City of Brenham staffers are warning that while the city’s financial condition is “solid,” it is “unsustainable” because expenses are growing faster than revenue.
City council members and top-level administrators on Thursday held the first of what will be a series of meetings to discuss the 2019-20 budget.
City Manager James Fisher said the city continues to maintain adequate financial reserves and repeatedly stressed that its financial condition now is sound, with a bond rating of AA- for the last 11 years.
But expenses that are outstripping revenues are causing the city to defer spending on capital projects “necessary to maintain what we have,” he told council members.
“The most important thing is that the city is in a solid financial condition,” said Fisher. “The economic retail outlook is favorable.
“But we have to change the way we look at things. We have to change the way that we plan and manage our facilities.
“I’m not saying that negatively, that what we’ve done in the past is bad. We’re changing the way we’re thinking, because there’s just a lot of different things that have been pushed down the road.
“We have to come up with a plan on how we’re going to take care of those. Sometimes during budget (discussions), you push things off that aren’t the ‘pretty’ things so you can take care of some other things.
“Because our expenses are growing faster than our revenues, it is causing us to defer capital spending necessary to maintain what we have.”
Suggestions to reduce expenses include reducing staffing through attrition and early retirement incentives, outsourcing work such as street reconstruction, creating a drainage utility to provide revenue for drainage improvements and seeking medical insurance bids in an effort to find savings there.
Revenue could be generated by focusing on retail growth and downtown revitalization, boosting tourism efforts, raising utility rates to cover the cost of service, adding a sales tax to electric and gas charges, and reviewing interlocal agreements to ensure city costs are being fairly reimbursed.
Fisher said the city must be “very cognizant of the costs” to maintain facilities and services.
“As we add things, as we take on things, our expenses go up,” he said. “That doesn’t necessarily mean our revenues go up.”
Among the philosophical changes are deferring capital projects without a plan to fund them and “don’t do” services that citizens aren’t willing to pay for.
Two major projects are being counted on to provide a boost to the city’s sales tax revenues — the largest funding source for its general fund budget.
Baker Katz is moving forward with a large shopping center project which Fisher said could “create some energy and excitement so some other development comes into town.”
The council last year also approved creation of a Tax Increment Reinvestment Zone which city officials hope will generate millions of dollars to spur development.
The TIRZ takes in 2,200 acres along U.S. 290, South Market Street and West Main Street.
A portion of property taxes generated by any increase above a baseline of property values is earmarked for economic development projects in the TIRZ.
Fisher, however, said that sufficient funding to take on major projects “will take time” to accumulate, but new businesses could “accelerate” that growth.