The Copperas Cove City Council spent hours during the month of June discussing what course to take with its next city budget. But discussion and action in the month of July will determine if the city plans to raise property taxes, institute new fees or take other steps to balance its budget and preserve more of its general fund balance.
During the last City Council workshop on the budget on June 16, City Manager Ryan Haverlah showed council members a spreadsheet that displayed the current status of the 2021 general fund budget. That budget includes $18.88 million in spending, set against nearly $16.66 in expected revenue. If no other action is taken by the council, the $1.22 million difference between those numbers will be made up through money currently in the general fund balance.
Going into the next budget cycle, that balance is estimated at $6.42 million. That would be reduced to $5.2 million if the city can’t find other savings or revenue sources.
That concerns some council members because the estimated remaining balance is just $597,696 above the city’s ideal fund balance — an amount that the city wants to have as a cushion in case of a fiscal emergency. The ideal fund balance, estimated at $4.6 million in the next budget, equals three months of anticipated city expenses.
The ideal fund balance has gone up each year as city expenses have increased, while the general fund balance overall has decreased for the last three budget cycles as the City Council has used it to close the gap between revenues and expenses.
When those numbers were laid out for the council earlier this month, Councilman Dan Yancey expressed his concern about the declining amount in the fund balance overall. He and other council members directed Haverlah and Budget Director Ariana Beckman to explore additional ways that the fund balance could be preserved.
In general, the options available to do that are somewhat limited. The council could delay hiring some positions included in this year’s budget, which would reduce the wages, salaries and benefits allotted for those new hires. The council could also delay implementing a cost of living wage adjustment for city employees or hold off on a planned step increase plan for the police department.
In all, new hiring and wage increases prioritized by the City Council take up $564,201 in the general fund budget. Haverlah explained at the June 16 council workshop that delaying one or more of those priorities by three months would reduce the corresponding expenditure by 25%.
Another option is raising the property tax rate. A one-cent increase is estimated to bring the city $125,451 in additional revenue.
Removing the city’s homestead exemption has also been suggested. That would add $232,288 to the city’s coffers.
An additional option is adding a transportation fee to city utility bills. Adding the $3 fee would generate $504,000 over the course of the fiscal year. Haverlah has said that part of that money could be used to boost the general fund balance, while the rest would go toward the city’s street maintenance fund.
The City Council has set several meetings at which the various options will be discussed.
The next budget workshop will be Friday, July 2, with council members hearing from outside organizations that want to request funding from the city. Organizations such as the Hill Country Transit District, Meals on Wheels and the Boys & Girls Club of Copperas Cove have requested funding in prior years. Organizations that promote tourism and hotel stays in the city can also request funding through the Hotel Occupancy Tax Fund. Those requests will also be heard July 2.
Possible fee increases will be discussed at a budget workshop on July 9. That meeting will also include a discussion of proposed City Council changes to the budget.
On July 21, the council will hold a workshop to discuss the property tax rate. The proposed property tax rate would remain at just under 78.65 cents per $100 of assessed property value. The council will have to determine whether to raise, lower, or leave the tax rate at the proposed amount.
A public hearing on the budget will be held July 23, the same day the council will set the date for a public hearing on the tax rate. Council members will also vote on the proposed tax rate at that meeting.
The budget, the tax rate, and the city’s fee schedule are set to be adopted during a meeting on Aug. 4.