Sherman proposes no property tax increase in 2020-2021 budget

Staff Writer
Herald Democrat
City Manager Robby Hefton speaks during Sherman's  City Council budget retreat on Thursday. The city does not anticipate raising property taxes despite a tight budget from the ongoing COVID-19 pandemic.

The city of Sherman is not anticipating a property tax rate increase for the upcoming year, despite economic uncertainty and a tight budget. This comes as the city council met this week for its annual budget retreat.

The annual meeting serves as one of the key steps the city takes each year in setting the budget for the upcoming fiscal year. The upcoming budget is expected to be minimalist as the city faces economic challenges in the wake of COVID-19.

“We started the budget process pre-COVID,” City Manager Robby Hefton said. “The budget as we have it prepared now is ample, it is safe and it is predictable and we were forced into that mode because of the events of the last few weeks and months.“

With this year’s budget, Hefton said his priority has been securing and shoring up the city’s general fund, which has become vulnerable due to an expected sales tax decrease in 2020 and 2021 due to the pandemic.

“We believe this will be a short-term fix to things because we think the effects we are seeing will be shorter term rather than long-term,” Hefton said.

Beyond the sales tax loss, Hefton said the city is anticipating potential losses in its property tax revenues.

“We have preliminary numbers, but one impact we don’t know yet is with high unemployment, with the other effects of COVID, will people be paying their taxes timely. That could have an impact we don’t know about yet.”

As a result of this, this year’s budget has been slimmed down with very few capital expenses or projects.

For the upcoming year, Hefton said city officials are expecting sales taxes to remain flat when compared to what was initially budgeted for 2020 with revenues of $18.37 million.

When all revenues and expenses are calculated, the city anticipates ending the year with $8.64 million in its general fund, or 75 days of reserve funding.

This balancing act will require the city to shift funds from other sources to help protect these days of reserve. For 2020, the city anticipates moving $1.3 million from the health fund to general.

For 2021, the city plans to move an additional $1 million from the solid waste fund. These funds would in turn come from a distribution of excess funds from the Texoma Area Solid Waste Authority, of which Sherman is a founding member.

In 2019, TASWA board approved splitting excess funds from the landfill to the partner cities. However, since then no distribution has taken place. Hefton said he plans to push for this distribution, as it is imperative to Sherman.

While the budget does not include a property tax increase, the city is discussing other revenue streams that are primarily focuses on new development. The city is exploring the possibility of setting impact fees for future development as a way of offsetting the impact it has on the city’s infrastructure.

Another proposed fee would see increases to fire inspections to make them more competitive with other cities in North Texas.

The city initially was proposing a 3 percent increase to utility fees, but this received push back from the city council. Instead, the council elected to use another income stream to offset this cost.

Hefton said the Marilee Special Utility District is is negotiations with the city of Sherman to provide treated water, using Marilee’s allocation from Lake Texoma.

“They have water allocation in Texoma, but they have no way to treat it and transport it. That’s where we step in,” Hefton said.

Under the agreement, Marilee would pay the city about $1.2 million for the construction of the pipeline. Instead, the council chose to bond this expense and use the funds for the utility relief.

Throughout 2020-2021, the city plans to conduct a rate study to determine a long-term outlook for the city’s utility demand and suggested rates.

Doing a rate study to determine long-term rates for utilities. Were last adjusted in 2017.

“Overall it seems like an appetite of the council to more regularly assess the fees we assess.”

Michael Hutchins is the local government reporter for the Herald Democrat. He can be reached at