In recent budget talks, the City Council concentrated on the piece of the pie that goes to Denton streets, examining whether years of cutting such thin slices to plug potholes, fill alligator cracks and layer more asphalt can be assuaged.
Residents continue to say street repairs should be the city’s No. 1 priority, Mayor Pro Tem Pete Kamp said during Tuesday’s workshop session. Council members long ago agreed the problem needs to be addressed.
Consultants came to Denton in 2009 to study the condition of city streets as they had in 2003. Their subsequent report, issued in early 2011, was sobering. Conditions had declined, from a score of 69 to 61 on a 100-point scale. They told officials Denton needed to spend $10 million a year just to maintain that failing grade.
Moreover, it would take $96 million to repair the nearly 1,000 street segments that had already failed. Because it has taken several years to ratchet up budget allocations, city leaders agree that the overall condition of Denton streets has likely slipped further since the consultants’ report.
Since 2011, Denton has greatly increased spending on street repairs, from an average of about $4.6 million per fiscal year to an expected $11.1 million for 2012-13. That figure includes this year’s launch of a five-year bond program, approved by voters in November, that puts $4 million per year to work rebuilding crumbled roads.
The council has generally agreed that Denton needs to spend $15 million per year for many years to catch up. Several council members, particularly James King, have pushed for allocating a pay-as-you-go budget that avoids the additional costs of financing. Overall, council members agreed that the de facto policy — letting streets deteriorate to the point that bond packages can fund their replacement — has proved to be more expensive than maintenance.
So far, the city has boosted the street budget with two big moves.
First, Denton is dedicating money from bond savings — instead of selling revenue bonds, the city is selling certificates of obligation to pay for projects and then allocating the savings for the less costly bonds to street work.
That brought about $460,000 over the past two years, and that figure is likely to grow as more financing is converted in the coming years. The alternative financing is expected to funnel about $1.2 million toward street repair in 2017-18, city staff said.
The city also began adding franchise fees to the pot, bringing about $12 million the past two years. By 2017-18, that figure should grow to $10 million annually, the staff said.
Street cut fees — payments made for any construction work that involves cutting public pavement — bring another $360,000 a year to the street maintenance fund, but that still leaves a gap. City Finance Director Chuck Springer outlined seven options that could bring $740,000, or more, per year to fill a gap that would become a gaping hole by 2017-18 when the street bond is exhausted.
Some options portend of political pain to come. Should the city shave a sliver from every department budget? Or should the city continue to delay supplemental projects and dip into the fund balance?
Should the city adopt new fees by either asking all residents to pay a maintenance fee or asking all new residents and businesses to pay an impact fee? Neither choice would be popular, council members conceded.
Should the city put off other capital improvements, either dedicating more bond money to streets or some of the bond tax rate to repairs? As residents watch fire stations, recreation centers and other city facilities take on more wear and tear, council members agreed that choice could prove unpopular, too.
During Tuesday’s work session, council members spent the most time discussing the possibility of adopting new fees, but settled for the time being on the principle that they would likely have to employ more than one of the seven options to tackle the problem.
The City Council will hold its first public hearing on the 2013-14 budget during its regular meeting at 6:30 p.m. Tuesday at City Hall, 215 E. McKinney St.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter @phwolfeDRC.
FUNDING THE GAP
City staff members have offered seven ways to come up with another $740,000 per year until there is enough money to repair Denton’s streets. The City Council could select one or more ways to supplement money being allocated from franchise taxes, bond funds and bond sale savings, and street cut fees.
Allocate more from the general fund: Reduce money for supplemental programs and tap reserves to add $740,000 per year until $2.9 million is added by 2017-18.
Reduce current programs: Reallocate a portion of the budget each year — about 0.75 percent — until 6 percent of the general fund pie has been reapportioned to street maintenance by 2017-18.
Dedicated property tax: A 1-cent increase would bring an additional $740,000. By year five, assuming 4 percent growth in the city’s tax base, a dedicated tax would have to increase to almost 5 cents per $100 valuation.
Defer other capital spending and use savings for streets: Issue $9.3 million less per year in general obligation bonds and use the taxes that would have repaid them to pay for street work instead. The cumulative effect means that, by 2019-20, the city would issue about $10.1 million for other capital projects (fire stations, vehicle replacements, facility improvements, etc.) compared to $50.8 million currently planned for capital projects.
Bond election with bond sales accelerated: Of the $50.8 million planned for bonds, issue $20 million for streets and do the work within seven years. Some savings would be realized in finishing the work three years sooner, but $740,000 annually would still be needed to maintain the program.
Adopt street maintenance fee: Assess a street maintenance fee that would add $5 to $14 to the average family’s utility bill (more for commercial properties) and raise about $3.5 million to $7 million annually.
Adopt street impact fee: Raise about $500,000 to $1.5 million per year by charging the cost of new road capacity to new growth, similar to water and sewer impact fees. The new fee couldn’t pay for maintenance, however.
SOURCE: City of Denton Finance Department