2020-21 Proposed FY Budget
Pay-As-You-Go funding for municipal projects
FBTX ~ As the Farmers Branch City Council moves forward with consideration of the proposed $144 million budget for the upcoming fiscal year, City Manager Charles Cox has noted that the tried-and-true pay-as-you-go method of funding municipal projects is still a part of the City’s overall financial strategy, but is changing with the economic and legislative times.
In September, the Council will consider approval of the new budget and consider debt funding for improvements to the Manske Library that will be absorbed into the budget without a tax rate increase. In fact, this proposed budget includes a full penny tax rate decrease, to 58.9 cents for every $100 of appraised value.
However, Mr. Cox explains that pay-as-you-go capital funding of $12.2 million is included in the 2020-21 proposed budget. This includes $3.1 million in utility improvements, $3.3 million for inflow and infiltration maintenance, $4.3 million in stormwater drainage projects and $1.5 million in street improvements.
“Our financial philosophy is still aligned with pay-as-you-go as a viable strategy but within the constraints of the current economy and legislative environment,” he said. “In past decades, large surges in construction and development activity would lead to equivalent surges in property tax revenues and fees that enabled savings to pay cash for projects.”
Since the inception of the pay-as-you-go program in the early 1990s, Farmers Branch has been able to self-fund more than $142 million in capital projects, including the Community Recreation Center, The Branch Connection, the Justice Center and the elevated West Side Water Tower. However, Mr. Cox explained that legislative limits on municipalities will seriously curtail the ability do that in the future.
“With cities under the constraints of tax caps, it won’t matter how large the surge of activity is,” he said. “Cities will only be able to collect so much, thereby hampering the previous ability to direct revenue growth to pay-as-you-go projects.”