The city of Killeen’s fiscal future is not looking any rosier now that the calendar page has turned to 2018.
At last week’s City Council meeting, City Manager Ron Olson told the council the city is staring at a shortfall of nearly $50 million in two decades — if nothing is done to change the current revenue and expenditure patterns.
That’s nearly double the $27.6 million figure Olson dropped on the council during last year’s budgeting process.
That’s because several necessary expenses were omitted from last May’s presentation — including mandatory HVAC replacements and underfunded recurring expenditures.
Employee pay is also lagging behind market norms, and the current budget doesn’t address that.
In recent years, the council and city staff have tried to trim expenses where possible, but the constant focus on bare-bones budgeting has put the city behind the 8-ball in several areas, including street maintenance and building repairs.
In the next two decades 27 of the city’s 43 buildings will need new roofs.
Add that to the mandatory HVAC replacements, and we’re talking big money.
More importantly, the city is about $35 million behind in deferred street maintenance.
Back in 2013, a survey had recommended the city spend $1.8 million annually to address the backlog of needed roadwork. But that’s not exactly working out. In the current budget, the city has allocated just $300,000 — one-sixth the recommended sum.
That’s not going to get it done.
But where is the city going to get the money to make up the difference?
With sales tax growing at a meager 1.5 percent last month, property taxes impacted by the mandatory disabled veterans exemption (for which the state is inadequately reimbursing the city) and no stable auxiliary revenue streams such as developer impact fees or transportation utility fee, the council’s options are limited.
Olson told council members they need to revamp the way they consider recurring budget issues — especially in the area of employee retirement funding — or face some dire consequences.
The problem is, if the council can’t get a handle on the shortfall, the city’s budget problems will ultimately become the residents’ budget problems. Either residents will be paying more, or they’ll see a reduction in programs and services — or possibly both.
In the meantime, major projects still must be addressed.
On Tuesday, for example, Olson said the city is proposing a $30 million bond referendum in the spring to pay for two road projects in the area surrounding three new proposed Killeen ISD schools — including a fifth district high school. Those schools will be included in a proposed $426 million KISD bond issue that is likely to go before district voters on May 5.
Adding in the $30 million city bond, Killeen voters would be on the hook for more than $450 million in KISD and city bond debt if both initiatives are approved.
The city doesn’t have much choice but to propose a bond.
In addition to supporting the increased traffic to the new school facilities, city is contractually obligated to make infrastructure improvements in the area of the 3,700-home Bell County Municipal Utility District No. 2. Not so coincidentally, it is located on Chaparral Road — one of the two road projects paid for by the proposed bond issue.
But given the fact that the roads in the proposed bond are located in the southern portion of town, why should residents in the city’s northern sector support it?
Roads in some of the city’s older areas have fallen into disrepair, and despite the city’s best efforts at addressing these needs, funding has been lacking.
It’s easy to see how some north Killeen taxpayers might balk at throwing their tax money at a project that won’t directly benefit them.
Knowing that, it might be better if the council were to consider a larger bond package that would address street repair needs across a wider area of the community. It might cost more, but at least more taxpayers might support it.
In the short term, however, the council must identify the city’s top priorities — as Olson requested Tuesday — and work on a strategy to fund and implement them.
Council members made their choices.
Building city infrastructure for the new district schools was near the top of the list.
Surprisingly, so was the issue of council protocol.
Granted, becoming better versed in council procedures may help members streamline meetings and be more productive.
But until the council can get a handle on how to prioritize spending and enhance revenue, better-run meetings won’t count for much.