Mineral Wells elected officials appear determined to balance the 2020-2021 budget without raising the property tax rate despite the city’s general fund being characterized as “suffering” by City Manager Randy Criswell.
Still, maintaining the current rate of 0.6912 cents per $100 valuation doesn’t mean a property owner’s tax bill won’t increase.
“Their taxes may go up because their property values went up,” Criswell said while addressing city council members at a special meeting on Friday.
Last year’s property tax revenues increased almost a half million dollars more than the previous year — or about 11% — without a rate increase due to increased property values and new growth, Criswell said. He expects that amount to be about $420,000 this year.
The current property tax rate means a resident who owns a house that has been valued by the local appraisal district at $200,000 would pay $1,382 in annual taxes.
Boosting the property tax rate by 1 cent would generate about $73,000 citywide for the general fund, Criswell said.
City council members said they want to maintain the tax rate at its current level. The city manager suggested they consider raising the rate in the future to cover the city’s financial commitments.
“Is our tax rate too low? Yes, it is,” Criswell told them. “Before we get to adopting a budget, I think I will have demonstrated that for you pretty well.”
Other rates, such as water and sewer, might need to rise to cover increasing costs as well, he said.
City officials discussed these and other budget matters in the first of what will be numerous meetings held during the next two months. Several work sessions and at least two public hearings will be scheduled, with the first set for Aug. 14.
City council members have established priorities for the roughly 5 million budget, including improvements to streets, public safety and water and sewer infrastructure, establishing better pay and benefits for city employees, examining and streamlining citywide staffing, and increasing demolition and remediation efforts to eliminate blight and nuisance.
Money to pay for those efforts comes in large part from the city’s three major funds: the general fund, water fund and airport fund.
For the first time in years, city officials are attempting to balance the budget without relying on fund balancing, or the equivalent of reaching into a savings account each year, as Crisswell describes it. This will stretch the budget thin this year but bolster the city’s finances for the future, he said
“Instead of drawing from your savings account, so to speak, you are living by your means,” he told the Weatherford Democrat in a phone interview.
Eliminating fund balancing this year created a deficit of about $1 million.
“We ripped that Band-Aid off in one year,” Criswell said. “That’s a big hit.”
The general fund isn’t sustainable long term, he said.
“We have to recognize the fact that we’ve made commitments to our citizens, and we’ve said we are going to provide these services to you,” Crissell told city council members, listing the library, pool and parks as examples. “Sometimes, over time, we as cities become so sensitive to property tax that we don’t want to ask property tax to pay what property tax should pay for, but we don’t want to reduce those services either. If we are going to commit to the services that we want to provide, we need to commit ourselves to fund them to the best of ability of the general fund.”
The city’s water fund is “healthy” and can be used to prop up the general fund this year, but the city needs to catch up on years of deferred maintenance, Criswell said. He suggested incremental water and sewer rate increases of about 5% to 8% a year for the next five years. Those increases could generate more than $2 million, some of which will be absorbed by the general fund, but much of which will pay for infrastructure improvements, he said.
Late fees on water bills were suspended in March because of the coronavirus but should be reinstated beginning Oct. 1, the city manager advised. Typically, those fees generate about $185,000 a year, he said.
Criswell characterized the Mineral Wells Airport fund as “weak” due to the pandemic’s impact on travel, the reduction in fuel sales at the airport and other revenue losses. The public airport is owned and operated by the city.
“Travel has been horrible with so many things locked down,” Criswell said. “I hope next year we kind of get to whatever normal might be at the airport.”
The airport board has suggested increasing the price of hangar leases to help offset costs.
Transforming the municipal airport into a cash cow will require a public-private partnership, Criswell said.
“Our airport is something special, and it could be something way more special than what it is,” he said.
If the airport remains city-owned, it will “never be anything more than what it is right now,” he said. “As time goes by, it will be worse because we don’t have any money to spend to fix anything.”
The city manager said he is having discussions with a potential private investor who is preparing to submit a proposal.
“That could really change the game for us,” Criswell said. “More to come on that. Right now we are going to hang on and operate and do the best we can.”
Criswell promoted the idea of Mineral Wells creating its own in-house street rehabilitation program at a cost of about $1.2 million. The move would reduce the need to rely on subcontractors, he said, but would require up-front costs for four new employees, materials and several pieces of heavy equipment such as a chip spreader and steel-wheel roller.
The city manager suggested waiting a year to implement such a program until the public works department finishes overseeing current street projects related to a 2017 bond package.
“We have bond money that needs to get spent and that our taxpayers voted for and said to fix these things,” he said. “That needs to be our focus over the next 12 months.”
City officials have made room in the budget tentatively for a 2% pay increase for city employees while also improving their benefits.
“We are looking at seeing what we can do with reducing our health insurance costs and also increasing those benefits for our employees,” Criswell said. “Sometimes those two things don’t go hand in hand. I do believe we will have exactly that.”
City officials want to reduce dependent prices on health plans, he said.
“It is sad that we have employees that have to choose not to take dependent coverage because they just can’t afford it,” he said. “I’m talking about costs of $1,300 to $1,400 a month to cover a family. That’s not OK with me, and I know it’s not with you either.”