Have you ever wanted to be a fly on the wall? In order to get more insight on the city’s newly instated budget and financial status, we went to the source. What follows is a brief conversation between Southlake’s City Manager Shana Yelverton and Chief Financial Officer Sharen Jackson about Southlake’s upcoming fiscal year (FY).
Southlake’s City Manager Shana Yelverton and Chief Financial Officer Sharen Jackson have some ideas on how to pull together a fiscally smart city budget. Every year, the work on the next year’s budget starts in early January with conversations about what needs to be accomplished. What’s considered during those discussions? Everything. For fiscal year 2020, the Southlake city staff knew changes from the Texas Legislature regarding the property tax would likely come to pass. And when they did, council and city staff had already worked out a way to create a budget strategy for FY 2020 and beyond that advanced the city’s long-standing goals while allowing for real tax relief.
Q: Proper oversight has brought us to where we are in 2020. The city has aggressively managed its debt to the lowest levels in over 20 years. How was this accomplished?
Shana Yelverton: Years ago, we started tracking data to fully understand the city’s financial health. These data sets are used to make intentional decisions toward improving our budget and financial performance. Our efforts have led to a set of policy guidelines that we’ve followed and have positioned us nicely for financial success.
Sharen Jackson: True. We knew we wanted to balance building a great city with conservative financial practices. We’ve been able to meet our goals by using cash to fund capital projects, rather than borrowing money. If we do issue bonds, we’ll use short amortization schedules so that they’re paid off quickly. And we look for opportunities to refinance previously issued bonds to achieve lower interest rates or shorter payout schedules to reduce our debt obligations.
Shana Yelverton: Working with council, we’ve been able to reduce our tax-supported debt by 61% since 2010, and 96% of our tax-supported debt will be paid off in 10 years.
Sharen Jackson: But we must keep in mind that we may need to finance future improvements by issuing bonds, so taxpayers could see new packages in the future. The good news is that any bonds would be issued in the context of greatly reduced debt.
Q: In addition to the aggressive debt management, what are the other key tenets that got us to where we are today?
SY: There are many budgeting techniques we use to manage budget growth. We use a modified, zero-based budget process to limit incremental, unvetted growth. By stripping the budget down to essential components and carefully reviewing any additional requests, we’re able to limit unseen increases. New requests are prioritized and included in the proposed budget only if the ideas pass a rigorous review.
SJ: We’ve also put a self-imposed cap on the cost growth of existing services, which limits the cost of our services so they don’t grow at a faster rate than that of other DFW service businesses. This is how we control spending for status quo services and programs. New services and legislative mandates may push us beyond the cap, but generally we limit growth by benchmarking ongoing costs to the DFW Consumer Price Index (CPI).
SY: It’s vital to manage a city budget as if you have serious financial constraints and then add back only those items that advance the city’s strategic priorities.
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Q: Can you break down the simple benefits for residents from the General, Utility and Debt Service Funds (73% of the budget)?
SY: I always ask students I speak with to think about their day. When you wake up and brush your teeth, set the garbage out, drive to work or school, attend a youth sports game at a park or see an officer working traffic, you are experiencing city services. These budgets show what it takes to pay to keep you safe and be able to live in a clean and comfortable neighborhood.
SJ: It’s important to keep in mind that the General Fund accounts for most of the costs of essential city services such as police and fire protection, emergency response, planning, financial and other services. The largest expense in this budget is for police and fire protection. The Utility Fund is where we account for water, sewer and garbage service. The Debt Service Fund is how we pay back the money we’ve borrowed to build capital projects.
SY: The bottom line is that we work where you live . . . in big and small ways. The budget is the city council-defined policy document where we set the level of service that we provide.
Q: What are the big differences between this year's budget as opposed to the 2019 budget?
SY: One of the biggest differences is the level of tax relief provided, particularly to the residential taxpayer. By reducing the tax rate 3.7 cents and maxing out the homestead exemption at 20%, we’re taking a big step toward limiting the property tax burden. And we’re doing it while we continue to build infrastructure and provide high-quality services.
SJ: We’re offering the same service palette, and we’re continuing to implement city council policy through the Southlake 2030 and Southlake 2035 comprehensive plans. One of our unique challenges with this budget is change brought about by the Texas Legislature, like decreased telecommunication revenues. But with the council’s support, we’ve been able to work through those challenges.
SY: Prudent financial management and a highly engaged staff mean residents and businesses will see us continue to work to ensure that Southlake is a great place to live, work and play.
Q: With remaining budgeted funds, please outline the most interesting capital improvement program projects taking shape in 2020 and in the near future. What should readers be most excited about in the near term?
SJ: To me, some of the most important things in the budget are the less exciting ones! Expanding water and sewer line capacity isn’t something you talk about around the dinner table, but this invisible service is so critical. Funding intersection improvements at Continental and Davis Boulevards, Continental Boulevard and Peytonville Avenue, and on Kirkwood Boulevard are projects that will help our motorists get around town.
SY: We have had record rainfall, and we’ve been able to study its impact. Several projects have been funded — everything from bridge and crossing improvements to better managing drainage in difficult areas. We can’t address everything, but we’re looking at unique ways to improve our management of stormwater, especially under significant storm conditions.
SJ: I think it’s worth mentioning that we’ve also included money to continue to build sidewalk segments. This year, we’ve been able to add new inventory along White Chapel and Davis Boulevards and through private development requirements. We’re getting ready to start a big sidewalk project to the east of the Continental Boulevard and Carroll Avenue intersection. We’ve included funds in the budget to keep the program going.
Q: The improvements at Bicentennial Park over the last five to 10 years have been very well received. What long-term capital improvement projects should readers be aware of an excited about in the future?
SY: When Southlake voters approved a dedicated sales tax as a way of funding park projects in the early 1990s, it opened many possibilities for developing a world-class park and recreation system. The city council, working with the Parks and Recreation Board and the Southlake Parks Development Corporation, has done a great job master planning our system and funding the improvements. This will continue in 2020.
SJ: Bicentennial Park updates are now complete. This year’s budget includes money to design and develop the Southlake Sports Complex (located near Crooked Lane and Continental Boulevard). The project includes: synthetic turf on fields, demo of the existing building, concession/restroom/storage/pavilion building, pavilions/shade structures, playground, fitness trail, batting cages, entry feature, trails, field improvements, parking, deceleration lanes, fencing, landscape and irrigation enhancements, park amenities, etc. It’s a big project!
Q: The city has always had a long-term vision. How does where we sit now compare to our planning 10 years ago, and also, how does it compare to the city's vision for 2030?
SY: Southlake’s first master plan was developed in the 1960s, and since then, elected officials and staff have worked to update and implement the recommendations. In the last decade, our planning efforts have become more and more sophisticated, and performance accountability has continued to improve.
SJ: The biggest change I’ve noticed is the strong alignment between our master plans and financial management.
SY: Southlake master plans continue to be updated on a schedule. These plans express the aspirations and values of the community. Each year, we meet with council to review our performance against the plans and to make necessary adjustments. The budget is how we implement the ideas; it’s a seamless process.
Q: How will the budget grow to meet Southlake's needs over the next decade (population, infrastructure, overall growth, etc.)?
SY: Master plans are designed to meet the city’s build-out needs. Implementing the plans will ensure that our growth is scaled for the city we will become and will help us define the operational requirements needed to support the services and infrastructure.
SJ: We still have several major projects to complete, such as the ultimate library, build-out of our park system and other infrastructure needs. These will cost money, but following our guidelines and adhering to a prudent budget help keep the value proposition high.
SY: Council will continue to manage our city so that we properly invest to meet the needs and desires of our community while balancing these with conservative financial management.