25-26 Budget Thoughts

[council4_vaughan]

Things I like about this budget:

1. More venue tax is dedicated to the general fund for parks (increase from $650,000 to $1,000,000). This helps supplement our general fund and frees up other revenues to cover traditional fund costs.
2. General fund operating costs are increasing 4% overall. This is an improvement from the 12%, 8%, 9% and 11% experienced in 2022, 2023, 2024 (actuals) and 2025 (budget).
3. Raises are directed at police and fire and not a flat percentage across the board. Police and fire are getting around 8%. Admin is getting around 4% and top management 2%. The flat raises in previous years were top-heavy in my opinion. Staggering them (at least for one year), helps target the increases to those that need it most.
4. No utility rate increases this year. After several years of increases (and some large in sewer), it is great for the residents to take a break. The utility fund has a healthy reserve and can afford to skip a year or rate adjustments.
5. The golf course has a balanced budget with only $101,800 in venue tax. Based on the economic impact study, this is similar to the amount of sales tax collected at the golf course and their estimate of the sales tax generated by golfers at other businesses in UC. This is a level of venue tax support that I can accept. If my fellow councilmembers, want to provide additional venue tax for capital projects, we can separately consider a budget amendment once the golf architect provides his numbers. But there is no need to have that discussion now as part of the regular budget.
6. Kim Turner assures me that the police and fire department are taken care of in this budget.

Opportunities for improvement:
1. The budget as it is presented needs property tax revenue of $11,435,919 to balance ($2,167,631 in debt service and $9,268,288 in maintenance and operations). Assuming our 2025 budget matched the actual taxes for 2025, this would be an increase in property tax revenue of $603,379. We have no new property in Guadalupe County and the new property in Bexar ($22 million) is expected to bring in about $110,000 in new revenue (at a $0.50 rate for easy math). That means, this budget requires current residents and businesses to pay an additional $490,000 in property taxes (approximately 4.5%). I think we should be adopting the no new revenue rate or lower, this means we would need to find savings (or new revenues) of at least $490,000 to do that.
2. Possibilities include:
a. Reduce parks capital spending ($529k) and professional fees for planning (~$164k) by anything not tied to a grant. I am told that a large portion of this is for the UC Park Pavilion expansion and a master plan. I have loved the investments we have made in our parks the last couple of years, but I think we can take a one-year breather on them. We will have a large park investment in northlake in the near future that we have promised to the reunion development. That should be our parks capital focus. The parks operating budget has increased from $431,578 in 2018 to $1,307,201 in 2025. Again, I think this is positive for the city, but a one year pause is an option.
b. The budget includes a $550,000 transfer to the capital replacement fund for the pending fire truck purchases. We already have a pretty sizable down payment saved up. It is also not realistic for us to expect to fund $3 million+ with cash. Financing is cheap and easy for equipment. This also smooths out the payment over time, having the residents and businesses that benefit from those trucks help finance the payments. Also, keep in mind that we have 4 large apartments in the works that will be bringing in approximately $250,000 each in property taxes and a rough estimate of $300,000 in sales tax from the new residents spending in UC. This will go a long way to additional police and fire funding (including a fire truck debt payment). It will take a few years for all that new revenue to be realized, but I think we will start seeing more revenue in 26-27 (when the truck debt payments would start).
c. Additional money from the venue tax can be used to cover a larger portion of the parks budget (for at least that which is not grant funded). This is a low hanging fruit and there is estimated to be about $800,000 in unallocated venue tax in the budget.
d. Consider changes to the automatic 2.5% step increase on employee anniversaries. In my mind, there should be a cost of living adjustment, which we took care of above and then merit increases. The merit increases would include an employee advancing to a new position or pay grade. But getting a step increase every year for staying in the same position (i.e. not growing in responsibility) is hard for me to get behind. Other possibilities could include a merit based budget pool subject to supervisor discretion. This can lead to favoritism, but it can also lead to our best and brightest getting more recognition.

Below is a general fund summary of the last 8 years and the proposed 25-26 spending for reference. Hopefully it is legible.

 

[council3_rubal]

t is also not realistic for us to expect to fund $3 million+ with cash.

 

[council3_rubal]

Thank you for your summary above. When Council was initially presented this year with a draft 5-year budget forecast, I was excited to see some thought for "future-directed" budget planning by our City (with the recognition that the out-years were just projections). Unfortunately, the workshop is now restricted to just getting by one more year. This is a disappointment!

That said, there is a need for a reality-based assessment of the funding path that prior councils and administrations have set for firetruck replacement. Great opportunities were lost by not having a replacement plan in place, and not considering it a higher priority for ARP funding. Furthermore, as you point out, we can expect little added property tax value benefit from the current new apartment construction for years, and when it comes, it will not alone address these needs. Also, be reminded that the General fund will only get 1/2 of the sales tax revenues you estimated from new residents. Another conundrum provided by the prior administration, with a prior Council approval, is the restriction on the amount of sales tax that can be applied through "linear parks" to relieve General fund expenditures. Therefore, your point 2 above has a caveat.

Somewhere in our budget process, we must balance the needs of our residents with the requirements of our City to provide for those needs. I am looking forward to a presentation by the Chief regarding crime trends and district-specific safety priorities. Similarly, I think we can expect our public works director to identify what progress will be made regarding our infrastructure needs (See Street of the Week posting). Even within our Council budget, we must cut the excess. It is NOT the time for the Council to attend gala events at the expense of our residents. Similarly, let’s look at the cost benefits of other Council expenses. I am also expecting the Development services to provide a more concise operational overview, delineating operations that are needed for health and safety and eliminating those that are not cost-effective.

Even after a year on Council, I think it is important to define more clearly the impact of the EDC in our budget cycle, particularly with their commitment to infrastructure costs for EDC projects in the Aviation District and other “economic nodes” in our City. We must be more careful to delineate General fund expenditures and the expenditures that could and should be supported by the EDC. Together, we can stretch residents’ tax dollars and not impose a double tax burden on our residents.

I was very disappointed in the administration's proposed budget for this year, especially given the projected general fund shortfall, to reduce the administrative overhead fee for Golf Course operations, thereby decreasing contributions to the General Fund. Also, the failure of our City to use billboard fees ($80K/year) from the billboards on City property for General fund needs should be addressed by the Council.

Regarding salaries, COLAs, and employee step increases. I am hoping that our City employee salaries are fair, and we protect good employees with a good benefit packages. However, when adjustments are made, they should be made with regard to the cost-of-living standards of our residents in Universal City (our residents), not with unfair comparisons with other Cities. I have asked for but have not received salary information and a determination of how many of our City full-time employees actually live within our City.

Cost-of-living adjustments (COLAs) are tools to fight yearly fluctuations in inflation rates. They are, therefore, with our benefits program, a retention tool. They should not be used by our City as a tool to raise salaries. As an example, federal COLAs for the last 47 years provided nearly an exact match to inflation rates (sometimes leading or lagging a little each year), but the mean difference over that period is a mere fraction of a percent. A COLA rate greater than 2.5% would be difficult for our City to justify.

Step increases: Prior Council during COVID established a 2.5% step increase yearly throughout 20 years of service. This exceeds the generous federal GS program. The break-even point for 2.5% rate with the GS program is approximately 16, NOT 20 years. Over a 20-year period, the federal GS step increases salaries by 30.5%, but the City’s step plan increases salaries by just under 60%! It is difficult to see how the City can pay for future salaries at build-out when tax valuations are fixed. Salaries are the largest budget item in our budget. Neither COLAs nor Step-increase programs are specifically required and must be applied with long-term consequences in mind.