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Kennedale
Wednesday, November 25, 2020

Council votes to walk budget tightrope with smaller safety net

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Adopted budget doesn?t match projected revenue stream

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Last Monday night a split Kennedale City Council took some decisive, if not conflicting, actions related to the budget, taxes and water rates.? {{more: continue …}}
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It was a victory in the short term for those against government spending as:
  • senior/disability exemptions were raised by $10,000 to $60,000.
  • basic water/sewer rates were lowered by $6.00 per month.?
  • the tax rate was lowered by just over 5 cents from last year?s tax rate of .77755 to .72514.
In the process a new budget was adopted. But, there in lies the conflict, the new budget that was adopted Monday was based on receiving the addition revenue income that had just been voted out.?
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Most significantly was the change in the tax rate. The rate that had been proposed for 2018 was .76775, a drop of 1 cent from last year but still an overall increase in revenue because of increase property values this year. The rate that was adopted Monday night was .72515 which represents what is called the ?effective tax rate.?
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The effective tax rate is the rate that would produce the same amount of revenue as the previous year. Normally, this happens when there is a no growth budget. However, the Council did approve a budget for 2018-19 that has increases built into it, meaning that the new budget will be have to be implemented with last year’s revenue.
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Staff estimated that to implement the new budget with the corresponding decrease in revenue would cause a drawn down of a third of the city?s fund reserve ? thus a smaller safety net.
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Many will cheer while others will be perplexed with the split decisions of the Council. For some this is just tightening of the belt. For others this is looked at as either a slow strangulation of city services or the risking of the savings that the city has for emergencies and unforeseen expenditures. Caught in the middle will be the staff who will have to figure out how to make it all work.

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It is safe to say that this will set up a series of contentious battles over expenditure this coming year.
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