Projected Revenue Highlights
Sales Tax Revenue:
Over the past 3 years, our annual growth in sales tax revenue has been significant, with a 35% increase in the first year, followed by 30% the second year, and an estimated 10% the current fiscal year. As we plan for the future, our challenge is to derive a reasonable estimate for our average sales tax revenue growth rate.
Over the past 10 years, the average annual growth rate in sales tax revenue has been 5.7% for Smith County and 4.4% for the City of Tyler. Smith County collects sales tax county wide, including the City of Tyler. As such, the reported overall average growth rate of Smith County (i.e., 5.7%) includes the slower growth rate of 4.4% reported by the City of Tyler. This difference in sales tax growth rate must mean that the economic growth of Smith County outside the city of Tyler (which corresponds to the area where SCESD2 collects sales tax) is even higher than the reported 5.7%.
Since SCESD2 does not collect any sales tax from the City of Tyler and as such is not impacted by the City's slower growth, we can actually derive an estimate of the average sales tax growth rate of Smith County outside the city of Tyler. That is, since the population size of Tyler and Smith County (ex. Tyler) are roughly the same, we derive the rate estimate by solving for x in the following equation: (4.4% + X%) / 2 = 5.7% ==> X% = 7% = Our estimate for the average SCESD2 sales tax revenue growth rate over the past 10 years. Accordingly, we project FY2024 sales tax revenue to increase 7% over the revenue collected in FY22-23 (which we estimate to come in at $15,187,428) resulting in FY2024 sales tax revenue projections of $16,250,548.
Property Tax Revenue:
The final certified taxable value for Smith County Emergency Services District No. 2, as determined by the Smith County Appraisal District, is $10,552,610,797. This represents an increase of 18.7% over last year. To be able to fund the additional 18 full-time first responders planned to be hired in FY2024, the proposed budget incorporates a 12% increase in the property tax rate resulting in a new proposed rate of $0.067688 / $100. We projected out the actual FY2023 current property tax receipts, incorporated the increases in taxable value and in the tax rate, to derive an amount of $6,970,012 which represents the projected current tax receipts for FY2024. We applied a similar logic to derive an amount of $156,932 which represents our projected delinquent tax receipts for FY2024. Combining current and delinquent tax receipts, we project a total FY2024 property tax receipts of $7,126,944.
Investment & Interest Income
Our FY2024 budget projects investment income of 842,700, a decrease of 3% relative to the estimated actual investment income of $867,661 received in FY2023. We base this reduction on projected FY2024 cash flows and the Fed's stated policy rate path. In short, we estimate an average invested balance of $21 million earning an average interest rate of approximately 4.00%.
Our FY2024 budget projects other income of 402,100, a decrease of 58% relative to the estimated actual other income of $950,188 received in FY2023. The primary reasons for this large decrease are as follows:
1. An estimated $150,000 in insurance proceeds reported as other income in FY2023 was a one-time event and will not be repeated in FY2024.
2. TIFMAS income of $274.956 was extraordinarily high in FY2023 and we project a reduced amount of $137,500 for FY2024.
3. Excluded Workers' Comp grants from other income in FY2024 as these receipts will be used to offset expenses instead.
By taking into account all the factors mentioned above, we aim to provide a realistic and conservative estimate of our revenue for FY2024, ensuring responsible financial planning for Smith County Emergency Services District No. 2.