By Moses Leos III
The anticipation of large, looming projects over the next year has the Buda City Council asking one question:
How do they fund it all?
During the 2013-14 budget workshop on July 11, the city pored over the proposed budget for the next fiscal year, along with the proposed budgets for the individual departments.
Currently, the city estimates a shortfall of over $800,000. Yet, despite the prospect of going “in the red,” the city is optimistic they can work around the issue.
“I’m pleased with the way things are going,” Mayor Todd Ruge said.
However, the elephant in the room during the meeting was the $2.2-2.6 million dollar Bonita Vista road project. At issue, the council debated over just how they can foot the bill.
The project, which tallied into the city’s general fund, could push estimated cash balances of the fund over revenue by $1.1 million.
While the council believes they can absorb the fund through a certificate of obligation, they did look at funding the project in different ways, primarily borrowing money.
Buda’s current debt load is $27.5 million. Compared to other cities, such as Kyle’s $94 million current debt load, the council feels confident it can borrow if need be.
“Previous councils did a great job of spending and borrowing conservatively,” Ruge said. “They did not handcuff us [with excessive debt].”
One council member requested a report on the levels of money the city could borrow and how it will affect future finances.
However, the benefit of borrowing money was greatly outweighed by the consequences.
Just borrowing $2 million, enough to help pay for Bonita Vista, would incur annual payments of $152,000 over a 20-year span. The city would have to pay over $1 million in interest, and raise tax rates by $.0214.
Council also looked at the financial impact of borrowing $5 million and $82 million. $5 million would pay for the 2013-14 planned Capital Improvement Projects (CIP); $82 million would be enough to complete every project currently planned.
“The consensus of the council was borrowing more money is not completely necessary,” Ruge said.
Ruge said council also discussed the possibility of placing the Bonita Vista expense out for a bond vote. Yet, with bond proceedings, plans to reconstruct the road may be placed on hold for a year or more. Buda hoped to complete Bonita Vista roads by year’s end.
In addition, city property tax rate increases would be included, something the council understood will not sit well with the general public.
The city also does not want to dip into an estimated $4.3 million total cash balance generated by wastewater revenue. Buda has budgeted a $1.15 million wastewater treatment facility in Garlic Creek into the wastewater utility fund.
Several council members heralded the idea of using funds for the wastewater plant to help offset the cost of Bonita Vista roads, then borrowing the money for the plant at a later date.
Yet at this point, absorbing the cost of the roads continues to be the focal point for the city.
“We must go through with a certificate of obligation for Bonita Vista,” City Manager Kenneth Williams said.
The implementation of the Bonita Vista project has affected other projects planned for 2013-14. However, the city expressed an interest in building the Westside Well in the Barton Springs Edwards Aquifer Conservation District (BSEACD).
With the west side of the city expanding at a rapid rate, the construction of the well will curb water needs from the Hays County Public Utility Agency (HCPUA) until at least 2018.
Buda has the Westside Well project budgeted at $750,000 in 2013-14; the well adds to the total of $2.6 million in expenditures from the water utility fund, placing it over budget by $900,000.
“We will have to take a harder look at the water utility fund,” Sidonna Faust, Buda finance director, said.
Other projects include a re-write of the Unified Development Codes (UDC), costing $150,000, which will be split three ways, with $50,000 from each of the general, water and wastewater funds.
Plans to complete the Bradfield Park project are also in the works, as the city has set aside $570,000 to finish the project; $195,000 will be reimbursed from Hays County.
As a result of the high dollar amount for these and other projects, the city transferred $3.13 million dollars from its investment account through Texpool Investment into the general fund. Last year, the general fund generated a little more than $5 million in revenue.
“We needed to transfer funds from [the account] in order to offset the CIP projects,” Faust said.
However, frugal spending by the city entities allowed the amount of expenses to stand at a substantially low amount.
“Outside of the CIP projects, the only other expenses are the addition of two new police cars, along with updates to older computers,” she said. “Overall, all of our departments have been very conservative in their spending.”
Buda Police projected the cost of the two police cars to be $50,407. According to Faust, the cost to update computers will not be a substantial sum.
Despite the shortfall, Faust said the city is in relatively strong financial standing.
“We are not in a dangerous situation,” she said. “We have been conservative in our spending. Everything looks good right now.”
The council will finalize the budget in August.
