Budget amendments to the 2018-19 fiscal year have been made in preparation for the opening of the 2019-20 fiscal year by the Mexico City Council. A special hearing was held Monday to review the planned budget for the next year, which was approved unanimously during the council's regular meeting.
City administrator Bruce Slagle highlighted all planned changes to revenues and expenses. The council and department heads held a budget work session last month in which all major expenses were discussed, such as Fairground Pool. The city's updated tax levy also was approved last month due to a nearly $650,000 decrease in property values.
Council member Chris Williams asked about how the closure of Teva Pharmaceuticals will affect property and wastewater revenue sources. "I can imagine it's going to be a little bit of money before it's all said and done," he said.
City staff are discussing the closure and possible effects on tax revenue. The company's personal property tax rate decreased considerably in 2018-19, Slagle said. "They aren't running certain things out there, so we've already felt some of that," he said.
Since the closure is planned for the first quarter of 2020, it helps the city since it will have two years in which to align for the property tax change, Slagle said. As for wastewater revenue, it will have a significant impact since Teva is a commercial user. "Budgets going forward, we have to take that into consideration," Slagle said.
The city is working with a balanced budget and maintaining necessary fund reserves, along with carry-over funds from the previous year to help with one-time expenses, such as the purchase of new vehicles or other equipment, Slagle said.
The city uses fund accounting for its budget that "emphasizes accountability rather than profitability," he said.
Core and essential city services receive priority over other funds. Total budgeted revenue for the 2019-20 year is $17.2 million, with expenditures budgeted at $19.06 million, a difference of $1.8 million. The excess expenditures are funded by project reserves and unreserved surplus from previous budget years and municipal bonds, Slagle said.
The higher expenditures are coming from interfund transfers, planned equipment purchases, planned improvement projects and carry-over projects from the previous fiscal year.
The city basis for the budget came from property values, sales tax receipts, lodging tax receipts, gross receipts tax from things such as phone providers, increases to recurring expenditures, changes to minimum wage rates from Proposition B, the renewal of the capital improvement sales tax, internet sales and the ongoing trade war.
Property values decreased .41%, Slagle said, with the majority of the decrease coming from personal property values. Retail sales tax collections also are down due to an increase in online purchases. The city is presently not able to collect a use tax on online purchases. Such a tax would have to be approved by Mexico voters. Implementing a use tax would increase city revenue by $152,000, Slagle said.
City health insurance and property and liability insurance is expected to increase for 2019-20. Estimates range from an increase of 5-10% based on the type of insurance. The number of full-time employees is not expected to change in the next year. Current staff will receive a 2% cost-of-living adjustment to their income, while entry-level public safety officers have a 3% market adjustment increase to their pay. Outside charitable and contract agencies generally will receive requested support amounts for their programs, such as the Help Center or Presser Performing Arts Center. The donations match 2018-19 donation levels.
The city will receive state and federal funding and outside donations to complete projects like a one-way street study, Muldrow sidewalk project, airport layout plan, airport runway displacement project, an Americans with Disabilities Act-compatible playground at Plunkett Park and a community dog park. The two park improvements or additions are coming from donations to the city.
Major expenses this year for the general fund include new ballistic vests for public safety officers, annual stormwater improvements, new trucks and mowers for the street maintenance department and a network server for city administration, among others.
The wastewater fund will conduct $796,000 worth of capital improvements this year, including a facility plan update for the wastewater treatment plant and a hydraulic model of the city's entire sewer system, which will allow the city to assess what future sewer updates it will need to address changes to operating permit rules. Sewer rates will increase 3% which will go into effect in October. The city also is addressing stormwater entering sewer lines and illegal sump pump connections to sewers.
The $3.6 million Fairground Pool project is expected to be next year’s largest expense. Two-thirds of funding will come from city sources — the capital project reserve fund and the parks and recreation fund. The final third will require a new funding source that needs voter approval, such as the internet sales use tax. The city likely will take a bank loan and pay that loan out of the reserve and parks and rec fund.
Public Health and Animal Control also will have more expenditures than revenue this year. This is due to an increase in residents using the city's dangerous building demolition program and other nuisance abatements, Slagle said.
City staff and department heads were recognized by Slagle for their work in preparing the next year's budget.