The City of Pearland released the proposed Fiscal Year 2015 – 2016 budget entitled, “Building Momentum,” to the public last week as staff and elected leaders begin the arduous task of refining and adopting the most useful budget to meet the needs of the City. If approved, citizens could see an increase in property taxes and water rates. However, city officials say the proposed budget has not been finalized and the final numbers could change.
The first Budget Workshop is scheduled for Monday (August 3) at City Hall, located at 3519 Liberty Dr. The issues to be discussed include property taxes, debt service, the General Fund and a Multi-Year Plan.
“By way of background, it’s worth noting that the budget process is an intricate process that had its beginnings for this year back in March with a special City Council work session to provide early budget input,” said City Manager Clay Pearson. “Before and since that meeting in March, City staff from across the organization has diligently researched and examined their operations and budgets.”
The proposed tax rate of $0.71937 per $100 valuation for fiscal year 2016 includes an increase from $0.7121 currently. Additional increases are expected in fiscal years 2017 and 2018, for a total tax rate increase of $0.13.
If the proposed tax rates are adopted, a resident with an average home value estimated at $199,749 can expect to see a jump of approximately $99 per year or 27 cents per day.
“For 27 cents a day, residents will receive enhanced fire services with the opening of two new manned 24/7 fire stations, pro-active patrol with the hiring of an additional four police officers, access to two new parks, the new Shadow Creek Ranch Sportsplex and Hickory Slough Sports Complex and increased funding for roads and sidewalk maintenance,” said Pearson.
“Last year, in 2015, the City had forecast a 2.5 cent tax increase for fiscal year 2016, but due to higher property valuation and the City’s taking advantage of lower interest rates to refinance $51.2 million in existing debt, resulting in annual savings of $425,000, the recommended tax rate for fiscal year 2016 is held constant in absolute terms, which is 1.78 cents lower than last year’s forecast,” Pearson added.
“Property taxes generate the second-most to the General Fund at $14.6 million, up from $13.2 million. Property taxes also support 100% of the debt service on outstanding general obligation bonds,” explained Pearson. “The property tax rate for debt service is pegged to remain constant. The effective tax rate for operations is planned to go up slightly, $0.0073 per $100 valuation. That effective tax rate is slightly less than had been anticipated in last year’s planning. Values on existing property are generally rebounding strongly from the 2008 financial crisis, which is the other component for individual property tax bills,” Pearson said.
Under the current proposed budget, city revenues will increase overall by seven percent. Of that amount, property tax revenues will increase roughly $1.4 million, or 10 percent. The estimated property tax revenue to be raised from new property added to the tax roll this year is approximately $2.5 million.
“Revenue increases of 16.0% are needed in fiscal year 2016 in the water/sewer fund as lower consumption in 2015 has reduced cash equivalents. Additional increases are needed in fiscal years 2017 and 2018 of 10.3% and 9.10%, respectively, due to major plant expansions and resulting debt service,” budget documents state.
This means that water and sewer bills for residents will see an increase of between $5 and $15 in the years to come.
“Due to higher than normal rainfall throughout fiscal year 2015 coupled with mission critical significant dollar wastewater treatment plant expansions to handle the city’s existing flow and to allow for growth, the City has budgeted a 16% revenue increase, generating $4.7 million in additional revenue,” Pearson explained.
“The annual debt service on a $55 million, four million-gallon-per-day expansion of the Reflection Bay Reclamation plant accounts for most of the increase. A 5.55% rate increase was forecast for 2016 last year; however, due to the higher than normal rainfall and increased capital construction cost, the increase is higher. With the rate increase, the City will meet all bond covenant requirements and reserve policy.
“The City’s volume rates are based on increasing block rates, where the more you use, the more you pay. Based on using 10,000 gallons with an 8,000 sewer cap, the monthly bill would increase from $74.55 to $86.36, or $11.81 per month. If one were to use less water, the bill would be less and if one were to use more, the bill would be slightly higher,” said Pearson.
It is still to be determined if garbage rates will increase.
“The City’s contract with Waste Management allows for annual rate increases each October 1, based on the Houston metro CPI. Based on the latest CPI information for June 2015, no rate increase has been built into the budget; however, the actual rate will be determined as of the August CPI data and subject to change. The City’s current monthly garbage rate is $17.48 plus sales tax,” Pearson said.
The largest expenditure from the General Fund is, and has historically been, Public Safety.
“Public safety resources remain the largest in the General Fund, 52% of expenditures,” said Pearson. “We are starting to occupy new Fire Station #3 at Yost and Broadway any day now with additional firefighters and equipment. The new fire station #2 comes on early in the next fiscal year and we are adding the equivalent of 12 new firefighter positions, nine full-time and three equivalents of part-time.
“On the police side, we had a good recruiting round last year and were able to add positions so that in June of 2015, we were at 100% of budgeted strength with 155 peace officers on the payroll, compared to 141 in June of 2013. We have added a civilian expert crime analyst to help give good information to operations to direct our work and made a civilian quartermaster position and IT position to help ensure trained police officers are doing the work that they are trained to do as much as possible. All told, with the good position we are in, the Chief and his expert leadership are soon in a position to be adding directed patrol resources at peak times, locations and assignments, atop the regular patrol,” said Pearson.
Sales revenues are expected to rise eight percent from approximately $18.9 million to $20.6 million due to the continued growth of the commercial and industrial industries in the City.
Notable projects include Costco, which is under construction on Business Center Dr. and recent project announcements, such as Keystone Engineering’s new facility on N. Main, which is expected to bring $6 million in investment and 70 new jobs to the community. Shale-Inland is planning to construct a $14 million facility on S. Main that will be 210,000 square feet and will bring in 80 new jobs. In the Lower Kirby District, Tool-Flo Manufacturing is expected to invest $36 million for an 80,000 square foot building and manufacturing facility that will have 188 employees.
“Sales taxes have been rising with the increased number of retailers and square footage, but that is going to level off at some point and also sales taxes are susceptible to the economy, so must be cautiously used and reserves established for fluctuations,” Pearson said.
Another major increase is expected to come in the form of increased healthcare costs for City employees and a standard cost-of-living raise.
“The City is a people organization. About 65% of the City’s general fund budget goes to salaries and wages. Balancing remaining competitive to retain and reward our talent remains a priority in our balancing items,” Pearson said.
“Like last year, with revenues and expenditures where they are, we are able to offer a two percent increase for our employees. That is intended to be across-the-board as an increase, but relatively small in light of the overall job market and costs increases.
“Employee benefits are also a big factor and the biggest is health insurance. Like companies and other public agencies, those costs are substantial and are managed carefully. We’ve already reviewed and rolled out the program for next fiscal year. We are able to over as part of our program City-provided coverage of 100% of the single health care plan coverage, which encompassed almost half of our enrollments last year, in our base plan. Moreover, the City pays 70% of the base plan for the more expensive dependent plans for couples and families,” said Pearson.
City infrastructure is always a major expenditure, with $1.5 million allotted for streets and sidewalks, up from $1.2 million last year.
“Taking care of existing roads and sidewalks remains a big priority,” said Pearson. “We talked about that with the City Council in March and followed-up with the results of a complete right-of-way asset inventory. The proposed budget has $2.06 million allocated for streets and sidewalks maintenance. The 2014 actual expense was $1.15 million. We would like to be near $4 million per year to keep up the inventory and avoid costly reconstructions, given our hundreds of millions in roads and sidewalk asset value.
“In our multi-year budget, the street and sidewalk maintenance, such as we completed on Mykawa and are doing in the Regency Park Subdivision, is included. We have a very large and appropriate capital improvements program for street widening, intersection improvements, and the like.
“We will open up the extension of Pearland Parkway south of Oiler Drive to Dixie Farm Road this month, start work on the Bailey Road widening and are continuing to make plans for McHard Road extension. Moreover, the City is appreciative of partners at H-GAC and Brazoria County that we coordinate roadwork with and receive cooperative funding from. Also, the Texas Department of Transportation is awarding the new managed toll lanes onto 288 from the Medical Center to Clear Creek where the work continues into Brazoria County, thanks to the Brazoria County government,“ Pearson added.
No final approval has been made on the 2015-16 budget. City Council has scheduled three Budget Workshops on August 3, August 10 and August 24, with Public hearings scheduled for August 31 and September 8, as required by law.
Council is scheduled to approve the tax rate on August 17 and will vote to approve the budget and any amendments made to it on September 14 and 21.
To view the proposed budget, the budget adoption timeline or to get more information, visit http://www.pearlandtx.gov/departments/finance/proposed-fiscal-year-2015-16-budget.
Unfortunately, volunteer turnout has been dismal at best for 
We will have three petitioning opportunities this weekend. We need help at each event, so please come on out if you can. Again, we need everyone’s help to reach out goal.
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