City officials review projected $32 million budget

The city of Sulphur Springs is in ongoing workshops to develop their 2021 budget, which may reach over $32 million, with a session this week on Aug. 4 and an upcoming session on Aug 13. 

The budget, first presented to city council at the Aug. 4 session, outlined total expected expenses of $32,155,619 and revenue for the city at approximately $10.6 million, to be used for a 1% cost of living increase for city employees and increase in health insurance costs and contractor services. 

This budget represents an approximately $2 million increase over the 2020 budget, according to budget documents, although the city proposes to keep the tax rate for citizens the same at 44 cents per $100. The increase in funds will come from the value of property taxes value, according to finance director Lesa Smith, which have, for the first time in city history, reached over one billion dollars. 

Of those billion dollars in property tax values, approximately $10 million in property tax value falls inside the downtown district, Smith said. 

After collecting taxes, the city will have approximately $4 million, Smith said. The city will also gain an additional approximately $200,000 in taxes from annexing the Pioneer and Heritage business parks in June 2019. 

City data shows that of collected property tax dollars for the 2020 year, 46% goes to public safety, while 17% goes to transportation, 11% goes to culture and recreation (downtown, library and parks), 11% goes to debt service, and 15% goes to “general government.” 

This means the amount of taxes going to public safety is 4% down from the previous year, where 50% went to public safety. It is up 2% in transportation, the same in culture in recreation, up one percent in debt service and up one percent in general government. 

As far as sales tax, revenues from sales tax are actually up 2.5% over July 2019 despite the COVID-19 pandemic, Smith said. Sales tax has netted the city $4.3 million in the 2020 fiscal year, and therefore the sales tax rate will remain the same, Smith said. 

“I know I sound like a broken record, but we don’t know what’s going to happen,” Smith said. “We’re going to set it conservatively and hope for the best.” 

The city does not propose an increase or water, sewer or sanitation rates. However, sanitation services contractors may adjust their rates in October, which the city has no control over, Smith noted, and the city may request an adjustment of rates at that time. 

The city has budgeted $2.4 million for water and sewer line replacement this year, Smith said, as some of the lines under city streets are 75 years old or older.  

Of note, the city has budgeted $150,000 for COVID-19-related expenses in 2021 because “we don’t know how long we’ll be dealing with this,” according to Smith. An infusion of funding from the CARES Act would offset the costs, however, the city has not yet received this funding, Smith said. 

“We never bring an unbalanced budget to the city council,” city manager Marc Maxwell told the News-Telegram. “We bring a balanced budget to the city council and they can adjust it as they wish. We conservatively estimate our revenues so if it falls off, we never have to lay people off, and if it’s good news we bring several hundred thousand dollars iento the new year.” 

Despite the fact that the city has budgeted two million more in expenditures this year than last year, the city does not plan on raising tax rates, Maxwell noted. 

“The three most notable things from the budget this year is that the tax rate is staying the same, water rates are not going up, and sewer rates are not going up,” he said. “Some people’s houses will be more valuable now than the year before, but we keep our rates the same and have for the past 19 years.” 

“When we say when we have a planned budget, expenditures equal revenue and we have planned use of reserves,” Maxwell noted. “It’s proven to be a sound strategy over the years.” 

The next city budget session will take place on August 13.