Sugar Land, TX – City Manager Michael W. Goodrum recently submitted a proposed $254.4 million budget for fiscal year 2021, which begins Oct. 1.
The proposed budget includes $226.9 million for operations – a more than 2 percent decline from the prior year – and $27.5 million for capital projects, including a first, but limited, phase of projects approved by voters in 2019. Overall, it follows guidelines in the City Council-adopted Financial Management Policy Statements and reflects responsible and conservative decision making as a result of unprecedented uncertainty in the midst of the COVID-19 global public health emergency.
Recognizing the economic impacts of COVID-19 on residents and businesses, the City immediately began taking budgetary actions at the start of the global health emergency to respond to anticipated declines in various city revenues – most notably sales tax revenue, which is a major funding source for the city’s operating budget. While also working swiftly to ensure the city’s financial resiliency, the city has been able to continue to provide critical public safety, emergency management, infrastructure and business support services.
The proposed budget provides for continued financial resiliency and maximum flexibility in an effort to place the city in a position to respond if the recovery is stronger than anticipated or the economy worsens beyond projections.
“As we all know, these are unprecedented times – and the personal and financial losses resulting from this emergency are deeply felt by residents and businesses across Sugar Land,” said Goodrum. “Unfortunately, the city isn’t immune from financial challenges either – even with the strong financial performance and proactive policies that placed the city in a position to withstand impacts from the economic downturn better than almost any other city.”
In preparing the proposed FY21 budget, the city delayed significant decisions to better align with the availability of data and to allow for the development of multiple scenarios and strategies focused on varying degrees of economic recovery. Such actions and strategies, which are in accordance with the strong financial management practices that have earned Sugar Land recognition as a financial leader across the nation and by bond rating agencies, include:
“The conservative approach and responsible flexibility mentioned above is another example of Sugar Land’s leadership in financial stewardship and resiliency, and these efforts have allowed us to present a budget that is operationally sustainable into the future, continues to offer one of the lowest property tax rates among cities our size, maintains essential services and avoids neglecting critical infrastructure projects,” said Goodrum.
Overall, the city is facing and has identified strategies to offset a significant revenue shortfall across all major funds as a result of COVID-19 – including a multimillion-dollar impact in the city’s main operating fund.
Due to the economic impact of COVID-19, the proposed budget includes a revised implementation plan for the 2019 voter-approved bond election projects. The first year of the revised plan will now focus on those projects addressing structural flooding, reducing the previously planned year one tax rate increase of three cents to approximately half a cent. The remainder of the increase is planned to occur in future years, with implementation of the projects being spread over five years instead of three. The City Council also previously directed the calculation of the voter-approval tax rate in accordance with disaster provisions approved by the state legislature in 2019 in order to allow for more time to gather information and input prior to taking action on the tax rate.
Additionally, an approximate $10 monthly increase to utility bills for customers is included in the proposed budget as the city prepares to implement the IWRP and meet the unfunded mandate to reduce groundwater consumption by 60 percent in 2025. Solid waste services are also subject to a minor contractual increase, which is under negotiation to ensure the best value for residents.
A series of budget workshops, open to the public, will be held through August, and the budget will be formally considered for approval by City Council in September. Public hearings will be scheduled to provide residents with opportunities for input prior to the budget and tax rate approval. For more information, visit www.sugarlandtx.gov/FY21budget.