City Manager's Message - Budget Overview

We are pleased to submit this Proposed Annual Budget for the fiscal year that begins on October 1, 2021 (FY 2022). This document represents the City’s financial plan and operations guide for the next fiscal year. It identifies issues confronting the community and provides a plan for serving our constituents. It takes a combined effort by City Council, management, and staff to allocate and deploy the City’s resources to meet the established goals while maintaining sound financial policies.

FY 2022 BUDGET OVERVIEW

The FY 2022 Proposed Annual Budget includes total resources of $36,227,620 and expenditures of $34,049,640, including transfers and planned use of fund balance. For perspective, the amended budget for FY 2021 contained resources of $32,440,763 and expenditures of $31,410,977. This message discusses the major issues, initiatives, and assumptions addressed in the budget.

The City's overall financial position is sound. The reserves in all funds are adequate and will continue to be monitored. This monitoring is accomplished through continued refinement of long-range fund projections and monthly budget performance review.

GENERAL FUND

The General Fund is the chief operating fund of the government. It is used to account for all current financial resources not required by law or administrative action to be reported in other designated funds. The primary governmental functions occurring within this fund are public safety, parks, library, streets, and general administrative operations.

GENERAL FUND REVENUES

Total revenues for the General Fund in FY 2022 are $17,339,200, an increase of $1,459,498 or 9.19% from the amended budget for the prior year. Revenues are derived from several sources. Foremost among these sources are property and sales taxes.

GENERAL FUND EXPENDITURES

General Fund expenditures in the FY 2022 Proposed Annual Budget total $17,339,200, increasing $579,931 over the FY 2021 amended budget. Encompassing fifty-seven percent of the budget, charges within the personnel category rise to enhance public safety operations and to increase compensation for employees based upon their performance. At twenty-six percent of General Fund expenditures, the increase in appropriations for services is primarily due to higher costs for refuse collection. A compensation study will also be completed in FY 2022. The maintenance category includes $650,000 for contracted street maintenance.

DEBT SERVICE FUND

This fund is used to accumulate a dedicated portion of property taxes for payment of the City’s general debt. Revenue from property tax collections is expected to be $1,114,330. Expenditure appropriations for FY 2022 total $1,180,870. Payments on tax-supported debt comprise three percent of all appropriations included in the FY 2022 Proposed Annual Budget.

WATER & SEWER FUND

The Water and Sewer Fund accounts for all activities related to the provision of water and sewer services to the residents of Belton, including administration, operations, maintenance, debt service, billing, and collection. An enterprise fund of the city, it is designed to be financed and operated like a private business. Accordingly, utility fees should be sufficient to cover annual operating and capital costs while providing income for future capital needs.

Total revenues of the Water and Sewer Fund are expected to increase by seventeen percent in FY 2022 to $10,614,980 from the COVID-reduced budget of $9,003,733 in FY 2021. Consumption volume grows as the number of customers served continues to climb. The proposed water and sewer rates have not changed from the previous year.

The FY 2022 Proposed Annual Budget anticipates Water and Sewer Fund expenses to jump by $1,625,270 to $10,614,980. Water procurement costs increase by $309,157, while sewer treatment costs remain stable. Transfers to capital project funds rise by $670,075 to advance vital infrastructure projects.

DRAINAGE FUND

The mission of this fund is to maintain a stormwater management system that efficiently conveys storm water in a safe manner and prevents flooding. The Drainage Fund is considered a utility of the City. Accumulated revenues are used to fund drainage-related expenditures and projects.

The revenue for the Drainage Fund is generated by the City’s drainage fee. The proposed drainage fee remains unchanged at $5.00 per month for single family dwellings.

However, drainage fee revenue in FY 2022 increases by six percent to $580,400 as the customer count grows. Budgeted expenses for FY 2022 total $573,180, including appropriations for four maintenance workers, public education efforts, and debt payments.

HOTEL/MOTEL TAX FUND

The Hotel/Motel Tax Fund records the receipt and distribution of the City’s hotel occupancy tax, which is levied at seven percent of the room rental rates. The City also receives a small portion of the County’s hotel occupancy tax. Authorized by state statute and approved by City Council, expenditures must promote tourism and the hotel industry. Revenues were expected to significantly decline in FY 2021 with prolonged closures due to the COVID-19 pandemic. However, hotel occupancy quickly recovered after a brief drop. For FY 2022, hotel occupancy tax revenue is projected to remain flat. Expenditures in FY 2022 increase to $180,110.

TIRZ FUND

The TIRZ Fund is used to account for the accumulation of resources from ad valorem taxes collected on the incremental tax values in the Belton Tax Increment Reinvestment Zone No. 1, which was created in 2004. These revenues can only be expended on projects within the TIRZ zone that have been approved by both the TIRZ Board and the City Council. The City of Belton and Bell County participate in the TIRZ, which will expire in 2024.

TIRZ Fund revenue continues to grow rapidly as captured property values within the Zone swell. Total revenues that are reflected in the FY 2022 Proposed Annual Budget increase by eight percent from $2,319,650 to $2,514,270. At $2,210,240, expenditures grow to improve Heritage Park.

INFORMATION TECHNOLOGY FUND

The Information Technology Fund is an internal service fund used to account for all costs of providing general information technology services to City divisions. These activities are financed through charges to the divisions for services rendered. FY 2022 revenues total $901,240, while expenditures equal $846,190 to acquire several computers for police vehicles.

BUILDING MAINTENANCE FUND

The Building Maintenance Fund is another internal service fund that will be used to account for all costs of providing building maintenance throughout the organization. Charges to other divisions total $458,230. Expenditures in FY 2022 total $419,610.

ECONOMIC DEVELOPMENT FUND

The Economic Development Fund was created in 1991, pursuant to the ½ percent economic development sales tax approved by voters in 1990. This additional sales tax can only be used for economic development purposes. Acting through the Belton Economic Development Corporation, Inc., a governmental nonprofit corporation, the purpose of this fund is to promote, assist, and enhance economic development activities within the City of Belton.

Revenues in the FY 2022 Proposed Annual Budget increase by six percent to $2,455,330. As sales tax revenue is essentially its sole source of income, the Corporation took an ultra-conservative approach to budgeting in FY 2021. The anticipated decline did not occur, however, as FY 2021 sales tax revenue may reach $2,320,110, $617,911 greater than budget. FY 2022 expenditures of $685,260 include funding for a downtown marketing plan and the preliminary design for the extension of Capitol Way.

CONCLUSION

Conservative management has placed the City of Belton in a sound financial position. The General Fund and the Water & Sewer Fund have healthy reserves. A growing property tax base provides sufficient resources to cover services, and sales tax revenue continues to rise. On the expenditure side, the allotment for street maintenance exceeds that which was envisioned in the Strategic Plan. There will also be a significant investment in infrastructure projects through Belton’s CIP, as well as in our most important asset, municipal employees.