In accordance with Texas Statute and the City of Sugar Land Charter, Section 6.03, the proposed budget for the fiscal year beginning October 1, 2017 will be presented to the City Council.

The budget for FY18 follows the guidelines in the City Council adopted Financial Management Policy Statements (FMPS), maintains existing service levels, and implements City Council priorities. The proposed budget continues to maintain high quality City services for residents and visitors to Sugar Land, ensures continued financial strength by meeting all fund balance requirements, and is structurally balanced.

The budget has been developed to serve estimated population of 117,868 as of January 1, 2018, including the communities of Greatwood and New Territory, which will be annexed into the City effective December 12, 2017.  The resulting 34% increase in population drives most of the expenditures being recommended in the budget, including the addition of 19.5 new positions that were recommended as part of the annexation budget reviewed with City Council last fall.  Several annexation related additions have benefits to existing residents, such as an additional ambulance to be placed at Fire Station #6, an additional station in public safety dispatch, increasing capacity to handle emergency calls, additional traffic technicians to ensure the City's traffic infrastructure runs smoothly, and the implementation of a new citywide 311 call center to address the needs of the newly annexed Greatwood and New Territory residents.

The budget maintains the City’s existing service levels for operations and maintains existing infrastructure.  In some cases, additional resources are necessary to ensure service levels are maintained based on increased workload and completion of capital improvement projects.

The FY18 proposed operating budget and CIP strives to maintain current service levels and implement completed capital projects, while continuing to invest in the City’s infrastructure. The FY18 proposed budget totals $231.0 million. Of the total, $208.6 million is for operations and $22.4 million is for capital projects.

The budget has been prepared using flat revenue estimates for sales taxes based on the current economic conditions. Updates to the land use plan show the City is aging, not only in infrastructure but in population as well.  As we plan to provide services to an aging community we must reduce our reliance on sales tax toward a more stable source of revenue.  Targeted economic development ensures that the community develops in a way that is beneficial and not detrimental to quality of life. Growth in the commercial tax base is key to managing the residential tax burden, especially as more baby boomers reach the over-65 threshold and begin to receive the additional tax exemptions offered by the City.

Property tax revenues are based on an assumed 3% growth in the residential tax base from revaluation and tax rate of $0.31595 - the same as the current year. The homestead exemption remains at 10%.  Based on the average residential value for 2017 this will result in a 3% increase to the average residential tax bill.

The budget begins to incorporate the first of recommended changes in the Financial Management Policy Statements that will be reviewed with the City Council later this year.  These changes take a more conservative approach to revenue estimation, particularly sales tax, and allows the funds to accumulate prior to being allocated to projects. Infrastructure rehabilitation projects previously located in the CIP are being relocated into the General Fund, with $1.4 million added to departmental operating budgets for rehabilitation work. This approach allows the City to maintain existing service levels, implement the City Council priorities, and maintain the City’s financial strengths.

City Charter also requires the City Manager to file a Five-Year Capital Improvement Program.  The Five-Year Capital Improvement Program totals $130.6 million.  The first year ($22.4 million, including issuance costs) of the five-year CIP is incorporated into and appropriated through the annual budget.  Staff will be reviewing the proposed budget in more detail during budget workshops scheduled during the month of August.

The Proposed Annual Budget for FY2018 and Five-Year Capital Improvement Program documents will be distributed to the City Council members at the meeting.  Documents will be available on the City's website after the meeting.