Proposed budget presented to council

The city of Allen's proposed 2012-2013 budget has been received by the city council, putting this year's budget season in the home stretch.

The budget, as submitted at the July 31 council meeting, will be the subject of a three-day workshop from Aug. 17 to 19. Any revisions at the request of the council will be implemented into the budget and be given final approval at the Sept. 11 council meeting.

This budget year is the fourth for the city's "new normal," in which resources have been limited by slowing property value growth and nationwide economic uncertainty, said City Manager Peter Vargas.

But with the appraised value of existing property now increasing, things are looking up, he said.

This time last year, existing property values declined by 2 percent, with the addition of new property making up the difference. With the increase in the value of existing property and new taxable land added to the rolls this year, the city now is looking at a nearly 4 percent increase in property tax revenue.

"We were very pleasantly surprised that our appraised values came back very positive this year," Vargas said. "They had been flat in the past and only the growth was keeping us in a positive situation, but this year we're close to a 5 percent increase in property values."

General fund revenues are expected to come in at $78.2 million, an increase of 6.7 percent compared to last year. Expenditures are projected at nearly $78.1 million. For the first time in three years, the fund balance is expected to reduce by $636,084, ending with $16 million. The new fund balance leaves the city with 74.5 days of operational funds, falling within the city's goal of maintaining between 60 and 90 days.

The reduction comes from a one-time "draw-down" for building maintenance at the library, Fire Station No. 2 and various parks facilities. While under normal economic circumstances the money would not be taken from the fund balance, the one-time nature of the expense will make it easy to be recouped, Vargas said.

"Obviously, we have some issues where as a city we are maturing, and if you look at some of our facilities are getting to be in that 10th or 12th year of operation, some of those maintenance costs are going to increase," he said.

The city's property tax rate is recommended to stay at 55 cents per $100 of valuation. The debt service portion remains 26.57 percent of the overall rate. If no tax decrease is requested by the council, it will be the first time in 20 years that the city does not decrease the ad valorem tax rate.

The sales tax rate of 8.25 percent -- the maximum allowed by the state -- also remains in place. Sales tax revenues are projected to increase by 5.3 percent compared to last year.

The budget also calls for the addition of 23.11 full-time equivalency positions. This includes six new firefighters, bringing the new Fire Station No. 5 to full staffing. Other new positions include two new detention officers, a buyer in the purchasing division and an IT specialist.

A full year's worth of salaries will also be budgeted for the 12 police officer positions created this year and six firefighters hired prior to the opening of Fire Station No. 5. Approximately 8.86 FTEs in the city golf course fund, reduced last year due to renovations, will be reinstated.

Notably, the budget calls for no bond sales through the city's seven-year Capital Improvement Program, through which $77.9 million in bonds were sold with voter approval in 2007.

Vargas said the city took a one-year "hiatus" on issuing new debt because it felt property tax revenues needed to rise for the city to afford continuing the program. Ongoing and upcoming projects paid for by earlier bond sales -- such as the Chelsea Road and Stacy Road expansions -- will continue as planned.

"It's approaching $12 million, and every year we budget to pay for the CIP, it's basically bonds that we've sold that the community approved in an election," he said. "But we've basically had to build in the payment schedule as well, so when you're taking $12 million to pay for current debt, you also have to be prudent: Can you afford to take on additional debt and not increase the tax rate or that percentage of the tax rate to pay it?"

One of the most significant pieces of the budget for the past three years has been the Allen Event Center, which the city took over operations for in the middle of 2010. While a $500,000 deficit is projected for the facility, Vargas said it provides a net gain for the city given the increases in sales tax and Hotel Occupancy Tax revenue associated with events held at the center. A report last year showed $8.3 million in overall economic impact thanks to the event center.

"We feel that we have turned a corner with the event center," Vargas said. "It has become more established in the industry, and so the entertainment industry is aware of the building and aware of its capabilities. ... Obviously our sports tenants are very happy with the building, as well. So now it's a situation where we hope our tenants can sell more tickets and we hope we can get some additional sponsorships for the facility, so we're very optimistic about the event center. It has played major role in increasing the economic impact into our community."

The first public hearing for the budget and tax rate will be held at the Aug. 14 council meeting. The second public hearing will be held Aug. 28.

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