Annual Budget
Annual Budget Letter
LAMESA TEXAS
TRADE CORRIDOR CROSSING
City of Lamesa
Office of the City Manager
601 South First Street 806/872-2124 Lamesa, Texas 79331
September 27, 2021
To the Honorable Mayor and Members of the City Council:
In accordance with the Civil Statutes of the State of Texas and the Charter of the City of Lamesa, the proposed budget and program of services for the fiscal year beginning October 1, 2021 is submitted for your review and consideration. The budget is intended to present, in financial terms, the overall plan for providing municipal services during the forthcoming year. Moreover, the budget provides the basis for a high level and quality of services of the City's infrastructure to ensure progress and development. This budget provides funding for similar levels of service offered by the City as last year.
Summary
The FY 2021-2022 budget is prepared for a balanced base budget with limited resources and it has been a challenging experience. To continue to meet fiscal challenges of the future, the City must strengthen its General Fund revenue base , at present consisting primarily of property tax, sales tax and franchise fee proceeds. The Enterprise Funds including the Water/Wastewater and Solid Waste fund have experienced a decrease in available working capital the last couple of years due to CRMWA repairs, water conservation measures, drought restrictions , repair and/or replacement of aging infrastructure, and the construction of a new Type 4 landfill cell. In the coming years, fiscal restraint and a strong economy will be crucial to our financial position.
The current economic conditions has remained steady due to stable sales tax receipts year over year. However, the treat of inflation could cause expenditures to increase dramatically necessitating the need to be vigilant to changing conditions .
Budget Overview
In the tradition of past years, the budget reflects that fund balances must be utilized in order to balance the budget. The projected ending fund balance for the General Fund for September 30, 2021 is $3,685,375. One of our fiscal goals has been for each fund to be totally self- sustaining. The budget for the General Fund has accomplished this goal up to current fiscal year, however the FY2021-2022 economic landscape is uncertain due to the addition of debt service requirements, inflation, and the volatile oil industry. To meet this challenge head on the City Council voted to increase the AD Valorem rate from .823236 to .853836.
Similarly, the total working capital available on September 30, 2021 (unreserved ending fund balance) in the Water Fund was $2,46,868 compared to an estimated projection of $3,236,877. Working capital on September 20,2020 for the Wastewater Fund was $591,695 compared to an estimated projection of $521,274 for the end of the current fiscal year.
The working capital ( unreserved ending fund balance ) on September 30, 2020, in the Solid Wat=ste Management Fund was $1,286,049 compared to an estimated projection of $1,3987,857 for the end of the current fiscal year.
The working capital on September 30, 2019 (unreserved ending fund balance) in the Solid Waste Management Fund is projected to be $612,267 a decrease of $267,215 in working capital over current year's budget.
The Municipal Golf Course estimated revenues for current year's budget will be $201,400 and expenditures estimated at $271,517. We need to transfer funds, $70,117 from the General Fund to create at least a zero fund balance to close the current year's budget. The Municipal Golf Course is unable to generate enough revenue to sustain its operations, therefore the General Fund will need to continue subsidizing its operations.
Key Changes in the 2021-2022 Budget
Revenues - Budgeted revenues for all funds are expected to increase $537,5769 over the budgeted revenues for Fiscal Year 2021-2022
Expenditures - Budgeted expenditures for all funds are expected to increase $343,471 over the budgeted expenditures for Fiscal Year 2021-2022-
Capital Expenditures -. The capital expenditures for FY 2021-2022 include six new pickups, one new garbage truck, and a new lagoon pump for the sewer plant.
Personnel - This budget includes an increase of 5 FTE in the FY 2021-2022 budget. (Water Production, Distribution, Police Department and Finance). Also, the council approved a four percent across the board pay increase to all employees except the police department. The police department rate table was reconstructed to be competitive with the surrounding communities.
Overview of the General Fund
The General Fund is the primary source of funding for City services. General Fund revenues are derived from real estate and personal property taxes, sales taxes, fines, and fees for service. The proposed FY 2021-2022 General Fund revenue budget is $4,996,219, an increase over the FY 2020-2021 budget of $4,604,359.
Sale tax receipts have increased slightly from FY 2020-2021 to FY 2021-2022 by $63,000 . Property evaluations have decreased slightly due to a slowdown of business startups and expansions. We will continue to be fiscally responsible and will manage all programs in the cost efficient and effective manner possible.
The ever increasing cost of health care and indefinite sales tax receipts will result in a short fall of General Fund revenues requiring an increase in the Ad Valorem tax rate in future years.
The Ad Valorem tax rate will increase from $.823236 to $.853836 per $100 of assessed values. The total appraised values for 2021 is $284,236,010 a decrease of $1, 235,150 from $285,471,160 in 2020. The City's financial position has become more dynamic and fluid due to fluctuation in oil field activity in the past twelve months. Prices for the crude oil continue to fluctuate creating uncertainty, yet more positive outlook in the local economy.
Overview of the Water and Wastewater Enterprise Fund
Last year our projected working capital at the end of the year will be $2,246,868 (FY 19-20). This year we project that the total working capital at the end of the year will be $3,236,877 (FY 20-21). There is a projected balance of $3, 480,378 at the end of the next fiscal year (FY 21-22).
The working capital at the end for the Waste water fund last year was $591,69 (FY 19-20). This year we project the ending working capital to be $521,274 (FY 20-21). The projected ending balance for the proposed budget is $520,017 (FY 21-22).
The City of Lamesa received a USDA Rural Utilities Service Grant/Loan Program totaling $12,500,000 for Water System Improvements. The grant totals $5,515,000 and the loan totals $7,035,000. The USDA funds will be used to insure availability of water during times of CRMWA water repairs and outages. The grant will include construction of a 14MG storage tank and replacement of City well field water supply line. The USDA Grant/Loan has required the City to raise its water rates to cover the debt issuance of $7,035,000.
Overview of the Solid Waste Management Enterprise Fund
Overall, the Solid Waste Management Fund estimated working capital for end of September 2021 is $1,387,857 and the projected working capital for September 2022 is approximately $1,361,967.
The landfill Type I cell has approximately four years of capacity remaining. To meet future needs the City Council has elected to set aside $2.00 per account each month in the City investment fund. The new Type IV cell has been excavated by the City staff and the finishing touches should be finished in approximately six months. The new cell life should be approximately 15 years.
Personnel
As you are aware, significant reductions in staffing levels have occurred during the last thirty years. The reduction of over thirty positions has had a noticeable impact in the City's ability to provide high quality services to the citizens of Lamesa. Fortunately, the use of better equipment, better organization, better qualified and better-trained employees has allowed the City to sustain an acceptable level of City services. Fortunately, the FY 2020-2021 budget includes a 4% increase in pay to all full-time employees except the Police Department. City employees have not received COLA raise other than merit increases for five years. In order to compete for Police Officers within the surrounding area it has become necessary to overhaul the entire pay plan. Hopefully, this will enable the PD to attract well trained employees while reducing the turnover rates.
The FY 21-22 budget includes five new FTE's including new positions in water production (pumper), water maintenance, police department (detective), vehicle maintenance (mechanic) and finance (assistant finance director).
Capital Replacements
Only items costing more than five thousand dollars are now considered as capital items. Most computers are no longer being counted as capital items. This budget provides for capital replacements only where deemed absolutely necessary to continue current levels of service.
The capital replacements for FY2021-2022 include, six new pickups, one new garbage truck, repair of Vac truck, lagoon pump, and Onmigo software for the PD.
Prospects for Future Progress
Again Preston Smith Unit-prison has continued to be a financial asset for the city. We feel that it has made a positive contribution to our sales tax and enterprise fund revenues. However, staffing constraints have forced the Preston Smith Unit to close two wings of their facility and Decreased the inmate population accordingly. Hopefully, The Lamesa Economic Development Corporation will be able to attract new sources of economic activity and add to our growth. The addition of new businesses and jobs will have a positive impact on our revenues. LEDC was the primary force in obtaining the new prison expansion and pledged $100,000 a year for five years for city utility service to the new unit. Furthermore, LEDC financially assisted the City in constructed two new water wells on LEDC farm land to supply water to Preston Smith Unit - $300,000. Also, LEDC provided funds for a new wastewater lift station and LEAP funded the construction of a new 250,000 elevated storage tank that will provide much needed infrastructure to the north side of town where commercial growth is occurring . Finally, LEDC has successfully assisted the Texas Housing Foundation in garnering tax credits for an 80 unit multi-family housing complex on N. 7th Street. Additional housing is critical in maintaining and sustaining a diverse workforce for recruitment by current, new and future businesses in Lamesa.
In addition to planned economic development activity, housing needs are a crises at this point. LEAP and LEDC, in conjunction with the City of Lamesa, continue to seek out opportunities that may arise to alleviate housing concerns within Lamesa and Dawson County.
Lamesa citizens voted and passed a Type B sales and use tax for the City of Lamesa . The certification of formation was filed with Secretary of State and the new Type B is now called the Lamesa Economic Alliance Project. We must continue to support local business activities and aggressively pursue new industries for local economic growth.
Emerging Issues
The reoccurring drought will have an impact on our local Agriculture economy. There are several major issues that have emerged and we will have to deal with in the near future
- TCEQ unfunded mandates
- CRMWA water cost and bond issuance
- Additional Water Wells and Water Rights acquisition
- Health Insurance Cost
- Capital Equipment Program
- City infrastructure (Water & Sewer Lines) repair and replacement
- Sustainability of Fund Balance with the new Senate Bill 2 limitations of Rollback Tax Rate to 3.5%
- Declining population
Many challenges face our organization in the area of Federal and State environmental mandates. We will continue to expend resources to meet these demands . Though the U.S. 87 reliever route and the 180 extension to the reliever route will not be constructed in the near future, we need to continue supporting the Ports to Plains and La Entrada Al Pacifico corridors efforts . Obstacles tend to be opportunities, these trade corridors will eventually be built and will create economic development growth.
Summary and Conclusion
We are continuing a process of evaluation of our financial strategy for the coming years . Fund balances must be maintained in the enterprise funds and continue to decrease expenditures in the General Fund and the other two Enterprise Funds. We will continue to look at different revenue sources or levels or make adjustments to the services provided.
City staff will continue to monitor the financial situation in a timely manner and will be prepared to bring recommendations to the Council at any time during the year if serious declines in revenues or unexpected expenses are foreseen .
I would like to express my appreciation to the Mayor and Council. What the staff works on and presents would be meaningless if the Council was not interested in striving for a professional, well run organization. I appreciate the opportunity to work for you, and will always attempt to be attentive to the desires of the Council.
Hopefully, this budget reflects the thinking and policies of the City Council and is representative of the desires of the Citizens of Lamesa. I especially hope you will let me know if you have any questions about this budget or the overall budget process.
Respectfully submitted
Wayne Chapman
Interim City Manager
LAMESA TEXAS
TRADE CORRIDOR CROSSING
City of Lamesa
Office of the City Manager
601 South First Street 806/872-2124 Lamesa, Texas 79331
September 27, 2021
To the Honorable Mayor and Members of the City Council:
In accordance with the Civil Statutes of the State of Texas and the Charter of the City of Lamesa, the proposed budget and program of services for the fiscal year beginning October 1, 2021 is submitted for your review and consideration. The budget is intended to present, in financial terms, the overall plan for providing municipal services during the forthcoming year. Moreover, the budget provides the basis for a high level and quality of services of the City's infrastructure to ensure progress and development. This budget provides funding for similar levels of service offered by the City as last year.
Summary
The FY 2021-2022 budget is prepared for a balanced base budget with limited resources and it has been a challenging experience. To continue to meet fiscal challenges of the future, the City must strengthen its General Fund revenue base , at present consisting primarily of property tax, sales tax and franchise fee proceeds. The Enterprise Funds including the Water/Wastewater and Solid Waste fund have experienced a decrease in available working capital the last couple of years due to CRMWA repairs, water conservation measures, drought restrictions , repair and/or replacement of aging infrastructure, and the construction of a new Type 4 landfill cell. In the coming years, fiscal restraint and a strong economy will be crucial to our financial position.
The current economic conditions has remained steady due to stable sales tax receipts year over year. However, the treat of inflation could cause expenditures to increase dramatically necessitating the need to be vigilant to changing conditions .
Budget Overview
In the tradition of past years, the budget reflects that fund balances must be utilized in order to balance the budget. The projected ending fund balance for the General Fund for September 30, 2021 is $3,685,375. One of our fiscal goals has been for each fund to be totally self- sustaining. The budget for the General Fund has accomplished this goal up to current fiscal year, however the FY2021-2022 economic landscape is uncertain due to the addition of debt service requirements, inflation, and the volatile oil industry. To meet this challenge head on the City Council voted to increase the AD Valorem rate from .823236 to .853836.
Similarly, the total working capital available on September 30, 2021 (unreserved ending fund balance) in the Water Fund was $2,46,868 compared to an estimated projection of $3,236,877. Working capital on September 20,2020 for the Wastewater Fund was $591,695 compared to an estimated projection of $521,274 for the end of the current fiscal year.
The working capital ( unreserved ending fund balance ) on September 30, 2020, in the Solid Wat=ste Management Fund was $1,286,049 compared to an estimated projection of $1,3987,857 for the end of the current fiscal year.
The working capital on September 30, 2019 (unreserved ending fund balance) in the Solid Waste Management Fund is projected to be $612,267 a decrease of $267,215 in working capital over current year's budget.
The Municipal Golf Course estimated revenues for current year's budget will be $201,400 and expenditures estimated at $271,517. We need to transfer funds, $70,117 from the General Fund to create at least a zero fund balance to close the current year's budget. The Municipal Golf Course is unable to generate enough revenue to sustain its operations, therefore the General Fund will need to continue subsidizing its operations.
Key Changes in the 2021-2022 Budget
Revenues - Budgeted revenues for all funds are expected to increase $537,5769 over the budgeted revenues for Fiscal Year 2021-2022
Expenditures - Budgeted expenditures for all funds are expected to increase $343,471 over the budgeted expenditures for Fiscal Year 2021-2022-
Capital Expenditures -. The capital expenditures for FY 2021-2022 include six new pickups, one new garbage truck, and a new lagoon pump for the sewer plant.
Personnel - This budget includes an increase of 5 FTE in the FY 2021-2022 budget. (Water Production, Distribution, Police Department and Finance). Also, the council approved a four percent across the board pay increase to all employees except the police department. The police department rate table was reconstructed to be competitive with the surrounding communities.
Overview of the General Fund
The General Fund is the primary source of funding for City services. General Fund revenues are derived from real estate and personal property taxes, sales taxes, fines, and fees for service. The proposed FY 2021-2022 General Fund revenue budget is $4,996,219, an increase over the FY 2020-2021 budget of $4,604,359.
Sale tax receipts have increased slightly from FY 2020-2021 to FY 2021-2022 by $63,000 . Property evaluations have decreased slightly due to a slowdown of business startups and expansions. We will continue to be fiscally responsible and will manage all programs in the cost efficient and effective manner possible.
The ever increasing cost of health care and indefinite sales tax receipts will result in a short fall of General Fund revenues requiring an increase in the Ad Valorem tax rate in future years.
The Ad Valorem tax rate will increase from $.823236 to $.853836 per $100 of assessed values. The total appraised values for 2021 is $284,236,010 a decrease of $1, 235,150 from $285,471,160 in 2020. The City's financial position has become more dynamic and fluid due to fluctuation in oil field activity in the past twelve months. Prices for the crude oil continue to fluctuate creating uncertainty, yet more positive outlook in the local economy.
Overview of the Water and Wastewater Enterprise Fund
Last year our projected working capital at the end of the year will be $2,246,868 (FY 19-20). This year we project that the total working capital at the end of the year will be $3,236,877 (FY 20-21). There is a projected balance of $3, 480,378 at the end of the next fiscal year (FY 21-22).
The working capital at the end for the Waste water fund last year was $591,69 (FY 19-20). This year we project the ending working capital to be $521,274 (FY 20-21). The projected ending balance for the proposed budget is $520,017 (FY 21-22).
The City of Lamesa received a USDA Rural Utilities Service Grant/Loan Program totaling $12,500,000 for Water System Improvements. The grant totals $5,515,000 and the loan totals $7,035,000. The USDA funds will be used to insure availability of water during times of CRMWA water repairs and outages. The grant will include construction of a 14MG storage tank and replacement of City well field water supply line. The USDA Grant/Loan has required the City to raise its water rates to cover the debt issuance of $7,035,000.
Overview of the Solid Waste Management Enterprise Fund
Overall, the Solid Waste Management Fund estimated working capital for end of September 2021 is $1,387,857 and the projected working capital for September 2022 is approximately $1,361,967.
The landfill Type I cell has approximately four years of capacity remaining. To meet future needs the City Council has elected to set aside $2.00 per account each month in the City investment fund. The new Type IV cell has been excavated by the City staff and the finishing touches should be finished in approximately six months. The new cell life should be approximately 15 years.
Personnel
As you are aware, significant reductions in staffing levels have occurred during the last thirty years. The reduction of over thirty positions has had a noticeable impact in the City's ability to provide high quality services to the citizens of Lamesa. Fortunately, the use of better equipment, better organization, better qualified and better-trained employees has allowed the City to sustain an acceptable level of City services. Fortunately, the FY 2020-2021 budget includes a 4% increase in pay to all full-time employees except the Police Department. City employees have not received COLA raise other than merit increases for five years. In order to compete for Police Officers within the surrounding area it has become necessary to overhaul the entire pay plan. Hopefully, this will enable the PD to attract well trained employees while reducing the turnover rates.
The FY 21-22 budget includes five new FTE's including new positions in water production (pumper), water maintenance, police department (detective), vehicle maintenance (mechanic) and finance (assistant finance director).
Capital Replacements
Only items costing more than five thousand dollars are now considered as capital items. Most computers are no longer being counted as capital items. This budget provides for capital replacements only where deemed absolutely necessary to continue current levels of service.
The capital replacements for FY2021-2022 include, six new pickups, one new garbage truck, repair of Vac truck, lagoon pump, and Onmigo software for the PD.
Prospects for Future Progress
Again Preston Smith Unit-prison has continued to be a financial asset for the city. We feel that it has made a positive contribution to our sales tax and enterprise fund revenues. However, staffing constraints have forced the Preston Smith Unit to close two wings of their facility and Decreased the inmate population accordingly. Hopefully, The Lamesa Economic Development Corporation will be able to attract new sources of economic activity and add to our growth. The addition of new businesses and jobs will have a positive impact on our revenues. LEDC was the primary force in obtaining the new prison expansion and pledged $100,000 a year for five years for city utility service to the new unit. Furthermore, LEDC financially assisted the City in constructed two new water wells on LEDC farm land to supply water to Preston Smith Unit - $300,000. Also, LEDC provided funds for a new wastewater lift station and LEAP funded the construction of a new 250,000 elevated storage tank that will provide much needed infrastructure to the north side of town where commercial growth is occurring . Finally, LEDC has successfully assisted the Texas Housing Foundation in garnering tax credits for an 80 unit multi-family housing complex on N. 7th Street. Additional housing is critical in maintaining and sustaining a diverse workforce for recruitment by current, new and future businesses in Lamesa.
In addition to planned economic development activity, housing needs are a crises at this point. LEAP and LEDC, in conjunction with the City of Lamesa, continue to seek out opportunities that may arise to alleviate housing concerns within Lamesa and Dawson County.
Lamesa citizens voted and passed a Type B sales and use tax for the City of Lamesa . The certification of formation was filed with Secretary of State and the new Type B is now called the Lamesa Economic Alliance Project. We must continue to support local business activities and aggressively pursue new industries for local economic growth.
Emerging Issues
The reoccurring drought will have an impact on our local Agriculture economy. There are several major issues that have emerged and we will have to deal with in the near future
- TCEQ unfunded mandates
- CRMWA water cost and bond issuance
- Additional Water Wells and Water Rights acquisition
- Health Insurance Cost
- Capital Equipment Program
- City infrastructure (Water & Sewer Lines) repair and replacement
- Sustainability of Fund Balance with the new Senate Bill 2 limitations of Rollback Tax Rate to 3.5%
- Declining population
Summary and Conclusion
We are continuing a process of evaluation of our financial strategy for the coming years . Fund balances must be maintained in the enterprise funds and continue to decrease expenditures in the General Fund and the other two Enterprise Funds. We will continue to look at different revenue sources or levels or make adjustments to the services provided.
City staff will continue to monitor the financial situation in a timely manner and will be prepared to bring recommendations to the Council at any time during the year if serious declines in revenues or unexpected expenses are foreseen .
I would like to express my appreciation to the Mayor and Council. What the staff works on and presents would be meaningless if the Council was not interested in striving for a professional, well run organization. I appreciate the opportunity to work for you, and will always attempt to be attentive to the desires of the Council.
Hopefully, this budget reflects the thinking and policies of the City Council and is representative of the desires of the Citizens of Lamesa. I especially hope you will let me know if you have any questions about this budget or the overall budget process.
Respectfully submitted
Wayne Chapman
Interim City Manager