Fiscal Year 2021-2022 Annual Budget and Tax Rate Adoption

There is a public hearing on the budget and property tax rate in the next Council Meeting, August 16, 2021, starting at 7:00 pm in the City Hall.

The City Council is required to adopt an annual maintenance and operating (M&O) and interest and sinking fund (I&S) budget followed by the adoption of a property tax rate that supports that budget. Recent legislative action, SB2, limited the annual increase in revenues collected from property taxes to no more than three-and-one-half percent (3.5%) annual increase, excluding new improvements, and established the no-new-revenue-rate, voter approval rate, and de minimis rate for cities with a population of less than 30,000.

According to SB2, if the rate adopted exceeds the no-new-revenue-rate, but is less than the voter-approval rate, then it will not trigger an election in November. If the adopted rate is greater than the voter-approval rate, then it triggers an election in November for voter ratification unless they are a small city. Small cities may adopt the de minimis rate, which literally means, “too trivial or minor to merit consideration.” The de minimis rate allows cities to increase their tax rate to a level that raises an additional $500,000 in revenue without triggering an election in November.

The image below shows the no-new-revenue, voter approval, and de minimis rates, as well as the annual revenue generated by each penny of property tax, $17,884.

Each year, the Council is required to hold a record vote to set a “not to exceed” property tax rate and set a public hearing date and time for the operating budget. This does not raise the taxes but sets a ceiling on the property tax rate that can be considered following the public hearing.

The Council has spent months discussing the current services in new Fairview as well as the service level that is being provided. During this time, there were several items that have risen to the top as priorities for the Council as well as the citizens, according to the recently completed Citizen Satisfaction Survey, including public safety, streets, and water/wastewater services.

Revenues in the fiscal year 2021-2022 increased approximately $420,000, primarily due to implementing commercial safety inspections (estimated at $240,000), increased sales and use taxes ($150,000 from the concrete batch plant), and new and increased property values, including $20 million in Denton County and $1.5 million in Wise County; while existing values in both Denton and Wise climbed $17 million, increasing the City’s property tax revenues by approximately $40,000 due to the property tax reduction sales tax adjustment.

Expenditures in the fiscal year 2021-2022 increased approximately $520,000 when removing the $300,000 in capital expenditures from the prior year. This is primarily due to the transition of a contract worker to a new full-time employee that will act as a part-time code enforcement trainee, streets maintenance, and our septic inspector as well as the contract renewal for the City Administrator ($103,000); an increase in contract labor costs primarily related to a streets maintenance helpers to increase efficiency and effectiveness ($60,000); supplies and services increased due to public safety expenditures related to the commercial safety inspection (offset by additional revenues from the inspections), FD recruitment and training, emergency vehicle exit, streets maintenance materials, etc. ($260,000), and capital expenditures related to the purchase of street maintenance equipment, including a hotbox and crack sealer ($122,000).