For most mid-size cities and counties in Texas, fiscal 2011 brought tighter budgets and the need for increased fiscal efficiency. Many governments witnessed declines in sales tax collections in fall 2010 when compared with the previous year.
Lower revenue requires lower spending
With budget cuts looming, local governments got creative with strategies to save.
As Deer Park officials prepared the fiscal 2011 budget, they had to face the challenges of reduced revenues produced by fiscal 2010 taxable sales that were lower than 2009. The suburban Houston-area city prepared a budget management plan to identify areas for cuts that would reduce its $36 million fiscal 2011 budget by $3.5 million — nearly 10 percent. Deer Park froze salaries of newly hired employees and eliminated 17 vacant budgeted positions.
“We scrubbed the budget as much as we could,” says Finance Director Keith Nelson. “We reduced capital expenditures to the bare minimum.”
“We scrubbed the budget as much as we could. We reduced capital expenditures to the bare minimum.”
— Keith Nelson,
Deer Park finance director
Efficiency audits reveal potential savings
North Texas city Farmers Branch had its own strategy. Since 2007, City Manager Gary Greer has selected three of the city’s departments for annual efficiency audits. This year, the audits were expanded to include seven departments. Greer identifies departmental services, evaluates their utility and finds the most cost-effective way to provide them.
During fiscal 2010, Farmers Branch saw a 14 percent decline in taxable sales from the previous year. Facing a budget reduction, city leaders opted to cut costs, not raise property taxes. The city reorganized departments to eliminate duplicated services, offered an early buyout for retirees, and has refrained from increasing employee salaries.
Private business is a partner in the recovery effort. “We’re taking a business approach,” Greer says. “[We’re] outsourcing and letting private industry perform certain functions.”
Tools to Help Governments Get Good Deals
- Become a State of Texas CO-OP member for access to TxSmartBuy.
- Search e-catalogs for products and competitive prices.
- Place a purchase order that is received by a contractor immediately.
Questions? Email firstname.lastname@example.org or call (888) 479-7602 or (512) 936-2764 in Austin.
Texas Multiple Award Schedules (TXMAS)
Existing competitively awarded government contracts are adapted to Texas state procurement needs.
- A list of vendor catalogues is available at the TXMAS website.
- Catalogs contain item specifications, ordering and invoicing procedures.
Questions? Contact the TXMAS coordinator at (512) 463-3421.
“It’s important that there’s a lot of scrutiny, for people to see where the money goes,”
— Gary Greer,
Farmers Branch City Manager
Transparency shows spending patterns
Financial transparency is an integral part of the process for both Deer Park and Farmers Branch, Texas Comptroller Leadership Circle members that recognize the value of knowing what the city spends in order to know where to save. “It’s important that there’s a lot of scrutiny, for people to see where the money goes,” Greer says. TR
Local governments with tighter budgets in fiscal 2011 can save by buying through the State of Texas CO-OP. Read more about state purchasing.
Partnering for Impact: Sales tax generates more than $500 million for economic development in Texas
The Comptroller recently released the 2008-09 Economic Development Corporation Report, detailing the activities of EDCs in cities across Texas.
Since 1989, the Development Corporation Act has allowed cities to form Type A or Type B economic development corporation (EDC) funded by a local option sales tax, to attract businesses and create job opportunities for their residents. A board of directors appointed by its city council administers each EDC.
In 2008, the 666 EDCs generated $555.5 million in sales tax revenue for local economic development activities. This sales tax continues to be the state’s primary local revenue source for economic development, although EDCs can also generate revenue from bond, loans, grants and other sources. The EDCs’ total revenue from all sources was $832.5 million. The fiscal 2009 total slipped to $538.2 million for the 680 EDCs operating in 2009, and total EDC revenues declined to $675.3 million, mainly resulting from sharp declines in bond proceeds and loans.
State law specifies a wide variety of project types that EDCs can fund. In 2008 and 2009, the leading expenditure category was capital projects — $500 million for capital expenditures and more than $284 million in debt service to finance them. These include transportation systems, such as roads and overpasses, as well as business infrastructure such as utilities.
EDCs also spend more than $110 million each year providing direct business incentives to encourage businesses to locate or expand their operations in a Texas community instead of another state or country. For example, Seguin incentivized Caterpillar to relocate one of its primary assembly plants to the city. The EDC partnered with Seguin Independent School District, Guadalupe County, the Texas Enterprise Fund and private partners to create an incentive package to attract the state’s second largest economic development project, in terms of job creation and investment, in fiscal 2008-09.
The recent recession had little impact on the overall financial health of EDCs during fiscal 2008-09. EDCs reported that cash reserves available for economic development projects declined only 4 percent during the biennium to $853.9 million.