A proposed $27 million annual operating budget for fiscal year 2024-25 was presented to City Council last week, which calls for a moderate year of financial growth with a more conservative view of funds.

The proposal was designed to accommodate both the city’s rapid growth and its evolving fiscal needs, and included a property tax increase, a need for emergency medical services, and a slight reduction in funding for development.

City Manager Tom Mattis unveiled the detailed financial plan on August 13, which was developed through a comprehensive review of all existing programs, operations and services.

According to state law, a budget must be submitted by October 1. Further discussions are planned.

“The city has had some very healthy fiscal years over the last few years, largely due to growth and development,” Mattis said. “The revenue from the development services fees has really boosted the general fund and allowed us to expand some of the services in ways we otherwise wouldn’t have been able to.”

Mattis said responding to growth has been a central theme in City Council and administration deliberations in recent years. Financial gains from development services fees have previously bolstered the city’s general fund, but this year is expected to be a comparatively “down year” for those fees despite ongoing development, officials said. The budget projects development services fees to be about $1 million below last year’s projections. The report noted that revenues do not flow steadily, with developers sometimes paying a lot of fees one year and not the next.

“The city has always been committed to making growth self-sustaining,” Mattis added. “This issue has nothing to do with whether development continues or not. It is obviously continuing. Construction is going on steadily. It’s just that the way the city receives that revenue is sporadic.”

Despite this decrease, the $27 million budget represents a slight increase in total allocations over the previous year.

With nearly $16 million in general fund spending, the budget focuses on public safety, public works and administration.

Budget calculations also suggest a 25% increase in the city’s property tax, pushing the “voter-approved rate” up by more than 12 cents. Mattis said the increase is largely due to the city’s total taxable revenue falling 13% from 2023 to 2024.

“Given the growth and development that has continued this year, I think it’s a pretty logical assumption that real estate was overvalued in previous years,” Mattis said.

Approved by voters

The proposed annual budget is based on the assumption of a voter-approved property tax rate and calls for a 3.5% increase in tax revenue.

So far, the city has been successful in reducing its property tax. The tax rate has fallen over the past four years. The report attributes the new, justified increase primarily to a state-mandated system.

“Even if we make that 12 cent jump, our tax rate will still fall back to where it was five years ago,” Mattis said.

In addition, sales tax revenue is also increasing, according to the report. Forecasts for the fiscal year are for more than $4 million, which is a record for Elgin.

The city collects an additional 2% sales tax on top of the 6.25% state tax rate, common in municipalities across Texas. Of that, 1% goes to city operations, with the rest going to Bastrop County and the city’s Economic Development Corp.

Big leaps

“In the last five years alone, we’ve seen some really big jumps year over year, all of which are a really good indication of how retail is operating overall in the city,” Mattis added. “That continues to show us that businesses are thriving.”

One focus of the meeting was again emergency rescue, even though the draft budget does not currently provide any funds for improvements.

While it is expected that Bastrop County will continue to provide ambulance service at the same level as today, the council is interested in significantly improving those services, officials said. Planning discussions on how the city will approach ambulance service improvements have not yet begun, but any significant improvement in those services will come with corresponding cost increases, the report said.

“After we get the budget done, that will be the first thing the council will look at,” Mattis added. “We can get right to work on this issue and figure out how to move forward. There are a lot of decisions that need to be made, including the first part, which is how we evaluate the options available to us.”

The budget is conservatively aligned and focuses on prudent financial management without cutting service levels or staff. This approach aims to effectively manage financial uncertainty and maintain service quality, with the ability to make mid-year adjustments if revenues exceed expectations, the proposal said.

“Some of the revenue issues could reverse and lead to a more positive outcome. If things are going better than forecast mid-year, we can rethink whether we can resume requests that didn’t fit into the budget,” Mattis said.

The budget review process includes a Council review on August 27, a public hearing on September 3, another review on September 10, and a second reading and final adoption on September 17.

These meetings provide opportunities for public input and further council deliberations. The proposed budget can be found at https://www.elgintexas.

Government.