Transmittal Letter

FY 2023 Annual Budget

August 2, 2022

Re: Fiscal Year 2022-2023 Annual Budget

Honorable Mayor, City Council Members, and Residents of Victoria:


The adoption of the Budget, the City’s financial and spending plan, is one of the single most important actions taken by the City Council each year. The Budget outlines the plan to address various challenges, priorities, and opportunities presented throughout the year. It reflects the City’s vision of providing a government that is efficient and an effective provider of goods and services – a government that is not only responsible to the will of its citizens, but also a government that provides leadership in helping determine the proper course for the future of our City.


In accordance with Texas Statute and City of Victoria Charter, Article V, Section 5, the Annual Budget for the fiscal year beginning October 1, 2022, and ending September 30, 2023 is hereby presented. The total Proposed Fiscal Year 2023 Revenue Budget is $167,202,056, an increase of $10,181,867, or 6.5 percent, compared to prior year, $157,020,189; and, the total Proposed Fiscal Year 2023 Expense Budget is $183,131,658, an increase of $11,877,289 or 6.9 percent, compared to Fiscal Year 2022 Original Budget, $171,254,369.



The discrepancy between total revenue and total expenditures will be funded with excess fund balance, excess fund balance is used on one time expenditures.

Budget Process

The Proposed Budget closely follows what was shared and discussed with Council during the budget work sessions in June. The following are brief highlights of the City's Fiscal Year 2022-23 Operational Fund Budgets.


Governmental Funds Budgetary Highlights

General Fund Budgetary Highlights

General Fund Revenue Highlights:

General Fund Proposed Budget Revenue - increased $2.32 million, mainly the net result of the following:

Property Tax

Property Tax Information

Sales Tax vs Rolling 12 Month Average Growth Percentage

12 month rolling Sales Tax

Sales Tax

After nine months of collections, sales tax revenue is projected to come in 7.7 percent or $1.3 million, over budget. The Fiscal Year 2023 Proposed Budget is $17,360,000, an increase of $175K or 1.02 percent compared to last year’s original budget; or a decrease of $1.4 million due to anticipated downturn in the economy.


Ambulance Supplemental Payment

The Texas Ambulance Services Supplemental Payment Program (charges for service fee) allows approved governmental ambulance services providers across Texas to receive supplemental payments associated with the cost of providing services to Medicaid beneficiaries and uninsured patients, budgeted for $300K in one-time revenue.


Interest Income

Increase to interest is due to inflation and the Federal Reserve increasing the rate.

Intergovernmental

Decrease is mainly due to less funding from Victoria Sales Tax Development Corporation, funding will be provided directly to the newly created Economic Development Fund instead of through General Fund.

General Fund Expenditure Highlights:

General Fund Proposed Budget Expenditures - decreased $1.6 million, mainly the net result of the following:


Personnel Services increased $1.2 million, mainly due to Phase III of Compensation Plan, STEP Pay Program and new staff costs;

Maintenance increased $1.9 million, mainly due to increase in vehicle replacement, fuel, software maintenance, and, professional services contracts;

Stabilization Fund transfer decreased, $500K, due to no funds being transferred this year from General Fund;

Capital Construction Fund transfers decreased, $4.6 million, due to Generan Funds portion of the FY 2023 Capital Improvement Program; and,

Capital increased $341K, mainly due to Park Other Structure Projects.



General Administration

Budgeted at $4.03 million dollars, an increase of $229K from prior year. This is mainly due to an increase in Personnel and Benefits related to Phase III of the Compensation Pay Program, new staff costs; and, software maintenance.

Public Works

Budgeted at $11.62 million, a decrease of $2.55 million, the net result of Phase III of the Compensation Plan, cost of new staff; decrease in transfers for CIP projects; increase in vehicle replacements; and fuel.



Public Safety

Budgeted at $32.23 million, an increase of $364K from prior year’s overall budget. The increase variance is mainly the net effect of Phase III of the Compensation Pay Program for general population employees in Fiscal Year 2023, STEP Pay Program; and, an increase in fuel; vehicle replacements; software maintenance; and drug testing.

Development

Budgeted at $2.38 million, an increase of $196K. This is mainly due to Phase III of Compensation Plan; Active Transportation Plan Study; demolishing; software maintenance; vehicles; and fuel.


Non-Departmental

Decreased $504K, mainly due to onetime transfer of $500K to establish the Stabilization Fund in prior fiscal year.

Recreation

Budgeted at $6.3 million, an increase of $621K. This is mainly the net result of Phase III of the Compensation Plan, baseline pay adjustments (Baseline adjustments: include payroll reorganizations, new hires, retirees that took place in the prior fiscal year that will be captured in this fiscal year.); vehicle replacements; fuel; increase in electronic subscriptions; and, other structure improvements for playground equipment and the Duck Pond.


Stabilization Fund Budgetary Highlights

This fund will be utilized for one-time programs/expenditures and major capital projects to reduce the use of long-term debt where possible. The funding sources are transfers from the City’s funds using excess fund balance or working capital balance. This fund will also be used to offset any fund balance/working capital deficits below the reserve policy for each fund. Appropriations from this fund will be made at the discretion of City Council during the budget process and fiscal year as needs arise. The Proposed Fiscal Year 2023 Budget does not include any transfers from other funds and expenditures.



Motel Tax Fund

Revenues increased $59K and expenditures decreased $479K, mainly the result of a decrease in capital improvement projects, a decrease in transfers to Community Center; and moving Main Street Program to Economic Development Department. Note: Downtown Maintenance Program and Façade Program will be funded by the VSTDC.


Convention & Visitor’s Bureau

Revenues decreased $187K mainly due to cancelling Bootfest 2022 Program. Expenditures decreased $58K, mainly the result of no Bootfest 2022 Program planned.


Economic Development

The City established the department with the intention to help retian, attract, and expand the business community. The department is possible through an agreement between the Victoria Sales Tax Development Corporation and the City. Revenues and expenditures are budgeted at $546K and will fund two divisions, Main Street Program and Economic Development Department.


COPS Grant Fund

The Police Department was awarded $500,000 for four entry-level-officers beginning Fiscal Year 2021. The grant provides for split funding for the officers over three years. For Fiscal Year 2023 (Year 3), $2,644 is budgeted.


American Rescue Plan Fund

The City was allocated $14,508,296 to be paid out over two years, beginning in Fiscal Year 2021 and ending in Fiscal Year 2022. No revenues are budgeted for Fiscal Year 2023.

The Proposed Fiscal Year 2023 Budget includes $10.06 million in General Governmental Bond payments, an increase of $160K, mainly the net result of issuing CO Bond, Series 2023 and a lower Bond Redemption Program. The Proposed Budget assumes a property tax rate of 55.82¢, which is 3.00¢ lower than prior year. The proposed tax rate is allocated at 34.55¢ for General Fund maintenance and operating costs, a decrease of 0.51¢ and 21.27¢ for debt service payments, a decrease of 2.49¢.

Governmental Construction Fund Budgetary Highlights

Governmental Construction Fund Revenue:

Revenues are budgeted at $23,347,269 an increase of $337K, mainly the net result of a decrease from General Fund Transfers, a decrease from University of Houston-Victoria, and an increase in transfers from TxDOT, per the Capital Improvement Program.


Governmental Construction Fund Expenditures:

Expenditures are budgeted at $29,247,015, an increase of $3.05 million, per the Capital Improvement Program. Staff is proposing adding a CIP Service Fee to CIP projects which would cover costs related to City staff performing planning, design, survey, procurement, inspection and contract oversight services. This fee will help alleviate costs of additional staff from the General Fund and Water / Wastewater Utility Fund. Note: The discrepancy between total revenues and total expenditures will be funded with Working Capital Balance. Major CIP Projects for FY 2023 are as follow:


  • Lone Tree Acres Street & Drainage Project ($4,290,000) – project consists of drainage improvements from the Southeast corner of Lone Tree Acres to Lone Tree Creek, re-shaping portions of the roadside ditches in the subdivision and reconstruction of the streets with stabilized subgrade, limestone base, seal-coat and HMAC.

  • Citywide Street LED Lighting Project ($250,000) – this project consists of replacing High Pressure Sodium (HPS) light bulbs with more efficient LED fixtures on street lights starting with Phase I on the South side of town.

  • Thoroughfare Streets ($7,734,123) – program includes various maintenance methods to Dairy Road (Salem to Whispering Creek), Nursery Drive, Magruder Drive, Lingo Lane, John Stockbauer Mill and Overlay (Rio Grande to Colony Creek), Guy Grant (Pre Engineering Design); and, North Street (Pre-Engineering Design).

  • Residential Street Program ($5,534,474) – program includes the reconstruction of streets; Country Club Drive between Navarro and Magruder utilizing mill and overlay; Spring Creek between Main Street and Country Club Drive; and, sections within the following subdivisions, Queen City, Castle Hill West, Deer Chase, Murray Street between Cameron and Water, Cameron between Water and Juan Linn, and Church between Navarro and East.

  • Public Safety Building ($3,475,000) – project consists of land purchase and engineering design of the construction of a new Public Safety Building.

  • De Leon Plaza Project ($2,570,000) – project includes closing West Forrest Street between Bridge and Main to provide a festival space along with added amenities.

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(Enterprise and Internal Services)

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