The Sugar Land City Council will meet Tuesday at 5:30 p.m. to consider recommended reductions of $1.58 million to the fiscal year 2018 budget that will eliminate festivals and two full-time positions among other major cuts.
The cuts are needed to address lower than budgeted sales tax and property tax revenues. The city will receive $600,000 less from property taxes in the general fund than planned in the budget due to the adoption of a tax rate of 31.762 cents, which was lower than the recommended tax rate to support the adopted budget. The general fund supports most city services.
In each of the four months since the budget was filed, the City experienced lower than projected sales tax collections. The fiscal year 2018 sales tax estimate was based on zero growth from 2017 estimates; the actual revenue came in lower than anticipated for the last three months of the fiscal year. The main sectors that are down are information, natural resources and wholesale – all highly influenced by the oil and gas sector.
The downward trend continued into October, leading to a recommended $1 million reduction in budgeted sales taxes, of which $750,000 is for the general fund. Recurring reductions are necessary to maintain the structural balance of the city’s budget; meaning that recurring revenues fund recurring expenditures.
The recommended budget reductions were selected based on their recurring nature, which support the city’s financial resiliency. Since the city’s financial decisions are not made one year at a time, the entire long-range forecast needed to be re-evaluated using updated assumptions for revenue growth based on City Council’s direction.
Budget reductions needed to have a recurring impact and minimal disruption to core city services. Reductions are spread across most city departments and target reducing subsidization of services by other entities and prioritizing “needs” versus “wants” and reducing discretionary service levels, especially services that place significant overtime demands on city staff. There are no reductions to public safety, though every employee in every department will feel the impact of the budget reductions through reduced funding and flexibility to perform their jobs. Some reductions will result in reduced flexibility to respond to unforeseen events that may occur in the future.
During a workshop on Sept. 26 to discuss budget reductions, a majority of City Council urged preservation of a proposed 3 percent employee merit pool. City Manager Allen Bogard, however, is recommending reducing the allocation for performance-based increases and adjustments to salary structures to 2 percent of salaries.
“While employees appreciate the Council’s direction to preserve the merit pool funding, there is a desire to balance compensation with other budget reductions that impact service levels,” Bogard said.
Recurring expenditure cuts totaling $1.58 million are recommended, including the following, with the budget impact for each:
- Reduce employee merit pool from 3 percent to 2 percent: $316,000
- Elimination of two full-time positions: $190,000
- Reduce the travel & training budget by 10 percent, providing $930 per employee to maintain certifications, continuing education and employee development: $72,000
- Eliminate funding for an external user fee study: $35,000
- Reduce employee recognition programs: $20,000
- Eliminate hosting of inter-governmental groups in the city’s suites: $12,000
- Eliminate funding for Impact Player Partners reception: $5,000
- Eliminate outside photography/videography for events: $4,000
- Eliminate support for Fort Bend TREK express run by Fort Bend County: $70,000
- Reduce payments to in-city MUDs to reflect the adopted tax rate: $42,000
- Reduce contingency funding from .5 percent to .25 percent of the budget: $200,000
- Eliminate the New Year’s Eve event in Town Square: $118,000
- Eliminate the fourth of July event, the Star Spangled Spectacular: $94,000
- Eliminate the annual State of the City event: $25,000
- Eliminate printing and mailing of the quarterly newsletter, Sugar Land Today, and the city calendar: $105,000.
- Closure of the city’s swimming pool, mainly driven by repairs needed to the pool that are unaffordable under current conditions: $40,000
- Eliminate supplemental street sweeping on state roadways: $85,000
- Reduce mulching & fertilizer of bed plantings in city rights of way: $69,000
- Reduce frequency of tractor mowing along rights of way: $31,000
- Reduce service in parks including less frequent mowing and pressure washing of parks; reduced landscape, litter pickup and custodial services; eliminating maintenance contracts and restructuring the senior holiday gala event: $50,000.
To determine if the city can improve drainage systems to prevent future structural flooding, $210,000 in one-time funding has been allocated for engineering studies identified after the recent flooding from Hurricane Harvey.
In the capital projects fund, adjustments to establish capacity to fund the improvements have been identified. The five-year capital improvement program has been reduced from $130.3 million to $96.4 million, eliminating projects that cannot be funded within revised debt capacity from the effective tax rate plus 1.5 percent from property taxes, which is the only funding source for bond-funded capital projects. Several projects have been eliminated from the five-year capital program due to funding capacity. Design funding in fiscal year 2018 will be removed from the budget to provide capacity to address improvements needed due to Hurricane Harvey.
Projects eliminated include:
- emergency operations center/ public safety dispatch facility;
- animal shelter; and
- reconstruction of Sweetwater Boulevard, phase II.
Other project schedules have been adjusted to fit within funding available under the revised forecast.
The 2013 voter-approved park bond projects required a 3.1-cent tax increase to fully implement in addition to a 3 percent growth in tax revenue to support the city’s needs. The city has only raised the tax rate .7 cents for the park bonds, generating $836,000 of the resources necessary to support the $1.9 million in annual debt service and operating costs of the projects funded to date. Until property tax revenues can be adjusted to eliminate park bonds subsidies, the park bond program will be suspended with $10.26 million in projects still to be funded.
The City Council will vote on the amendment to the budget on Oct. 17, at 5:30 p.m., at Sugar Land City Hall, 2700 Town Center Blvd. North.