The Denton City Council sought more information behind some assumptions in the city’s proposed $745 million budget for 2012-13, a 27 percent increase in spending over 2011-12.
That increase includes $116 million in capital improvements, a 3 percent pay raise for the staff and the full-time equivalent of about 48 new hires.
The council got its first in-depth look during a five-hour work session Thursday morning, when discussions sometimes veered off into policy questions over the best ways to encourage redevelopment and neighborhood revivals as much as better information to evaluate the budget.
The budget assumes the city will charge the same property tax rate as last year, or 68.975 cents per $100 valuation. Because the average Denton home is worth slightly less in 2012, dropping to $154,354 from $154,378 in 2011, the average taxpayer would be expected to pay 17 cents less this year.
However, the proposed tax rate is higher than the effective tax rate — the city estimates it would take about 68.045 cents per $100 to raise the same amount of money on the same properties as last year.
Thus, keeping the same tax rate, under the law, is considered a tax increase, said Bryan Langley, the city finance director.
The city expects to collect about $26 million in sales tax next year, but $1.4 million will be refunded for economic incentive agreements.
As a result, net sales tax receipts for 2012-13 are likely to be slightly less than gross receipts for 2011-12.
Council member Chris Watts asked for more information about tracking net sales tax over gross receipts. He told Langley he was concerned about being briefed on trends in gross sales tax receipts knowing that the city has obligated it, such as the agreement to reimburse the developers of the Rayzor Ranch shopping center.
Several council members sought more information about the proposed pay raises for the staff, questioning some of the reasons for another increase.
While the city staff did not have a pay raise in 2010-11, they did have a 2 percent pay raise this year. Public safety employees also had step increases the past two years.
Currently, more than 50 percent of city employees’ pay has fallen below the midpoint of the market, City Manager George Campbell said.
Employee turnover dropped during the economic downturn, dipping to 5.14 percent in 2008-09, but has been increasing in the past several months, Langley said.
The equivalent of 1,354 full-time employees now work for the city.
Turnover is projected to exceed 9 percent by the end of the 2012 fiscal year.
Council member James King questioned whether recent turnover reflected pent-up desire by some employees to look for another job once the economy got better. Council member Dalton Gregory asked for more information about what labor markets were being compared, and council member Kevin Roden asked for data from employee exit interviews.
Mayor Mark Burroughs said he was surprised that, given the state of the economy, the city employee pay base would have slipped so much.
“I talk to other mayors and they are doing worse than us,” Burroughs said. “I’d like to see the last couple of studies to see how we trended and got that far behind.”
Several council members asked about other items that impacted policy more than big-ticket budget items — for example, the possibility of putting more money in downtown improvement grants, beyond what the newly created tax-increment finance district would fund. They also asked for a report of what neighborhood improvement grants have and haven’t been able to accomplish so far. Roden and fellow council member Jim Engelbrecht suggested that the city’s planning department might be able to do more analysis using geographical information systems to help target distressed neighborhoods.
The council also is considering reinstating a line item that would give each council member a small amount of discretionary funds to spend in their district, though Campbell recommended those requests be routed through the city manager’s office and voted on by the council.
A downtown shuttle wasn’t recommended by the city manager, who told council member Pete Kamp, when she asked about it, that the council should have the discussion about whether it was a priority over other requests that weren’t recommended.
After Langley told the council that growth projections were conservative, Burroughs asked him to show scenarios where the council could avoid imposing a 1-cent property tax rate increase for the 2014-15 fiscal year.
Watts echoed the request, adding, “What about savings on the expense side?”
Langley told the council that many of their questions would likely be answered in a Q&A memo before the Aug. 14 budget workshop, although the council is scheduled to vote Aug. 7 on the tax rate.
The first of two public hearings on the budget is scheduled for Aug. 21.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is firstname.lastname@example.org .
BY THE NUMBERS
Expenses for the Denton city manager’s proposed 2012-13 budget are 27 percent higher than in 2011-12, with most of the increase coming from major capital improvement projects — not only for city streets, but also in the water, sewer and electric projects. Here are some key numbers from the proposal:
Capital improvements: $278.9 million
Street improvements: $7.2 million
General debt service: $39.9 million
General fund: $94.3 million
Electric fund: $159 million
Other funds: $165.7 million
Total expenses: $745 million
SOURCE: City of Denton