County Judge Robert Kelly gave an overview of the unfinished county budget for the 2021-22 fiscal year last week, saying he and the four county commissioners still have some negotiating to do with various department heads and elected officials.
They are facing deadlines of Aug. 23 to hold a public hearing on the budget, and Sept. 13 to hold a hearing on the tax rate they also will set to fund the budget.
By law, the county judge, Robert Kelly, is the chief budget officer for the county.
Last week, Kelly made the following observations about state rules and the ongoing budgeting process.
First, Kelly noted that in Texas, Senate Bill 2 about establishing taxes is what he called “very anti-local government.” He said now, if the county raises its tax rate more than 2.5 percent, they must hold an election.
And the county is planning capital improvements on properties they already purchased, using “Tax Anticipation Notes,” which funded $2.5 million and are good for seven years at .75 percent interest. One of those properties is 16 acres adjoining the current Road & Bridge offices, that cost them $350,000 to buy and is the future site of a new Animal Control facility.
On the county website, the current county tax rate is listed as $.44590 per $100 valuation, with $.38700 for maintenance and operation; and $.05890 for debt service.
Kelly said in his FY20 budget, the monies they spent in 2020-21 were basically labeled “no new tax revenue rate.”
Under SB2, Kerr County Tax Assessor-Collector Bob Reeves is required to report what tax rate county leaders are charging, so as not to charge citizens any higher tax rate than necessary.
“If we set a lower rate, and try to raise the same amount of money, it’s a balancing act,” Kelly said. “So our tax rate will probably be a couple cents less per $100 valuation. But we were just getting the exact figure from Bob (Reeves) on Monday (Aug. 9).
Kelly added, they so far plan to spend essentially the same amount of money as in previous years. And Kelly’s proposed FY22 budget listed a “Fund Balance” (or “savings account) of 30.77 percent.
After frequent budget workshops, he said commissioners and department heads saw that extra cash in the bank as available to spend, and now the proposed budget lists a fund balance of 27.62 percent instead. That was up for discussion at the Monday, Aug. 9, meeting, too.
A budget worksheet so far lists the following “grand totals” and are not yet “balanced:”
• Estimated reserve balance - $11,930,575;
• Estimated total revenue FY22 - $38,479,764;
• Recurring expenses requested FY22 – $39,032,981;
• Non-recurring expenses requested - $4,160,773;
• Total FY22 requested expenditures - $43,193,754;
• Revenue less than expenditures - $4,713,990 deficit.
County government is a combination of departments with hired staff, and elected officials also with hired staff.
Of those, the Sheriff’s Office and Road and Bridge are the largest in terms of staff and equipment, followed by the County Clerk’s, Tax Assessor’s and District Clerk’s offices.
Kelly commented on several proposed line items.
Animal Control could get two new fully outfitted Ford F150 trucks, and an extra separate building installed for more staff office space.
The Sheriff’s department is now on a “vehicle replacement schedule” lease system with Enterprise.
Under the Road & Bridge Fund, road reconstruction at almost $299,000 is considered “routine,” while three pieces of new equipment for the department are not, and neither are “winter storm road repairs.”
There is a proposed county contribution of $777,500 over two years to airport projects, which Kelly called “very important for the community.”
He also noted three items under Flood Control Fund, for a study on a flood warning system, a drainage study for East Kerr to shunt extra water from the north side of Hwy. 27 south to the river, and three road/drainage projects in East Kerr and Kerrville.
Total proposed non-recurring major expenses are listed at $4,160,773, a list and dollar figure Kelly and commissioners have recently agreed on.
“We had not planned to be fighting COVID this long,” Kelly said, “but the county also was awarded funding from the American Rescue Plan Act, and has received part of it.”
Remaining on the budget calendar is a workshop to finalize the budget and discuss the tax rate, including whether the proposed rate would exceed the rollback rate or the effective tax rate, whichever is lower; taking a record vote and setting two public hearings if needed (Aug, 23 and Sept. 13).
A public hearing on the budget is listed Sept. 23, but Kelly stressed that budget workshops also are open to the public.
Official adoption of the new budget and the tax rate are planned Sept. 23; and must be final by Sept. 30, before the start of the new fiscal year Oct. 1.
Kelly said department heads and elected officials have been submitting their proposals and “wish lists” to Commissioners’ Court and Kelly.
Submitted requests, including raises and added staff, have then been considered as the basis for the court’s formulation of a new budget.
Kelly said these steps grew out of Judge Pat Tinley’s final days in office before his death, when commissioners had to take over the budget process in mid-stream and have been doing that ever since.
“In other counties, the judge prepares the new budget, and sends it out to the departments and elected officials,” Kelly said. “And after that, departments can question the proposals and lobby at public workshops before the commissioners’ court. Then the commissioners’ court decides what the budget will be.”
Kelly said as a newly elected judge, he was assigned a mentor, a working county judge, to get advice from and send questions to. His is Bandera County Judge Richard Evans, who was trained as a professional accountant.
Kelly said it’s a logical connection, as Kerr shares the 198th District Court with Bandera County.
His mentor’s advice early on was that the budget process in Kerr County has been constructed backwards lately. He said here, they’ve reversed the process and requests came from departments first.
It’s supposed to start with the judge and be sent out, then possibly adjusted by commissioners, Kelly was told.
As of late last week, Kelly said, they are working to reduce a $4,713,990 deficit, with proposed expenses higher than expected revenue.
Commissioners’ court still must finalize the new budget and the tax rate needed to fund it.
Complicating this in FY20, the State Legislature changed the “rollback tax rate” which is the allowed increase in the tax rate before the governmental entity has to get voter approval in an election.
That allowed increase was up to 8 percent in the “effective tax rate,” the tax rate that would raise the same amount of revenue as last year.
The State Legislature decreased that percentage of increase from 8 percent to 3.5 percent.
Kelly said employees’ salaries are set by Commissioners’ Court, and any other raises or new hires decided by Commissioners.
Kerr County has almost 300 employees.
“On the current court, Jonathan Letz and Tom Moser are ‘senior commissioners’ who have been here the longest and have the most experience forming budgets. We have consensus on some, but not all, the requests for raises,” Kelly said.
He said they paid a consultant to do a salary study for county government; and learned from those results that they were already “pretty competitive.”
Kelly said he and the commissioners work closely with the County Auditor on each new budget, with Auditor Tanya Shelton, and deputy auditor James Robles.
County auditors are hired and paid by the District Judges, not local commissioners.