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Briefing - Fiscal Year 2022-2023 Budget Outlook
Town Staff presented preliminary budget projections for Fiscal Year 2022-2023 based on conservative estimates of Town revenues.
Council has requested four goals for Staff to focus on in regards to exercising fiscal responsibility: sustain a low property tax rate, maintain existing service levels, compensate employees at 50% of market and invest in public infrastructure.
Staff detailed the challenges facing the Town: supply chain, high inflation and market volatility, with initial general fund projections showing a $200,000 budget deficit. Staff explained that as the Town continues to grow and has additional expenses, the objective is to keep revenues greater than expenditures. Staff reminded Council that the budget presented is preliminary and projections could change.
There has been a decrease in development fees, the Town’s largest source of revenue, presumably because the lots available were rushed to market, followed by supply chain and labor issues slowing construction on next phases. Town expenditures have increased, with personnel requests being the largest area of growth.
Developmental Services revenue peaked during the 2021 fiscal year with approximately 1500 homes built. Residential construction was flourishing when the interest rates were low and the infrastructure was there for people to build homes.
Town Staff discussed the status of the Town’s existing property tax base, which is projected to increase considerably, primarily because of commercial growth. Town Staff stressed that this is a direct result of inflation in existing value.
New value growth is increasing by 40% due to growth in the property tax base, mainly from new property values and from existing commercial and residential properties. Sales tax revenue is projected to increase 16% due to inflation and growth.
Expenditures are expected to increase by 9% due to growth and inflation. The largest expenditure being the need for additional personnel in order to maintain current service levels. Additional large expenditures budgeted for the Fiscal Year are police and public works vehicles.
Town Staff reviewed our Capital Improvement Program and discussed how investments in our infrastructure will grow our tax base for years to come. Estimates are based on 1% commercial value growth. These investments will provide ample funding for future capital projects.
Town Staff reviewed several important future decision points for Council’s consideration:
- An increase in water and sewer wholesale rates.
- Potentially absorbing the EDC and/or CDC in an effort to decrease property tax reliance, which would provide increased sales tax funding to the General Fund.
- Decreasing the Debt rate and increasing the Operations rate (which would require an election).
- Adding a storm water fee could be a revenue source that would provide additional operating and capital dollars.
Town Council called for public input.
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