PRELIMINARY BUDGET PRESENTATION CITY COUNCIL WORK SESSION TONY - - PowerPoint PPT Presentation

PRELIMINARY BUDGET PRESENTATION CITY COUNCIL WORK SESSION

TONY PUENTE - DIRECTOR OF FINANCE JUNE 19, 2018

OBJECTIVE

 General Fund Projection Assumptions & Preliminary Forecast  Overview of Preliminary Supplemental Funding Requests  Over 65 and Disabled Tax Limitation (Freeze)  Discuss Homestead Exemption  Options for Consideration

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GENERAL FUND PROJECTION ASSUMPTIONS

 Assessed Value Increases

• FY 2018/19 – 10.0% (assumes new value is 3% of total value)
• FY 2019/20 and beyond – Assumes effective tax rate each year plus new value.

 Total Effective Tax Rate

• Tax rate set as a rough estimate of effective tax rate of $0.610738 (2.7 cents below current rate of $0.637856)
• Staff reviewing Truth-In-Taxation calculation on effective tax rate and will provide the City Council additional details during

the August 2nd Budget Workshop. Tax Year 2018 is the first year impact of the Over 65 & Disabled Tax Limitation (Freeze).

 Sales Tax

• FY 2018/19 – 5% above revised estimate for FY 2017/18 ($39.2 million vs $36.2 million)
• FY 2019/20 and beyond – 5% in Year 2; 4% in Year 3; and 3% in Years 4 & 5

 Franchise Fees

• All growth in franchise fee revenue and an additional $622,000 transferred annually to the Street Improvement Fund

(based on 10 year plan to transfer all franchise fees to street improvement)

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PRELIMINARY GENERAL FUND FORECAST (PROPERTY TAXES AT EFFECTIVE TAX RATE)

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Amended Current Preliminary Year 2 Year 3 Year 4 Year 5 Budget Estimate Budget Projected Projected Projected Projected 2017-18 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Beginning Fund Balance 31,770,772 $ 31,770,772 $ 31,582,129 $ 31,903,527 $ 32,250,511 $ 33,053,676 $ 33,440,580 $ Property Tax 44,460,191 $ 44,460,191 $ 45,824,128 $ 47,416,268 $ 49,302,133 $ 51,548,343 $ 54,240,825 $ Sales Tax 36,181,384 $ 39,202,935 $ 41,163,082 $ 43,221,236 $ 44,950,085 $ 46,298,588 $ 47,687,546 $ Other Revenues 39,078,797 $ 39,307,459 $ 40,379,208 $ 40,403,151 $ 40,550,689 $ 40,746,978 $ 40,831,455 $ Total Revenues 119,720,372 $ 122,970,585 $ 127,366,418 $ 131,040,655 $ 134,802,907 $ 138,593,909 $ 142,759,826 $ Base Expenditures 119,687,991 $ 118,273,937 $ 126,295,020 $ 129,193,671 $ 131,749,742 $ 135,207,005 $ 138,495,760 $ New Recurring Expenses

• $
• $

750,000 $ 1,500,000 $ 2,250,000 $ 3,000,000 $ 3,750,000 $ New One-Time Expenses 4,885,291 $ 4,885,291 $

• $
• $
• $
• $
• $

Total Expenditures 124,573,282 $ 123,159,228 $ 127,045,020 $ 130,693,671 $ 133,999,742 $ 138,207,005 $ 142,245,760 $ Ending Fund Balance 26,917,862 $ 31,582,129 $ 31,903,527 $ 32,250,511 $ 33,053,676 $ 33,440,580 $ 33,954,646 $ Change in Fund Balance (4,852,910) $ (188,643) $ 321,398 $ 346,984 $ 803,165 $ 386,904 $ 514,066 $ Fund Balance as % of Expend. 21.6% 25.6% 25.1% 24.7% 24.7% 24.2% 23.9%

PRELIMINARY SUPPLEMENTAL FUNDING REQUESTS

 Supplemental Requests are requests for funding of capital and operational expenses.  Currently, the requests total $47,294,648

• Capital - $41,256,000
• Recurring Operational Expenses - $3,467,867
• One-Time Operational Expenses - $2,570,781

 The final detailed list of supplementals based on priority and funding options, will be discussed with

Council in July/August.

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OVER 65 & DISABLED TAX LIMITATION (FREEZE)

 Preliminary Data as of June 8, 2018:

• Accounts = 7,146 (6,914 are Over 65 and 232 are Disabled)
• Assessed

Value before Exemptions = $1,675,480,669

• Taxable Value after Exemptions = $1,257,101,809 (equates to $8,018,499 in taxes)
• Actual Tax Due to City = $7,284,851 (based on current tax rate of $0.637856). Equates to $1,142,083,954 in taxable value.
• Difference between Taxable Value and

Value of Actual Tax Due = $115,017,855 or $733,648

 Based on preliminary values, City anticipates receiving $7,284,851 from properties with tax freeze in

FY 2018-19.

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2017 ESTIMATED TAX LIMITATION IMPACT

Exemptions were increased at 3.0% per year and values at 2.0% per year to attempt to adjust for turnover factors. This analysis does not represent the maximum property tax impact. This figure can continue to change as a result of property values and will likely increase after 2027. Tax Year (FY) Number of Exemptions Taxable Value Net Taxable Value Reduction Property Tax Reduction 2016 (FY 2016-17) 7,134 209,247 $ 154,247 $ 2017 (FY 2017-18) 7,504 221,210 $ 166,210 $ 2018 (FY 2018-19) 7,729 225,634 $ 170,634 $ 33,199,197 $ 211,763 $ 2019 (FY 2019-20) 7,961 230,147 $ 175,147 $ 68,078,273 $ 434,241 $ 2020 (FY 2020-21) 8,200 234,750 $ 179,750 $ 104,722,230 $ 667,977 $ 2021 (FY 2021-22) 8,446 239,445 $ 184,445 $ 143,220,372 $ 913,540 $ 2022 (FY 2022-23) 8,699 244,234 $ 189,234 $ 183,666,520 $ 1,171,528 $ 2023 (FY 2023-24) 8,960 249,118 $ 194,118 $ 226,159,242 $ 1,442,570 $ 2024 (FY 2024-25) 9,229 254,101 $ 199,101 $ 270,802,097 $ 1,727,327 $ 2025 (FY 2025-26) 9,506 259,183 $ 204,183 $ 317,744,862 $ 2,026,755 $ 2026 (FY 2026-27) 9,791 264,366 $ 209,366 $ 367,104,733 $ 2,341,600 $ 2027 (FY 2027-28) 10,085 269,654 $ 214,654 $ 419,004,851 $ 2,672,648 $ Base Year of Freeze

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2018 PRELIMINARY TAX LIMITATION IMPACT

Freeze account growth at 3.0% per year and values at 2.0% per year. Tax loss based on current tax rate of $0.637856. Tax Year (FY) Freeze Accounts Average Assessed Average Taxable Value Loss Above Freeze Tax Loss Above Freeze 2017 (FY 2017-18) 2018 (FY 2018-19) 7,146 234,464 $ 175,917 $ 115,017,855 $ 733,648 $ 2019 (FY 2019-20) 7,360 239,153 $ 179,435 $ 144,364,688 $ 920,839 $ 2020 (FY 2020-21) 7,581 243,936 $ 183,024 $ 175,902,279 $ 1,122,003 $ 2021 (FY 2021-22) 7,809 248,815 $ 186,684 $ 209,762,654 $ 1,337,984 $ 2022 (FY 2022-23) 8,043 253,792 $ 190,418 $ 246,085,155 $ 1,569,669 $ 2023 (FY 2023-24) 8,284 258,867 $ 194,226 $ 285,016,830 $ 1,817,997 $ 2024 (FY 2024-25) 8,533 264,045 $ 198,111 $ 326,712,841 $ 2,083,957 $ 2025 (FY 2025-26) 8,789 269,326 $ 202,073 $ 371,336,895 $ 2,368,595 $ 2026 (FY 2026-27) 9,052 274,712 $ 206,115 $ 419,061,698 $ 2,673,010 $ 2027 (FY 2027-28) 9,324 280,206 $ 210,237 $ 470,069,430 $ 2,998,366 $ Base Year of Freeze

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2018 PRELIMINARY MARKET VALUES BY CATEGORY - $15,093,646,583

Single Family Residence, $6,477,663,971, 42.9% Multifamily Residence, $1,973,621,508, 13.1% Land, $880,257,325, 5.8% Commercial/Industrial, $4,166,686,247, 27.6% Oil, Gas, and Other Improvements, $402,921,184, 2.7% Other, $70,513,316, 0.5% Exempt Property, $1,121,983,032, 7.4%

City of Denton

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3 YEAR HISTORY – ALL EXEMPTIONS

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2016 2017 2018 Exemption Certified Certified Preliminary AB - Abatements 131,784,454 $ 59,456,376 $ 45,655,661 $ CHODO - Community Housing Development Organization 21,342,697 296,840 25,918,125 DP - Disabled Person 2,434,485 10,915,980 11,093,557 DPS - Disabled Person Surviving Spouse 10,000 50,000

• FR - Freeport

208,186,573 187,207,919 235,863,732 HS - Homestead 88,848,080 91,671,530 92,667,716 HT - Historical 4,736,286 4,986,834 5,389,776 OV65 - Over 65 Person 300,776,413 318,388,231 332,807,447 OV65S - Over 65 Person Surviving Spouse 26,611,649 27,086,616 25,833,269 PC - Pollution Control 17,907,977 4,272,985 16,325,045 PPV - Personal Property Vehicle 233,221 224,763 243,499 Sub-Total Local Exemptions 802,871,835 704,558,074 791,797,827 DV - Disabled Veteran 48,047,888 57,356,519 68,415,238 EX - Exempt Property 788,985,676 1,075,184,842 1,096,295,497 Sub-Total State Exemptions 837,033,564 1,132,541,361 1,164,710,735 Grand Total 1,639,905,399 $ 1,837,099,435 $ 1,956,508,562 $ Local - Exempted City Taxes 5,486,344 $ 4,494,066 $ 4,835,810 $ State - Exempted City Taxes 5,719,785 $ 7,223,983 $ 7,113,331 $ Total Exempted City Taxes 11,206,130 $ 11,718,049 $ 11,949,141 $

2017 CERTIFIED - LOCAL AND STATE EXEMPTIONS COMPARISON

Local Exemptions State Exemptions T

• tal

Denton $704,558,074 $1,132,541,361 $1,837,099,435 Lewisville $981,546,366 $431,602,303 $1,413,148,669

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HOMESTEAD EXEMPTION

 Currently 0.5% of value or $5,000 whichever is greater

• Homes up to $1 million receive same exemption

 Preliminary values as of 6/8/18 reflect:

• 19,123 single family homes with a homestead exemption (64%)
• 29,654 total single family homes in the City
• Exempted value equals $92,667,716 or approximately $565,957 in revenue to City.

 Preliminary average taxable home value is $234,007  Denton Central Appraisal District (DCAD) encompasses 42 cities

• 16 cities have a homestead exemption and those range from 0.5%;$5,000 ($1M) to 20%;$10,000 ($50K)

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HOMESTEAD EXEMPTION

City HS Over 65/DP Freeze 2017 Tax Rate Carrollton Y – 20% or $5,000 $60,000/$60,000 N $0.599700 The Colony N $10,000/$10,000 N $0.665000 Denton Y – 0.5% or $5,000 $50,000/$50,000 Y $0.637856 Flower Mound N $100,000/$100,000 N $0.439000 Highland Village N $75,000/$75,000 N $0.568020 Lewisville N $60,000/$20,000 Y $0.436086 Roanoke Y – 20% or $10,000 $40,000/$4,500 Y $0.375120 Coppell Y – 5% or $5,000 $75,000/$75,000 N $0.579500 Trophy Club N $35,000/$0 Y $0.451442 Plano Y – 20% or $5,000 $40,000/$40,000 Y $0.468600 Frisco Y – 7.5% or $5,000 $80,000/$80,000 N $0.446600

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2017 AVERAGE TAXABLE HOME VALUE COMPARISON

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City/Town # HS Avg Taxable M&O Rate Debt Rate Tax Rate M&O Debt Total Ft Worth 205,541 133,323 $ 0.641500 $ 0.163500 $ 0.805000 $ 855.27 $ 217.98 $ 1,073.25 $ Dallas 217,643 185,074 $ 0.558000 $ 0.222400 $ 0.780400 $ 1,032.71 $ 411.60 $ 1,444.32 $ Garland 58,214 129,368 $ 0.394000 $ 0.310600 $ 0.704600 $ 509.71 $ 401.82 $ 911.53 $ Little Elm 6,647 254,244 $ 0.485188 $ 0.172483 $ 0.657671 $ 1,233.56 $ 438.53 $ 1,672.09 $ Arlington 89,050 128,783 $ 0.440900 $ 0.198900 $ 0.639800 $ 567.80 $ 256.15 $ 823.95 $ Denton 18,404 214,136 $ 0.430311 $ 0.207545 $ 0.637856 $ 921.45 $ 444.43 $ 1,365.88 $ Richardson 19,346 195,351 $ 0.370310 $ 0.254850 $ 0.625160 $ 723.40 $ 497.85 $ 1,221.26 $ Carrollton 16,419 213,047 $ 0.427790 $ 0.171910 $ 0.599700 $ 911.39 $ 366.25 $ 1,277.64 $ Irving 36,039 164,939 $ 0.465000 $ 0.129100 $ 0.594100 $ 766.97 $ 212.94 $ 979.90 $ Coppell 10,848 361,552 $ 0.463473 $ 0.116027 $ 0.579500 $ 1,675.70 $ 419.50 $ 2,095.19 $ Highland Village 4,377 362,323 $ 0.497060 $ 0.070960 $ 0.568020 $ 1,800.96 $ 257.10 $ 2,058.07 $ Corinth 5,163 249,112 $ 0.427910 $ 0.108950 $ 0.536860 $ 1,065.98 $ 271.41 $ 1,337.38 $ Frisco 16,325 413,666 $ 0.290435 $ 0.156165 $ 0.446600 $ 1,201.43 $ 646.00 $ 1,847.43 $ Flower Mound 17,578 378,473 $ 0.339698 $ 0.099302 $ 0.439000 $ 1,285.67 $ 375.83 $ 1,661.50 $ Lewisville 13,124 217,318 $ 0.318766 $ 0.117320 $ 0.436086 $ 692.74 $ 254.96 $ 947.69 $ Roanoke 1,401 225,412 $ 0.160949 $ 0.214171 $ 0.375120 $ 362.80 $ 482.77 $ 845.57 $ Grapevine 11,480 238,472 $ 0.134740 $ 0.154531 $ 0.289271 $ 321.32 $ 368.51 $ 689.83 $ Taxes Due to City

OVER 65 EXEMPTION TREND

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Tax Year Exemption Property Value Amount Exemption Property Tax Amount Maximum Exemption Number of Exemptions 2018 358,640,716 $ 2,190,355 $ 50,000 $ 7,539 2017 345,474,847 $ 2,203,632 $ 50,000 $ 7,259 2016 327,388,062 $ 2,237,174 $ 50,000 $ 6,874 2015 309,426,822 $ 2,134,272 $ 50,000 $ 6,477 2014 293,674,600 $ 2,025,621 $ 50,000 $ 6,149 2013 277,098,487 $ 1,911,287 $ 50,000 $ 5,760 2012 239,549,122 $ 1,652,290 $ 45,000 $ 5,512 2011 197,929,836 $ 1,365,221 $ 40,000 $ 5,102 2010 166,562,941 $ 1,148,868 $ 35,000 $ 4,898 2009 138,378,400 $ 922,320 $ 30,000 $ 4,720 2008 109,375,564 $ 729,010 $ 25,000 $ 4,445 2007 102,084,189 $ 680,412 $ 25,000 $ 4,152

65 and Older Exemption

DISABLED PERSON EXEMPTION TREND

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Tax Year Exemption Property Value Amount Exemption Property Tax Amount Maximum Exemption Number of Exemptions 2018 11,093,557 $ 67,753 $ 50,000 $ 247 2017 10,965,980 $ 69,947 $ 50,000 $ 245 2016 2,444,485 $ 16,704 $ 10,000 $ 260 2015 2,476,992 $ 17,085 $ 10,000 $ 266 2014 2,384,830 $ 16,449 $ 10,000 $ 260 2013 2,433,553 $ 16,785 $ 10,000 $ 266 2012 2,529,362 $ 17,446 $ 10,000 $ 267 2011 2,530,660 $ 17,455 $ 10,000 $ 273 2010 2,647,502 $ 18,261 $ 10,000 $ 289 2009 2,836,433 $ 18,905 $ 10,000 $ 303 2008 3,125,290 $ 20,831 $ 10,000 $ 317 2007 2,824,490 $ 18,826 $ 10,000 $ 286

Disabled Person Exemption

HOMESTEAD EXEMPTION TREND

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Tax Year Exemption Property Value Amount Exemption Property Tax Amount Maximum Exemption Number of Exemptions 2018 92,667,716 $ 565,957 $ 5,000 $ 19,123 2017 91,671,530 $ 584,732 $ 5,000 $ 18,890 2016 88,848,080 $ 607,134 $ 5,000 $ 18,297 2015 86,502,404 $ 596,650 $ 5,000 $ 17,781 2014 84,697,697 $ 584,202 $ 5,000 $ 17,427 2013 83,466,451 $ 575,710 $ 5,000 $ 17,111 2012 84,215,825 $ 580,879 $ 5,000 $ 17,205 2011 85,860,689 $ 592,224 $ 5,000 $ 17,485 2010 85,250,897 $ 588,018 $ 5,000 $ 17,355 2009 83,711,284 $ 557,952 $ 5,000 $ 16,977 2008 81,648,837 $ 544,206 $ 5,000 $ 16,506 2007 78,656,727 $ 524,263 $ 5,000 $ 15,912

Homestead Exemption

HOMESTEAD EXEMPTION

 July 1st – Council must adopt an ordinance prior to this date in order to make the change effective for

Tax Year 2018 (only available meeting date is June 26th).

 Exemption percentage may not exceed 20% per the Texas Tax Code, Section 11.13(n).  Council may increase minimum in any increment. Staff would recommend minimum

increment of at least $1,000 (-$113,191 each increment).

 $5,000 exemption = $30.54 per year based on preliminary effective tax rate of $0.610738.

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$1,000 $5,000 $10,000 $20,000 0.5% $200,000 $1,000,000 $2,000,000 $4,000,000 1.0% $100,000 $500,000 $1,000,000 $2,000,000 5.0% $20,000 $100,000 $200,000 $400,000 7.5% $13,333 $66,666 $133,333 $266,666 10% $10,000 $50,000 $100,000 $200,000 20% $5,000 $25,000 $50,000 $100,000

OPTIONS FOR CONSIDERATION

 Option 1 - No Change.  Option 2 - Gradually increase to desired amount.  Option 3 - Increase now to desired amount.  Option 4 - Consider desired amount as part of FY 2018-19 Proposed Budget.

• This option would make any change effective for the 2019 Tax Year and not the upcoming 2018 Tax Year.

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QUESTIONS

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