Thursday, July 30, 2009

2010 proposed budget

The Woodlands Texas residents have passed yet another milestone. At the town hall meeting last night, the first budget proposal of the complete township was presented by Don Norrell. I will give you my take on it.

First and foremost, the staff of the Township and the Woodlands Service Company has put together an excellent summary! The five-year plan is as Don Norrell stated, “never totally accurate but has the known requirements in it at the time of publication. Things always change over the course of even one year.” Timing of projects is partially driven by the need to keep the tax rate consistent and predictable. When a financial plan is developed, one must predict the income and the cost of providing services.

Bottom line is that the proposed tax rate is 32.8 cents per $100 county property assessment. There will be no exemption for disabled veterans, or over-65 residents, or for homesteads. In perspective and comparison, the county is proposing a tax rate on the identical property assessments of 48.38 cents. For a $200,000 home the township tax would be $656 and the county $967 for a total of $1,623. This would be the bulk of your tax bill for 2010. For a complete picture, you will have to also add the school tax and the community college tax to it. Put the township tax in a historical context: in 2007, the association rate was 45.5 cents for TWA, 42 for WCA and 39 for WCOA. So TWA will save 13.5 cents ($270 for $200,000 home), WCA 9.2 ($184), and WCOA 6.2 ($124 on $200,000 assessment).

The base operating requirement has been established at 23.5 cents. That is, to keep the same amenities, not build anything, just keep things as they are, and pay off debt, it would cost the taxpayer 23.5 cents on every $100 assessed. So that means for the $200,0000 homeowner, a tax of 7.5 ($150 per year) per year pays for the following over the next five years:

  • Expansion and reorganization of police services
  • Two additional fire stations and the replacement of the central fire station
  • New parks, renovated parks, ponds and recreational improvements.
  • Firefighting and policing equipment
  • Computers, hardware, software
  • Accumulating financial reserves
  • Emergency fund
  • Trolley expansion
  • Waterway taxi operations
  • Probably more that I have not captured
  • Study for government office construction

We continue to be a community being developed, so we continue to build parks and amenities to make The Woodlands, “The Woodlands”. Unfortunately, the Township inherits a 50/50 partnership with the developer to fund the construction of parks and pathways in new neighborhoods. The TWA debt obligations, because of that agreement, must also be paid by all of us. That debt would have been paid off by TWA association assessments over the next four years, had we not consolidated and formed a new government. We also inherit the capital investments of several new parks and pathways as a result of the development of Creekside Park Village and other new neighborhoods.

Operationally, we will be hit by a very large operational increase in the fire department. For the township as a whole, salaries and benefits go up a whopping 7.4%! Township employees will receive improved benefits from the merger by assuming some of the benefits from the Woodlands Service Company. Combined, this 7.4% equates to $1.7 million. Contracted services will also go up by 4.1% equating to $1.0 million. This primarily provides additional police protection. These two expenditure types comprise 62% of the operating budget. Elsewhere in the budget, it is difficult to see the changes simply by numbers, because of the capital spending in the last two years of the WCA when projects were accelerated. There are also some savings from consolidation and redistribution of duties among staff.

By the number to note: Policing program $1.1mm, Savings by consolidation $1.24mm, 2010 capital for construction & renovation & improvements $11.0mm, 2010 total revenues $77.7mm, 2010 total expenses $77.6mm, Debt service $7.65mm, Paths and walkways Town Center $1.8mm.

Can we expect some tuning to this initial budget proposal? I think so, but the rate will not likely go down much if any. I would like to see it capped here though and not allow it to rise above 33. Preferably, the board can add value by lowering the rate to 32 (where I really want it capped long term). It is expensive to live in The Woodlands. We face water bonds added to all of this. Much work has gotten us to this point. Refinement and fine-tuning is needed. We are, after all, in a recession. The county cut back 5% to accommodate some of the stress on everyone. It would be better to start the township lower if we can, and consider the plight of those who are under budget stress.

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