Woodway budget provides for wage increases, but no new revenue through tax rate

Woodway’s budget officials propose raising wages for all employees while keeping the tax rate at the state’s set rate with no new revenue.

The Woodway City Council on Monday discussed the preliminary budget that city Finance Director Brenda Hernandez submitted in June. It includes a proposal to reduce the tax rate by 1.93 cents per $100 of value. Given increased property values, the reduced tax rate is expected to generate the same amount of revenue as in the 2023-24 fiscal year, not counting properties added to the tax rolls last year.

Council members appeared to agree to reduce the tax rate from 37.37 cents to 35.44 cents, thereby supporting a balanced budget, but some called for alternatives to adjusting the wage increase model.

The City Council will vote on the final budget and tax rate in the coming weeks. The actual proposed property tax rate will not be determined until the McLennan Central Appraisal District submits the final, certified property values ​​on the tax roll around July 25.

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The average home value in Woodway rose to $437,000 in the first assessments this year, up from $422,000 last year, according to the McLennan Central Appraisal District’s first assessment data in May.

Wage and capital expenditure

Hernandez proposed spending $11 million on employee salaries and benefits, including $9.1 million for the tax-funded general fund, $1.3 million for the fee-funded water and sewer fund and about $600,000 for the Carleen Bright Arboretum operating fund.

Planned capital expenditures and equipment replacements from the general fund departments, not included in operating funds, total $2.4 million. Capital expenditures from the utility funds of $2.4 million were also requested for the water and wastewater utilities.

Many capital expenditures at Woodway are set aside in operating funds for years before being spent, rather than selling bonds for most capital projects.

All working capital included capital expenditure requests totaling $71,500.

Employee increases

The preliminary budget calls for a 5% cost of living increase for all employees, with merit increases of 4% for employees with an “A” rating and 2% for employees with a “B” rating. Employees with a rating below a B will be placed on merit increase plans and will not receive merit increases.

At the suggestion of Councilman David Russell, Hernandez agreed to prepare an alternative raise model with a 4% cost-of-living increase and merit increases of 3% to 5%. Russell said this would give employees more incentive to work hard and improve their performance.

Councilmember Cook and Hernandez reminded the council that inflation was above 5% and as high as 9% as the pandemic was waning and employees had not received a cost-of-living increase of more than 5%. Cook said the council still needs to catch up with inflation from previous years.

General Fund Expenditure

The general fund, which covers administration, public safety, parks, roads and other general government services, would receive $5.42 million in property tax revenue, $4.43 million in sales tax revenue and $760,000 in franchise fees. Other general fund revenue, including permits, court fines and the mixed beverage tax, would total $1.33 million.

The largest expenditure item in the general fund goes to the Department of Public Safety at $7.27 million, which is about $210,000 less than the 2023-24 budget.

Public Safety Director Chief Khalil El-Halabi told the council he was able to cut costs because Midway ISD is developing its own police department, meaning Woodway will need three fewer public safety officers. Woodway’s public safety officers are trained as firefighters, police officers and emergency medical technicians.

Revenue and tax rate

The proposed property tax rate yields an expected revenue of nearly $7 million on an estimated net taxable value of the properties of $1.97 billion. Actual tax rolls are expected to be delivered by the McLennan Central Appraisal District around July 25.

The finance director estimated the total value of the properties at $2.14 billion and the property tax exemptions at $170 million.

Council members David Keyston and Russell asked staff on Monday to plan for a tax rate with no new revenue, and Mayor Amine Qourzal and other council members nodded in agreement without objecting.

Of the $7 million in property taxes, about 78% would go to the general fund, 12.8% to future road improvements, 5% to bond repayment and 4.3% to long-term capital projects.

Cook proposed to the council on Monday that they retain a contribution of about $295,000 to the long-term capital projects fund and keep that revenue in the general fund. That way, a balanced budget could be achieved without having to touch reserves. The rest of the council agreed in principle.

Since the fund was established in 2015, the city has not spent a cent of it, Hernandez said.

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