The Killeen City Council didn’t just pass its budget and tax rate last week. It also picked winners and losers.
It wasn’t a direct exchange, but the council axed $335,000 in additional money for the regional transit system — The Hop — while creating a $379,000 contingency fund to cover the cost of sewer repairs for homeowners who experience a break in the lateral line between the street and their homes.
In doing so, it may seem that the council sided with homeowners over residents who use public transportation.
But that would be too simplistic an assumption.
A representative from The Hop previously addressed the council with the transit district’s request for the additional funding, which would have raised the city’s allocation from $120,000 per year to a whopping $455,000. But the representative also acknowledged that even if the city agreed to the request, there would still be some changes and cutbacks in bus service in Killeen.
So really, it’s difficult to fault the council for axing the request — though it was in the proposed budget put forward by City Manager Ron Olson. Still, the failure to grant any portion of the request is likely to hasten the depletion of the transit district’s reserve funds, making future bus service cuts more likely.
On the other hand, the council’s decision to allocate money to help offset residents’ sewer line repairs deserves further scrutiny.
Certainly, council members were just trying to do right by residents who face financial hardship under the city’s current ordinance — which states that residents are responsible for repairs to lateral sewer lines, even if the break occurs outside of their property.
However, the council hasn’t established a policy for who qualifies for assistance, or how the funds would be disbursed. Moreover, council members haven’t come up with a strategy for drafting an updated ordinance that would clearly state the terms of responsibility for repairs.
So, for now, the city has a fund for repairs without a means to administer it.
The sewer repair fund creates two other potential problems.
First, in drawing on water and sewer funds to establish the fund, the council has essentially forced water ratepayers across the city to subsidize the repairs of other residents.
Secondly, the new fund siphons money from the city’s water-sewer contingency fund, which means less money would be available in the event of a large-scale infrastructure failure, such as the sinkhole that developed earlier this year on W.S. Young Drive.
Clearly, the council has a lot of work to do in determining how to maintain and grow the fund, as well as defining the city’s scope of responsibility regarding repairs and maintenance going forward.
Another apparent winner in the new budget is the Greater Killeen Chamber of Commerce, which was awarded full funding of $338,700 annually.
This was a qualified “win,” however, as the funding level is about half of what it was three years ago. Also, council members are moving forward with a “transition plan,” which would potentially move toward elimination of city funding for the chamber after the current two-year agreement expires.
However, given the fact that several council members backed off a defunding plan and that the makeup of the council could be very different when the current agreement expires in 2020, the likelihood of cutting off city funding is probably not very high.
Still, considering that the chamber is funded by taxpayer money and water and sewer fund revenue that could be better used elsewhere, it’s probably in Killeen’s best interest to work toward development of an alternate funding strategy — as many other larger cities have.
Perhaps the biggest winners were the city’s taxpayers, who will see no increase in the tax rate for the coming fiscal year, which begins Oct. 1.
Earlier in the budget process, the council had proposed a hike of 0.77 cents per $100 property valuation, which would have increased taxes for the owner of a median-priced home by about $11.55. But council members backed off that hike Tuesday, opting instead to keep the 74.98-cent rate unchanged. The proposed increase would have generated another $420,000 for the city.
But Killeen is going to need much more than $420,000 to keep the city moving forward.
The city’s current budget is balanced, with no increases in fees. However, that’s going to be difficult to achieve in the coming years without significant cuts in programs, services and personnel.
That’s especially true given the financial impact of the state-mandated property tax exemption for disabled veterans. Though legislation provided Killeen with some reimbursement for the exempted tax revenue, the exemption still resulted in a $4 million loss for the city — and such a sizeable hit is hard to compensate for.
Moreover, the amount of exempted tax revenue has been growing steadily over the past five years, making it likely that Killeen’s budget crunch will get worse before it gets better.
Unless the state Legislature adopts a better compensation formula for cities disproportionately impacted by the exemption, the revenue loss is something the city will have to contend with for years to come.
One possible solution — though a somewhat unpopular one — is for the city to adopt a street maintenance fee, which would provide revenue for needed road repairs. In offering it as an option to council members recently, Olson estimated such a fee, added to residents’ utility bills, would produce about $4 million annually. This would compensate for the exempted property tax revenue and free up money in the city’s general fund for other expenditures.
Every year, the municipal budget represents a series of calculated funding shifts, strategies and trade-offs. That means each year, there are bound to be winners and losers. It just goes with the territory.
Still, it’s up to the city manager, staff and city council to see to it that the city’s residents get the most for their tax dollar.
More and more, however, that seems to be an increasingly difficult job.