Inflation has skyrocketed over the last year, increasing costs of pretty much everything, forcing many individuals, groups and businesses to cut back or find other ways to make up the difference in their budgets. The City of Sulphur Springs is no exception.
To more accurately reflect the record inflation levels and changes from projected revenues and expenses, Sulphur Springs City Council approved Ordinances adjusting the city budget and master fees schedules. The City Council also considered a contract amendment for the street improvement program due to increased costs as well.
Sulphur Springs Assistant City Manager/Finance Director Lesa Smith on June 7, 2022, asked the City Council to consider on first reading Ordinance No. 2798, which amends the 2021-2022 budget Ordinance No. 2794.
Smith, at the regular June 2022 City Council meeting, explained that the amendment addresses changes that have occurred during the fiscal year due to action by the public, City Council, and circumstances outside of city control.
The overall expenditure limit increased by $1,069,820. The additional revenue that the City is collecting amounts to a projected increase of $1,060,970. The remaining $8,850 comes from the Airport fund balance, according to Smith.
The city budget originally adopted for Oct. 1, 2021-Sept. 30, 2022 in Ordinance No. 2783, allows for appropriation of funds other than current year ad valorem taxes. Appropriations were projected to be $30.73 million or 85.71% of the total estimated revenue of the city for fiscal year 2021-2022; $5.125 million of that was projected to come from ad valorem tax revenue with a 98.354% collection rate this year, that’s about 14.29% of the projected $35,855,231 in total city revenue in FY 2021-22 projected to come from ad valorem taxes.
Ordinance No. 2798 would increase the total estimated revenues for the city to $36,925,051 for the city in FY 2021-22, with appropriations increasing to $31,799,900, which represents 86.12% of the total estimated revenue for FY 2021-22. Collecting at a collection rate of 98.354%, ad valorem tax revenue was account for $5,125,151 or 13.88% of total revenues from all sources to be collected for the city for FY 21-22.
Total city expenditures — as established in Ordinance No. 2783 and including debt requirements, operations and capital improvements — are not to exceed $35,855,231 in FY 21-22. Ordinance No. 2798, as proposed would amend the budget to allow total expenses up to $36,925,051.
Sulphur Springs City Council approved Ordinance No. 2798, as proposed by Smith, on first reading at the regular June 7, 2022.
As is the case for all city ordinances, Ordinance No. 2798 was presented again at the July 5, 2022, regular City Council meeting, for a public hearing and second reading. There, the City Council gave final approval to the amendment as proposed.
Master Fees Schedule
The City Council also was asked the summer to consider amending Ordinance No. 2790, which outlines the master fee schedule for costs, fees and rates associated with permitting, utility services and other services provided by the city.
In September 2021, the City Council adopted Ordinance 2790, establishing a Master Fee Schedule. Part of the reason for having the schedule separate from the budget was so that if fees needed to be changed during the year for any reason, it could be done more easily, Smith explained during the June 2022 City Council meeting. The purpose of user fees are for the City to recoup the cost —or most of the cost — of providing a service to an individual benefactor instead of putting the burden on the general population.
With inflation at record levels, city staff reviewed fees and, at the June City Council meeting, recommended that the fees be increased. Since the utility-related fees were adopted 2018, the City has we have faced a significant increase in the cost of parts, fuel, labor and other material costs. The City of Sulphur Springs Distribution and Collection Department calculated the current cost required for them to purchased materials and perform the work, Smith explained.
City officials reported that, in addition to rising costs, the number of taps and meters being installed or requested in Sulphur Springs has risen significantly in the past several months, which means the margin of loss is getting wider as well and it is important to close that gap.
The change, city officials pointed out at the June 2022 meeting, do not impact the general population, only those who directly benefit from the service the City is providing to them.
After discussion, the City Council on June 7, 2022, approved on first reading Ordinance No. 2799, which sets the master fee schedule as recommended by staff. Ordinance No. 2799 was presented July 5 for second reading. The City Council again approved the amended fee schedule as recommended by Smith and city staff during the July 5 meeting.
Sulphur Springs Assistant City Manager/Community Development Directory Tory Niewiadomski, during the July 5, 2022 meeting asked the City Council to consider amending the contract for the street improvement program due to increased materials costs.
Niewiadomski reminded the City Council that when Texana Land & Asphalt was awarded the bid for the 2021 Street Improvement Program in March 2021, the contract included a provision which allowed the City in February 2022 to extended the contract another year at the same unit prices, depending on available quantities of materials and provided oil prices remained stable, within a 20% variance.
On June 24, 2022, Texana was advised by material provider RK Hall that a price increase would be necessary to fulfill the city’s hot mix contract. From January to June of this year, the rack price of liquid asphalt oil increased by $240 per liquid ton, but Hall would only charge Texana an additional $13 per ton of asphalt. Diesel has also increased $2.10 per gallon, a 58% increase. Texana contacted the City asking to increase the price for Type D and F HMAC surface by $13 to cover the cost in crease from material supplier RK Hall. That would raise the price for Type D from $98 per ton to $11 per ton and would increase Type F from $99 per ton to $112 per ton, Niewiadomski told the City Council at the July 5 meeting.
City staff recommended approving the price modification due to the large price increase in asphalt oil and diesel price increases. Doing so, Niewiadomski noted will impact the Capital Improvement Program Street Funds and Street Maintenance Fee funds available to complete these projects. In fact, the modification will mean a cut of $125,000 worth of street work this year.
“I think based on the size, Houston Street we’ll have to postpone until next year,” said Niewiadomski, referring to the 4,800 linear-feet of paving work planned on Houston Street from League to Hillcrest as part of the $2.01 million in street work designated in the 2022 SIP.
“So, my take is this is painful but we’ve got to do it,” City Manager Marc Maxwell told the City Council Tuesday evening.
Mayor Doug Moore noted that if the 2022 SIP contract is amended, the city would not be spending any more money, but would be getting less paving for the amount budgeted.
“Yes, less band for the buck,” Niewiadomski affirmed.
Place 1 Councilman Jay Julian made a motion, which Place 2 Councilman Harold Nash seconded, to amend the 2022 SIP contract as requested by Texana and recommended by city staff.