over the next 20 years, Olson said. On top of that, the city is legally obligated to replace HVAC units at all of its facilities — a cost of $360,500 in fiscal year 2018 alone.' End of copy.

With all of these roofs needing to be repaired, the city might look into a city building thrasher.

And as to the comments made by councilman Rivera, I would remind him that if you go hog wild in spending, you have to have the money to pay for it and so far, we have not had the money for quite a while and we have had to rely on 'Rob Peter to Pay Paul'.

Copy: 'On top of that, the city is legally obligated to replace HVAC units at all of its facilities — a cost of $360,500 in fiscal year 2018 alone.' End of copy.

Have we started this cost of $360,000 dollars yet and what does that do to the balanced budget????

So where is our city council going to do the cutting???? I hope some of the suggestions presented here and put forward.

This has been the personal opinion of this writer and nothing shall be used, in context or without or changed in any way without first notifying, and receiving explicit approval from this writer.
One of the 4.42 % who voted.

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