Turning the page, The Story of Hutto now travels to the next City pillar: Maintain Financial Stability.
In putting together a proposed budget the past few months, City leaders took a conservative approach when trying to predict City income. It’s incredibly important not to become too optimistic when estimating our future income. When overly-hopeful budgetary practices are implemented, it is difficult – if not impossible – to reel those programs and services back in, as we saw in the past. So the City is keeping eyes locked on the future, to ensure current spending is responsible while we continue to restock the City’s reserves.
After all, if our income isn’t bigger than our expenses, the City will find itself taking two steps forward and one step back. The last thing your leaders want to do is dig into the City’s hard-earned savings. The main goal is to continue building the City back responsibly and gradually without any future program, project or staff cuts.
Now let’s take a look at this by dollars and cents. City revenue (income) comes from five primary sources, in order from largest to smallest:
- property taxes
- sales taxes
- permits and licenses
- franchise fees
- special revenues
In the upcoming Fiscal Year 2023, property taxes are projected to make up about 45% of total revenues, and sales taxes make up another forecasted 29%. While property taxes and other revenue streams are a little bit easier to project, let’s focus on the wildest and most unpredictable character in this story: Sales Tax!
Sales tax revenues are the City portion of taxes applied to the sale of most goods and services within Hutto. These revenues are directly related to the current market conditions, which unfortunately can be wildly unpredictable. With inflation rates near historic highs and the threat of a potential recession, it is very difficult to accurately predict sales tax revenues. As a result, it’s not wise for the City to count on sales tax revenues as guaranteed income for the City. We need to be conservative now when planning for this future income. Better to be overprepared than underfunded.
In Fiscal Year 2020, the City collected just over $5.33 million in sales tax. The following year, this soared to $6.41 million despite the pandemic. We had projected about $6.2 million in sales tax income for the current budget year (which ends this September), but growth and favorable market conditions have bumped this income up to an estimated $7.33 million. With these figures in mind and careful research into projected market trends, the City now anticipates a sales tax revenue of $7.33 million for the upcoming Fiscal Year 2023.
This conservative estimate of what amounts to about one-third of City income for 2023 ensures our expected revenue can continue to outpace our expenses. Any additional revenues above what we plan on will simply help the City bolster strategic reserves – a righting of the ship that continues positively each budget year due to careful planning.
The Foundation and the Glue
As financial stability is the foundation of this chapter, it’s time to talk about the glue that holds this pillar up right: Transparency. Stability and transparency support each other. They go hand-in-hand. We believe every Hutto taxpayer deserves to be able to see how their tax dollars are being projected and spent. The City is determined to not just talk the talk, but walk the walk as well. So we hope you’re finding this year’s budget process and information more accessible and easier to understand. We expect the community to keep the City open and accountable, which ultimately will help keep Hutto fiscally stable as well.
In addition to the “budget book” you’re reading here week by week, Hutto’s Finance and Communications teams have collaborated to make resources available at HuttoTX.gov/budget. There you can take an up-close look at the proposed budget itself. But like any good book club, don’t just read the book and walk away ... Join the conversation! We invite you to take part in shaping the rest of this story. Community feedback can be submitted electronically to [email protected] or in person at Hutto City Council meetings.
Speaking of City Council meetings, please let your friends and neighbors know that during the next three meetings, there will continue to be in-depth conversations about the proposed budget. On Thursday, Aug. 18, the certified tax rolls will be presented to City Council. Then on Thursday, Sept. 1, the City will host the first public hearing on the proposed budget and the first reading to adopt the budget. Finally, on Thursday, Sept. 15, there will be a second/final reading to adopt the budget and a formal vote to adopt the tax rate.
Stay tuned next “Fiscal Friday” as our 6-part story enters its second half! We’ll be focusing on the next pillar in our series: Grow Responsibly and Sustainably, with updates about capital improvement projects, upcoming growth studies, and the key role of the Hutto Economic Development Corporation (EDC).