After increasing Sherman’s property tax rate and utility rates last year, city said Friday neither rate is expected to change as part of the fiscal year 2018-2019 budget.
City Manager Robby Hefton said the city will be fully preparing the new budget over the next month, but he told the Sherman City Council, as part of their first budget planning meeting of the year, both rates are expected to remain steady at this point.
“Because of savings in our group health plan, which effects the operating dollars for the general, utility and solid waste funds, and a few other funds, we expect to be able to leave the property tax rate unchanged for 2019,” Hefton said. “We’ll evaluate it again in 2020. Will we need it again in 2020? I don’t know.”
In addition to the budget planning, Friday’s meeting also included a financial update for the council. Revenue projections for next year show property tax revenues are expected to be up more than $400,000, while sales tax revenues are expected to increase by $800,000. And the city’s group health costs are expected to be $500,000-$600,000 less than this year because of changes in the health plan.
The city is expecting a modest increase in revenues in its utility fund thanks to growth in the city and new industries, such as Finisar Corp., which will begin production of components for the Apple iPhone in the former MEMC building on the city’s south side later this year. Hefton pointed to the city’s large utility users as one of the reasons the utility rates are likely to remain steady.
“We expect Finisar to be a large water user, so when we build those projections in — and we do have numbers from them based on their engineers and their projections — we don’t expect that we’re going to need a rate change for 2019 for utility rates,” Hefton said.
Council member Daron Holland, attending his first budget planning meeting as a member of the council, said he is excited the property tax and utility rates are going to remain unchaged.
“That’s a great idea,” Holland said, especially for Sherman residents. “So far, they’ve noticed the increases we’ve had due to the school and other big projects that are coming in, but I think we’re going to be stable as far as our taxes and that’s important.”
The meeting was also the first budget session for council member Josh Stevenson, who was also pleased to hear the city rates would be staying the same.
“I think the citizens have paid their taxes and paid their moneys and the plan was the city’s going to grow and that growth is going to pay for everything we need to continue to grow,” Stevenson said. “I think right now, the plan is working as we’re growing and revenues are coming up. Those extra revenues can pay for the infrastructure we need to support that growth. So if we can continue doing that without raising the rates, I think that we’re doing right by our citizens.”
The city manager said the city does plan to issue additional debt this calendar year, but expects that won’t have much impact on city rates. Hefton explained Sherman pays between $6 million and $7 million a year on debt to the Greater Texoma Utility Authority for the water plant and other utility projects. He said several of the oldest of those bonds will end in 2021, meaning the city’s debt service will go “way down.”
“What happens between now and 2021 to add to the debt that we have, we don’t know yet,” Hefton said. “But the biggest nugget of that has already happened, and that’s the Water Treatment Plant’s $28 million expansion. Undoubtedly, we’ll have to issue some more debt, but it won’t be anything like the $20-whatever million we issued for the Water Treatment Plant.”
Solid waste rates
While the city’s stormwater utility fee, which was introduced last year, is also expected to hold at its current rate for the new fiscal year, Sherman’s solid waste rates will be reviewed because of the impact recent annexations and growth are having on services offered by the city.
“We are really at a crossroads here — not only do we have the additional work going on, we’re adding residential customers,” Hefton said, noting the city has recently added more than 200 new houses a year.
In December 2015, Sherman brought 186.244 acres of land — including Lamberth Road Estates, Carriage House Estates, Shady Oaks Subdivision and various unplatted tracts on Montclaire Drive — into the city limits. Then in March 2016, Sherman annexed approximately 274 acres along Friendship Road and Highway 56.
“We’ve done annexations of Carriage Estates, which was 150-plus customers, Preston Club, which is currently 100 customers and they’re getting more,” Hefton said. “And so we’ve had some strategic annexations along with the growth that’s starting to cause problems with our (solid waste) routes, so most likely we’re going to have to add more routes and at least one more driver on the residential side and maybe another driver. What impact that’s going to have on rates, I’m not sure yet. We’ll look at that as part of the budget and we’ll have an answer for that when we come back in June.”
The council will next discuss the proposed 2018-2019 fiscal year budget at its June 14 budget workshop. In addition to the need for more personnel in the utilities departments, Hefton said he expects growth elsewhere as well, pointing out how much work the code enforcement department is doing with new construction and commercial expansions.
“Not everybody’s going to get what they asked for — even the good results that we’re having, without fail, there’s always more requests for resources than there are dollars,” Hefton said before shifting to the code enforcement department. “When that activity grows and you keep the same staffing level, something’s got to give. So either we decline in the level of service that we give or people get delays in getting their inspections and permits and things like that.”
Stevenson said the focus on code enforcement was one of the most important things to come out of the meeting for him.
“As the city grows, making sure that we can do code enforcement and making sure we can go out and do inspections for all this new construction, that’s a really important part of what the city’s supposed to do,” Stevenson said. “And I want to make sure we do it well.”
Council member Willie Steele also stressed the importance of code enforcement and protecting the city’s current assets.
“The new (things) that we’re doing is exciting and it’s important, but I don’t want us to lose focus on the existing things,” Steele said. “Are we maintaining what we have? You almost hate to say it, but we’re becoming a big city. So we have to start thinking and acting like a big city.”
Holland said his experience earlier this year on the council’s audit committee for the Finance Department helped give him a better understanding many of the budget’s figures.
“The most important part for me was being able to put in the proper roads that we need to put in based off of the growth that we’re having,” Holland said. “The Travis Street overpass that’s going to help get the kids from one side of the town to the other — that really makes me feel good about it.”