Ten-Year Financal Forecast

Planning for the Future

Each year, staff prepares a long-term financial projection concurrently with the preparation of the annual operating and capital improvement budget. With the substantial amount of growth expected over the next 10-15 years, our current long-term financial projection becomes even more critical as additional costs and demands for services from development at Avenir, recently annexed western developments, and new City facilities must be factored into the equation.

Although multi-year forecasting is not an exact science and is subject to many uncontrollable factors, such as the COVID-19 economic downturn and the current inflationary environment, it can serve as a useful tool in trying to chart a financial path for the short and long-term and provides an opportunity to monitor actual versus projected results each year so that proactive measures may be taken to balance future budgets.

The graph below illustrates the projected unassigned reserves, budget stabilization reserves, and ad valorem operating tax rate for a 10-year period. No general obligation debt is forecasted in this projection.

As illustrated in the chart above, the operating millage is proposed to be reduced from the current rate of 5.32 to 5.17 in FY 2024. This is made possible by property valuations that substantially exceed last year's projections. Due to the compounding effect of this significant increase over the ten-year forecast, and projected new development added to the tax rolls, primarily from the Avenir development, the forecast projects the millage rate to remain flat at 5.17 mills through FY 2033 and the debt service millage rate to remain at zero. Assuming the operating millage rate remains flat, the ten-year projection anticipates a drawdown in budget stabilization reserves of approximately $900 thousand in FY 2025 and $1.8 million in FY 26 due to the planned transfer from the General fund necessitated by the temporary closure of the Burns Road Community Centers scheduled for Fall 2023 as a result of the planned construction of the new facility. Thereafter, it is anticipated that financial results will enable unassigned reserves to increase to $30 million and budget stabilization reserves to be approximately $5.8 million by FY 2033. It should also be noted that unassigned reserves meet or exceed City policy of maintaining a balance of a minimum of 17% of expenditures each year of the forecast.