After years of steady, sometimes double-digit growth, budgets for many area cities stayed flat or even shrank this year. For a handful, this was the second year of shrinking bottom lines.

A Denton Record-Chronicle analysis of proposed budgets for the 2008-09 year, compared to the same information gathered for 2007-08, showed that only five of 17 area cities planned to increase spending by 7 percent or more.

Two cities, Sanger and Krugerville, were omitted from the analysis. Krugerville did not pass a budget until Sept. 30. Sanger made major changes in how it accounts for its electric department’s income and expenses.

But Sanger was not exempt from belt-tightening. City Council member Thomas Muir, who also is a certified financial planner, imagined that other city leaders were as shocked as Sanger was at this year’s valuations. In Sanger’s case, the tax roll was $23 million lower this year, a large portion still being disputed by Wal-Mart, which has a distribution center on Sanger’s north side.

“Even in North Texas, where we’ve weathered the storm pretty well, we have been seeing stagnation in property values,” Muir said.

Sanger eliminated one senior level staff position —economic development director — and funded a small merit pay plan, but no cost-of-living increases.

Spending variations

Seven area cities will spend less next year, with Krum, Bartonville, Shady Shores and Justin anticipating double-digit dips in spending. Bartonville’s spending went up 10 percent last fiscal year, but this year retreated to its 2006-07 spending levels.

Several other cities projected a flat budget. Proposed spending in Aubrey, Oak Point and Pilot Point differed by less than one percent from last year to this year.

For many cities, this was the second year in a row of shrinking budgets. Annual spending in Oak Point, Hickory Creek and Shady Shores has shrunk a total of $300,000 in each city since 2007. Ponder and Pilot Point both dropped $100,000 from their annual expenditures during the past two years.

Among cities proposing increases, Double Oak and Corinth both crept up about 4 percent, but most of the increase was eaten up by rising fuel and energy costs. Corinth, which anticipated a 25 percent increase in its budget last year, is also cutting staff positions to absorb the increases.

Among cities still projecting significant growth, Argyle, Dish, Copper Canyon and Denton plan for a double-digit increase overall.

Denton city leaders approved a $462 million budget — up about $47 million, or 11.4 percent, from last year. The budget includes the equivalent of about 33 new full-time positions that officials say are needed to provide services as the population grows. The budget also includes money for employee raises and increased pension-fund contributions.

Dish, where nearly half the budget comes from mineral valuations, will spend $20,000 more and Copper Canyon, $130,000 more. Many on the Argyle staff will see market adjustments of their salaries, funded in part by the town’s $490,000 increase in spending.

Tax rates

Most Denton area cities have adopted tax rates less than 60 cents per $100 valuation for several years, including Krum, Pilot Point and Corinth. This year, Sanger crossed that 60-cent threshold, adopting a rate of 62 cents per $100. Lake Dallas took its first step past the 70-cent mark, with a 71-cent rate. Few municipalities in the county are higher, though many residents living in fresh water supply districts pay 90 cents to $1 per $100 valuation in addition to school and county taxes.

City tax rates did not change appreciably in Argyle, Bartonville, Copper Canyon and Bartonville, even though residents there agreed to form a new emergency services district. This year, the cost of fire service is being transferred from the cities to the district, which has the authority to tax up to 10 cents per $100 valuation.

The board of Denton Emergency Services District No. 1 adopted a rate of 8.2597 cents per $100 valuation. The new rate will be on the tax bill of every property owner in the district, except those living in the fresh water supply districts of Lantana. 

Lantana leaders have said they negotiated a contract to pay the district the same as if the tax applied, rather taxing property owners directly for fire service.

In Denton, budget planners used a mix of reserve funds, spending cuts, and increased service fees and rates to avoid raising the property tax rate.

Muir said he could envision a time where cities such as Sanger might also need to consider other ways to raise revenue if property values fall, especially since the cost of many things, such as fuel, is rising.

“We still have to build streets and run plants and do the necessary services,” Muir said.

Staff writer Lowell Brown contributed to this report.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com.