Killeen’s proposed city budget for the upcoming year is balanced and calls for no tax or fee increases.
On the surface, that would seem to be good news — especially since the city has been struggling to make ends meet in the face of a burgeoning state-mandated disabled veterans tax exemption that last year erased $4 million in potential revenue.
But a closer look at City Manager Ron Olson’s proposed budget reveals some potential problem areas — and some seemingly odd choices.
For example, the budget suggests focusing police overtime on traffic enforcement and writing citations — to reap up to $575,000 in surplus revenue for the city.
The budget also targets debt collection, calling for a designated municipal court position to recover unpaid fines — a potential harvest of $300,000.
Still, even with the proposed transfer of $1.75 million from the city’s debt service fund to the general fund, there just isn’t enough money to work with.
The budget plan calls for dedicating $300,000 to deferred street maintenance — only about 15 percent of what is needed. Yet the budget proposes giving the Hill Country Transit District the full $455,000 in requested funding to avoid threatened service cuts to The Hop bus system in Killeen.
The city’s aviation fund is in a tailspin, but the budget plan keeps the airport parking exemption for military veterans and some medal recipients that cost the city nearly $308,000 last year.
And not only does the budget not call for any cuts in employee positions, it calls for an across-the-board 2.6 percent raise for all city workers. Some employees, who have been identified as being compensated at nearly 40 percent below the market average, are in line for an additional 9.4 percent wage hike.
While trying to do right by city employees, bus riders and traveling veterans is laudable, the fact remains that without a significant increase in revenue, the city is on pace for a $26.7 million deficit by the year 2037. And unless the city’s untenable employee retirement system is overhauled, that number could be as high as $50 million.
Council members may think Olson’s balanced budget lets them off the hook as far as making difficult, potentially unpopular cuts. But adopting a bare-bones, no-frills budget won’t bring about any sustainable, long-term solutions to the city’s financial problems. It will only get Killeen as far as the next budget cycle.
Obviously, some bigger steps must be taken — and Olson has offered the council some possible options.
Some of the potential choices are guaranteed to be controversial, such as closing the Killeen Community Center, eliminating Volunteer Services and reducing library hours. It’s likely those ideas would never get to a council vote, as members likely wouldn’t want the public outcry. Moreover, the potential savings from acting on those three suggestions would total only $741,000.
Other possible choices include eliminating more vacant positions and amending the airport parking fee structure — both good ideas but not likely to produce significant savings or revenue.
The big-ticket items on Olson’s list of options are adoption of a street maintenance fee and elimination of funding for “community partners” such as the Heart of Texas Defense Alliance, Greater Killeen Chamber of Commerce, Killeen Economic Development Corp. and The Hop.
Cutting off funding to the community partners would save the city $3.2 million, according to Olson’s estimate — though doing so likely would generate considerable pushback.
The city pays more than $762,000 to support the EDC and GKCC, after cutting contributions to the organizations by half in the fiscal year 2017 budget. That amount continued in the current fiscal year, as the city has two-year agreements with both entities. With a new contract coming up this year, the council will have to decide on what funding level is appropriate.
The city currently pays $120,000 to support The Hop, though the amount budgeted for the coming year is a 277 percent increase. Killeen contributes $109,000 to HOTDA, through the city’s economic development corporation.
Certainly, eliminating funding for all these entities would be both unlikely and unfeasible, but reducing the totals should be considered as part of any budget-trimming plan.
A bolder move is the adoption of a street maintenance fee. According to Olson’s calculations, such a move would allow the city to shift street operations out of the general fund and produce $4.4 million annually.
While residents might squawk about an added charge to their utility bills, the resulting revenue would provide much-needed funding for overdue street repairs while giving the city more breathing room in its general-fund budget.
More importantly, the street maintenance fee would be more than a Band-Aid on the current budget. It would give the city a dependable revenue stream that would allow long-term planning for infrastructure projects.
As a possible side benefit, the $4.4 million freed up in the general fund would give the city the opportunity to restructure its underfunded employee retirement system. In doing so, Killeen would be able to avoid a multimillion-dollar-shortfall the current system faces over the next 20 years.
Olson acknowledges his balanced-budget proposal is an imperfect solution.
No doubt, it will take more than writing extra traffic tickets and collecting past-due fines to bring long-term stability to the city’s financial situation.
It’s up to the council to step forward and do what is necessary to improve the city’s financial outlook — while striving to minimize the impact on residents.
Though the council has voted it down twice, a street maintenance fee seems like the best option at this point. When compared to reducing library hours or closing a community center, asking residents and commercial customers for an extra $5 a month is a far better option.
The council also should adjust the airport parking fees to avoid the need for city subsidies to prop up the aviation fund. Whether this means elimination of free parking for veterans or reducing the percentage of the discount, something must be done.
Ultimately, Killeen’s budget health will depend on whether the city can receive a more equitable reimbursement from the state for its disabled veterans property tax exemption.
But council members can’t just wait for that eventuality; they must act decisively — and soon.
The city’s financial future is in their hands.