(Seguin) -- The Seguin City Council Tuesday officially kicked off its budget and tax rate adoption process.
City Manager Doug Faseler gave the council its first look at the proposed budget for the 2017-18 fiscal year. Faseler's presentation included a look at the proposed revenue projections and expenditures included in next year's budget.
The overall operating budget calls for the city to spend approximately $76.8 million next year. That compares to the $75.6 million that the city is projecting to spend by the end of the current fiscal year, which comes to a close on September 30.
Faseler says every budget has it's challenges, and next year's proposed budget was no exception.
"In looking at some of our revenue sources, they remain fairly flat. Some went up slightly, some went down some, sales tax was pretty stable (as well as) building permits, franchise fees. We are recommending that we maintain our current tax rate at 54.12 cents. That's above the effective tax rate, but it is the same rate that we're currently operating under. So that would be an increase. Also, we've got a small increase in EMS fees, revenue. So we're looking at that," said Faseler.
Unlike some recent years, Faseler says the general fund budget, which includes items which are typically funded through property taxes, does not include several new positions for next year.
"(We're) not looking at adding as many new positions as we have been able to do (in the past). We've been fortunate the last couple of years (to be able to add positions) in public safety and public works, different areas, the library. We're only proposing one new position this year and that's an information systems director. Technology has gotten so broad across all departmental lines -- public safety, utilities, in all the departments who need some additional assistance and direction in those areas," said Faseler.
The budget does include several capital improvement projects, which are big ticket infrastructure and other projects that help the city provide services to its citizens.
"We're continuing street improvements and street projects, (they) are a priority of the city council. We're looking at issuing $5.5 million in certificates of obligation during 2018 to continue our five year street plan. Along with that, we've made some adjustments to our wastewater rates and that's going to enable us to do some utility projects that are part of our five year plan, and some of those are associated with those street projects. You want to replace the water and the sewer mains before you reconstruct the streets," said Faseler.
The city of Seguin is also a utility company -- providing electrical, water and sewer services to a large portion of the city. Faseler says there is going to be a water and wastewater increase next year. He says those additional dollars are needed to help cover the expenses associated with those to services, and to help improve the water and sewer systems in the city.
"A couple of weeks ago, we addressed our water and sewer rates, and it was particularly set in order to fund our capital improvement projects --- not huge increases but we do have a five year plan with some gradual increases," said Faseler.
Faseler says the city has to reinvest some of its revenue into its utility infrastructure. He says that's why some of these projects have been identified in next year's budget.
"You know we've got some (old) mains in the city. We are an older city about 178 year old city. We've got some sections of line that are the old clay type sanitary sewer line, and they crack and they separate and so we've got some major lines that we are going to replace and at the same time upgrade them to allow for growth," said Faseler.
The proposed tax rate of 54.12 cents per $100 of property value is identical to the current tax rate, but it's over 2.6 cents more than the effective tax rate of 51.5 cents per $100 of valuation. City Finance Director Susan Caddell says it's been some time since the city adopted a tax rate that was higher than the effective tax rate. The effective tax rate takes a look at new property values, and it represents the level of taxation that the city would have to impose in order to generate the same level of revenue as this year. Caddell says over the years the city's tax rate has grown due mostly to debt the city has taken on to make needed improvements across the city. She says that interest and sinking (I&S) tax rate is only used to cover that debt. She says when you look at the city's maintenance and operation (M&O) tax rate it tells a slightly different story and it shows how the city has tried to hold the line of its operating expenses year to year.
"Ever since we've been issuing a lot of debt in 2013, I've been keeping track of our tax rates so you can kind of see how the O&M and I&S rates have been. In 2003, our I&S rate was 13.16 cents. We are recommending 25.33 right now. Our O&M rate in 2003 was 26.91 and we are recommending 28.79, and in 15 years, that's less than a two cent increase in our O&M rate," said Caddell.
Faseler says they have also identified a project that won't have a direct impact on that proposed tax rate next year. He says the city is relocating its planning and codes department to another location in downtown Seguin. He says they have some money on hand that will allow the city to renovate a building just a block from Seguin City Hall. Faseler says new tax dollars will not be needed for the roughly $2.9 million that will be needed to renovate the building. He says this will be a good move for the folks that work in that department, and it will also allow them to better serve the customers who need to utilize those services.
"Catty-corner from city hall is the old Ford dealership at the corner of Mountain and River streets, and the city purchased it earlier this year and the plans for it is to convert it to a development services center, and within that building, our building permits will be issued, our planning department will be located, engineering or inspectors, capital projects, (and) code enforcement. So it will provide a more accessible location for the general public and contractors and developers to come in and deal with our staff. As we exist right now, most of that staff is located on the second floor of city hall -- many of them sharing offices -- very tight quarters, and it will provide for more of a professional work environment," said Faseler.
The proposed budget also reflects a change in which technology plays a much bigger part in the city's day to day operation. Faseler mentioned the new IT director position in the budget. He says the city also needs to spend more money on cyber security to make sure that it's protected from any outside attack. Faseler and Caddell shared with the council an explanation of a recent cyber security concern. Caddell says staff recognized that it wasn't right, but it shows the potential for problems to occur.
"I got an email from Doug and it says, 'are you in your office, I need to get a check cut' and I knew he wasn't in his office. It was saying it came from his office. I knew he wasn't in there. So I got suspicious and I actually called him up and talked to him about it and he said no it wasn't him. And also a couple of weeks ago, I was on vacation and I got another email from him saying 'are you in your office?' And, he knew I was on vacation," said Caddell.
Faseler says they have some cyber security measures already in place, but he says they have included $50,000 in the new budget that would allow them to have a cyber security assessment done so that it can have a better feel for what additional steps need to be take to boost the city's overall cyber security efforts.
Tuesday's budget workshop was just the beginning of a process that will take weeks to complete. Additional public meetings will be held to give the city council and the public an opportunity to ask questions about the proposed budget. The city's new fiscal year begins on Oct. 1.