Killeen’s proposed fiscal year 2022 budget is ambitious, proposing to spend $40 million more than in 2021 after one of the hardest years in recent history. So the obvious question is: Where does the city expect the money to come from?
For historical perspective, in 2019, the city budgeted for $170 million in revenue, but actually received about $265 million. In 2020, the city budgeted for $191 million, and received an estimated $245 million, according to the proposed FY 2022 budget.
This year, the city has forgone lowballing, budgeting instead for an optimistic total revenue of $240 million in the proposed 2022 budget.
Killeen City Manager Kent Cagle’s optimism comes from three primary revenue sources: property taxes, sales taxes, and utility fees and services.
Property taxes, the rate for which has been proposed to lower by $0.01 — from $0.733 to $0.723 — make up the bulk of the city’s General Fund, at $40.1 million and roughly 16% of the entire budget, followed by sales taxes at $30.5 million, which in turn makes up another 12%. These two taxes enable the city to pay its police officers and fire fighters, as well as other public sector workers.
And according to Cagle’s proposed budget, Killeen’s net taxable property increased by 10% since 2020, which comes out to about $156.8 million. Total property valuation for the city of Killeen comes out to around $9.8 billion, with $2.2 billion of that being tied up in non-taxable property such as churches, nonprofits and property covered by the disabled veterans exemption.
Sales taxes, meanwhile, are projected to increase by a “conservative” 1.5%, or $500,000, to $30.6 million, up from $30.1 million. Cagle identified a $4.3 million increase from the 2020 to 2021 fiscal year, and budgeted a very low increase for FY 2022 as “there is some uncertainty on how sales tax will be impacted as pandemic restrictions are lifted and the economy begins to recover.” In his budget, Cagle mentions a “surprisingly strong” year for tax sales through the pandemic.
Another potential source of optimism may be, counter-intuitively, Killeen’s unemployment rate. The U.S. Bureau of Labor Statistics identifies a 7.3% unemployment rate for Killeen residents as of July 2021. This puts Killeen 0.8% over the Texas, and federal, unemployment rate.
In real numbers, this equates to about 11,600 people for current projected population. A decrease in unemployment is directly related to an increase in purchasing power, which would see a surge in sales tax revenue.
The Water and Sewer Fund, meanwhile, which accounts for $44.7 million in expenses, is paid for primarily by sale of water, sewer fees, and delinquent penalties. Of those three sources, water sales and sewer fees make up a total of 89%.
What is interesting, however, is that $6 million of expenses for the Water and Sewer Fund includes a transfer to the general fund. This is not necessarily unusual, but does raise questions regarding what is meant to be the direct nature of fund usage.
Moreover, water sales are often a key source of income for Killeen. Given the unusually high rainfall the city has experienced this summer, it is not unlikely that water revenue will be lower than projected.
Moving from water, the Solid Waste Fund takes in about $18 million in services annually; $12 million of that total comes from residential services, and $6 million comes from commercial services.
Cagle has proposed maintaining residential service fees until 2024, but has also proposed increasing commercial fees by $6.30 per 2 square yard container.
The Killeen City Council will be hosting its first public budget hearing today at 5 p.m. in the city hall council chambers.
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Killeen City Budget revenue by source
Proposed 2022 budget 2021 budget actual % change
Property tax: $40,166,530 $36,142,833 11.0%
Sales tax: $30,583,664 $30,131,689 1.5%
Water sales: $20,988,817 $20,154,208 4.0%
Sewer Fees: $19,044,665 $19,182,160 -0.01%
Source: City of Killeen