Waco's proposed next annual budget includes the first drop in the general fund in several years, a flat tax rate and fee increases as planners anticipate a slowdown in tax revenue growth in the coming years.
Waco City Manager Bradley Ford presented the proposed fiscal year 2025 budget to the Waco City Council on Tuesday. City Hall office staff presented city council with highlights, including an unchanged tax rate and several major projects, but also a forecast of lackluster revenue growth over the next few years, which led to the need to raise rates and some budget cuts.
The proposed budget maintains the current tax rate of 75.5 cents per $100 of valuation, which is the lowest tax rate it has been in 16 years.
Taxpayers who own a home with a median taxable value of $226,683 will see their annual tax bill increase by $154.37, or 9.9 percent, due to higher property taxes. That estimate, along with the final tax rate, could be adjusted when the McLennan County Appraisal District issues the certified tax record by July 25.
People also read…
The monthly utility bill for the average Waco customer would increase by $7.38 to $136.44. The 5.7 percent increase includes 60 cents more for water, $3.12 more for wastewater, 25 cents more for drainage, $1.42 more for solid waste, the implementation of a street fee of $2.
The proposed total monthly bill would still be lower than the average monthly bill in 2021 adjusted for inflation. In 2021, the combined monthly utility bill, which did not include drainage or street fees, was estimated at $111.27. Adjusted for inflation, that 2021 bill would equal $137.57 today.
The new street fee is designed to charge properties for street maintenance based on the amount of traffic they generate. The street rate of $2 would be the average for single-family homes. Other properties that attract more traffic would be subject to higher fees. If the city council approves the budget and related ordinances as planned on Aug. 27, the new rates will go into effect Oct. 1.
Over the past decade, Waco has enjoyed favorable economic conditions, including a gradual increase in gross domestic product, stability in several industrial sectors, and a declining unemployment rate. However, Waco Chief Financial Officer Blu Kostelich said his team anticipates slowing growth in median household income and a decline in discretionary income due to inflation over the next two years.
“People are tapped out. … People have less purchasing power and that's when you start to see some of your income start to decline,” Kostelich said.
As a result, Waco estimates a modest 2.7 percent increase in combined sales and property tax revenue for the general fund by 2025, to $173.2 million. That contrasts with an 8.6% increase in the current year, when tax revenue jumped from $155.2 million in 2023 to a year-end estimate of $168.8 million in 2024.
Ford said the proposed budget addresses the projected lackluster revenue growth trend over the next two to three years.
“We've seen these things, these clouds, develop for about 10 months,” he said. “We're ahead of the storm in some ways. We've battened down the hatches and we're starting to turn the ship around to try to avoid the storms instead of heading straight for them, and that's good governance.”
The city is expected to adopt a general fund budget of $202.5 million for the next fiscal year, about $1.2 million below the 2024 budget. It would be the first time in at least five years that the general fund does not increase. The budget also includes a $7.6 million reduction in non-personnel expenses. The cuts will not affect basic city services to Waco residents, according to Tuesday's presentation to the council.
The majority of the city's general fund will continue to go toward employee salaries and benefits. The proposed budget includes 1,846 people, which is seven less than the current year. Some vacancies were frozen or removed from the proposed budget.
Waco is estimated to spend $120.2 million on employee salaries and benefits in fiscal year 2025, about $5.4 million more than this year. The estimate assumes a 3 percent increase for civilian employees, higher increases for police and fire personnel, a 9.7 percent increase in health insurance costs and less conservative estimates for overtime expenses.
Despite stagnant revenue, the proposed budget includes multiple major projects to be completed and open next fiscal year, such as the new regional landfill and transfer station or Fire Station No. 15 at Richie Road and Panther Way. The budget also includes several new projects that are expected to begin next year.
The Waco City Council took the next step in authorizing one of those projects when it unanimously approved a resolution to fund $12.3 million in engineering and design services for the first phase of the downtown redevelopment project of Waco, an effort to transform downtown Waco over the next 12. to 20 years. Hunt Development Group, the firm that recently established a strategic roadmap for the project, is now authorized to provide design and engineering services for Phase 1A, including form-based code, architectural programming, design development, engineering civil and floodplain permits over 12 years. – month period
Phase 1A of Waco's downtown redevelopment project includes the discovery of Barron's Branch, a long-buried stream encased in a 22-foot drainage tunnel between Fourth Street and University Parks Drive. The project would restore the creek, surrounding it with walkways and shops.
Phase 1A would also create a new pedestrian plaza along Jefferson Avenue, connecting the Brazos River to St. Francis at Brazos Catholic Church. It would recreate a historic fountain known as La Pila, which served the Carrer Dos neighborhood cleared under a federal Urban Renewal project, and create a leisure space called “Mutualista Hall and Dance Floor,” also a look at the past of the area. . The project is also needed to address utility infrastructure improvements, such as life-cycle replacements and capacity upgrades needed for future phases of the project.
The 12-month design process would include multiple progress updates, town hall meetings and stakeholder engagement sessions. The agreement with Hunt does not require any upfront payment from the city. Waco has the option to end the project at any time without retroactive fees.
The design and engineering portion of Phase 1A will be funded from currently available funds already identified for the project. An existing economic development project fund will provide 48% of the funding and 52% will come from eligible water and wastewater fund surpluses. This financing approach would allow the city to repay the funds through future bond proceeds.
Ford ended the budget presentation by discussing strategies for building future budgets over the next three years with lower revenue growth. Strategies could include outsourcing some services, recovering costs through additional fees, eliminating programs, or prioritizing certain projects over others.
After the presentation, District 4 Council Member Darius Ewing said it's important to recognize that Waco is bringing in less new money year after year than it has in the last four or five years.
“Instead of being really, really good at moving really, really slowly, maybe we should think about being good at stopping quickly,” Ewing said. “So we continue to be aggressive and explore projects to the point where we realize they're not feasible so we don't lose opportunities that might otherwise work for us because of a feeling or a need to feel that we should be conservative. at this time we are projecting forward with less income.”
District 2 Council Member Alice Rodriguez said she's not really happy with the budget, but thanked staff for their work.
“It's not always easy for councilors to add fees and it's not always easy for us to eliminate programs, but that said, as councilors we have to do what's best for the city of Waco because we're going to do what we can.”
Waco City Council members have more than a month to review and make amendments to the proposed budget. The public will have the opportunity to provide feedback to the city council during public hearings before members vote to adopt a final budget on Aug. 27. The approved final budget will come into effect on October 1.
Here's the latest for Wednesday, July 3: White House plans new Biden appearances; House Democrat urges Biden to drop re-election bid; Hurricane Beryl moves towards Jamaica; The heat wave affects much of the United States
