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| 2/25/2009 12:18:00 PM | Email this article • Print this article | Hope shines through in tough times
City doing well financially despite economic times
KATHRYN EAKENS
Leader Staff
Despite what economists are calling the worst recession in three decades, Round Rock's assistant finance director, Cheryl Delaney, says the city is financially strong and still on-target to meet its FY 2009 budget.
"We have some of the lowest tax and utility rates in the area. We have excellent tax reserves. The pay-as-you-go capital program has saved our taxpayers approximately 10 cents on the tax rate," Delaney told elected officials and city employees at their winter retreat Feb. 18. "And the thing we're most excited about is our recent general obligation bond rating upgrade from AA to AA plus. I think that was significant that in this in environment we were able to have this upgrade."
In June, Forbes magazine named the Austin-Round Rock area the No. 1 place to ride out the recession - taking into consideration the region's housing data, recent job growth, unemployment data and medium income.
But in order to continue to weather the recession, Delaney said the city still needs to find ways to diversify its economy and continue gradually shifting the amount of sales and property taxes that make up its general fund revenue.
"One of the things that is expected at this time is that recovery is going to be slow," Delaney said. "We met with the county appraiser, who indicated that our property values are expected to decline over the next few years. And our sales tax revenues are expected to see a decline, as we have seen over the past few years."
Round Rock's FY 2009 budget shows a certified taxable property value of $8.1 billion.
Currently beginning her work on the city's 2010 budget, Delaney is estimating a 3 percent decrease in taxable property value for the upcoming fiscal year - down to $7.8 billion - including new property added to the tax roles.
Sales tax also represents a significant portion of the city's general fund revenue in the FY 2009 budget at $49 million, with Dell Inc. making up $19.5 million and all other sales tax revenue the remaining $29. 5 million.
For the upcoming fiscal year, Delaney is estimating a 7 percent year-to-year decline in the computer giant's sales tax revenue and a 3 percent decline in all other sales tax revenue.
As a result, Delaney is currently anticipating a $3 million revenue shortfall in the city's 2010 budget - assuming no new programs are added.
"There are going to be a lot of things we're going to have to do," she said. "We're going to have to resolve our revenue shortfall. We're going to have to figure out how to diversify to generate more revenue. We're also going to have to really look at our expenditures and where we need to spend our funds.
"What's truly going to dictate how we're going to be operating in the future are the economic conditions. Based on what we know, we can expect sales tax revenue and property tax revenue to decline and we still might see that continued population growth so we need to be prepared for that. And I think the one thing we're going to have to continue to look at is consider continuing our strategy of that gradual shift from sales tax reliance."
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