Fiscal Year 2025 Operating Budget

FISCAL YEAR 2025 OPERATING BUDGET

FISCAL YEAR 2025

OPERATING BUDGET

This budget will raise more revenue from property taxes than last year’s budget by an amount of $3,439,842, which is a 31.87% increase from last year’s budget. The property tax revenue to be raised from the new property added to the tax roll this year is $991,018.

September 17, 2024 – City Council Record Vote on the Budget

Ayes – Council Members Cecil Chambers, Jay Weatherford, Zahnd Schlensker and Greg Helm

Nays – Council Members James Traylor and Sarah Salgado

$21,511,485

CHARLES DANIELS City Manager

JON THATCHER City Attorney

ROSA RIOS City Secretary

KARL ZOOK Assistant City Manager

CITY COUNCIL & STAFF

DEBORAH WOODHAM Director of Finance

MELONIE WALKER Budget Analyst

CARRIE WHITE Police Chief

DEREK BRIGGS Fire Chief

JOHN CASEY City Engineer

KYLE GROVES Director of Public Works

PETER MORGAN Director of Community Development

KYLE ROUVALDT Director of Parks & Recreation

ZACH SMITH Director of Communications & Marketing

Jason Roberson Mayor

Salgado

Traylor

Cecil Chambers

Jay Weatherford Place 3

Zahnd Schlensker Place 5

Greg Helm Place 6

August 15, 2024

Dear Mayor and City Council:

In accordance with the City Charter and the laws of the State of Texas governing home rule cities, please accept this letter as the budget transmittal and executive summary for the Fiscal Year 2025 annual budget. The budget is structurally balanced, meaning that reserves have not been used to balance the operating budget. It provides for all available resources and expenditures for the City and acts as the general financial and operating plan for the City of Forney.

INTRODUCTION

As always, this budget was prepared with great diligence in allocating limited resources for the best benefit to the citizens of Forney. The City will finish FY 2024 with an unexpected surplus in funds. Forney has continued to experience growth in building permits and associated fees.

The property tax base in Forney has continued to grow at a rapid rate with a 133% increase in values in the last 5 years. The increased values and early redemption of debt have allowed for a decrease in the property tax rate of just over $0.13 in the same period. This budget proposes a tax rate of $0.405240 and will raise an additional $3,439,842 or 31.87% in property tax revenue from FY 2024.

Both sales tax and building permit revenue depend on the health of the economy. Therefore, this budget includes a conservative 5% increase in sales tax over the budgeted collections in FY 2024 and no increase in building permit revenue due to the high inflation rate and potential recession. Associated permit fees were also kept flat or decreased to account for the slowing economy.

Additionally, the Forney citizens will consider restructuring the sales tax allocation in November to include the creation of a Crime Control Prevention District (CCPD). The current allocation to the Forney Economic Development Corporation will be decreased 50% and the remaining 50% will be pledged to the new CCPD. This change is dependent on voter approval and will only take effect following a positive election outcome.

Forney’s continued growth and increased revenue will allow the funding of additional staff and supplies required to meet the needs of the citizens. Last year staffing levels were increased by 11.5 new positions and this budget includes 18.5 additional positions to address these needs.

The FY 2025 budget fully incorporates the new police and fire contracts negotiated during the Meet and Confer process. It includes new step plans for police and fire personnel with additional certification and education incentives. All civilian employees will also receive a 4% cost of living adjustment and a possible 3% merit increase.

The City of Forney charter specifies that no more than 7% of current expenditures may be kept in the undesignated general fund balance. In effect, this provision requires that excess funds at year end be obligated for one-time purchases or expenditures. The city is poised to complete FY 2024 with a surplus of more than $5,000,000 of which $2,037,000 will be allocated to capital improvement projects, $2,005,541 to capital equipment purchases, and $47,450 to the special events fund.

Forney is a member city of the North Texas Municipal Water District (NTMWD) and purchases water and wastewater services from NTMWD. The NTMWD will be increasing the price per 1,000 gallons of water purchased by 4 3% for FY 2025. They will also impose a 21.5% increase for wastewater services. Therefore, this budget includes an increase of 4.3% for both commercial and residential water rates as well as a 21.5% increase in all sewer rate charges for Forney citizens. These increases are necessary to be able to provide the required maintenance for the water and wastewater systems within the City of Forney.

The City recently renewed the contract for solid waste disposal services for a five-year term. The contract includes a provision that there will be a potential 5% rate increase during FY 2025. This budget proposes to pass along that increase to the citizens.

The Hotel Occupancy Tax (HOT) Fund is a special revenue fund that receives revenue through a 7% tax charged on all room rates by hotels or motels within the city limits. This fund is typically used for special events and the revenue from local reservations will allow for a transfer of $300,000 to cover events in FY 2025

The Capital Purchases Fund will provide for General Fund capital purchases through the $2,005,541 general fund transfer as well as $850,000 from unallocated fund balance within the Capital Purchases Fund. These funds will cover both vehicle and equipment requests from general fund staff for FY 2025. Capital requests of $695,000 for equipment to be used by the utility crews will be funded through unallocated fund balance in the utility fund.

The City of Forney Capital Improvement Program (CIP) is comprised of several funds. The General CIP fund accounts for projects such as facilities, parks, technology and roads. The General Fund transfer of $2,037,000 will fund projects requested by staff in this budget. The Utility CIP fund accounts for water and sewer infrastructure projects and will receive a transfer of $300,000 from the Utility Fund during FY 2025.

GENERAL FUND

The General Fund is the City’s principle operating fund and is supported by taxes, fees, and other revenues that are not restricted to specific uses. This fund accounts for City functions such as police, fire, community development, parks, municipal court, and administration.

GENERAL FUND REVENUE

Fiscal Year 2024 total General Fund revenue is expected to end the year 8.8% above the original budget. This is the result of increased interest rates and a healthy investment portfolio.

Total revenue for Fiscal Year 2025 is projected to be $41,189,367. This is an increase of 18 3% from the prior year’s budget. This increase is due to increased property tax revenues, fire protection income, and interest on investments.

Taxable Valuation & Tax Rate

The total certified property valuations for Fiscal Year 2025 are $5,579,259,363. This is an increase of 13.8% or $675,826,563 in total valuation. Forty-five percent of this increase can be attributed to new construction with the remainder being an increase in existing property valuation. Both factors indicate a thriving community.

4,000,000,000 4,500,000,000 5,000,000,000

3,500,000,000

0 500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000

While valuations have increased by 133% since 2020, the total tax rate has decreased by $0.13 The increased valuations, along with sound debt management including early redemptions and refunding, has contributed to the decreased tax rate. A tax rate of $0.405240 is proposed for Fiscal Year 2025. This represents a $0.0387 increase from the prior year.

While the debt service portion of the tax rate will be decreasing, the maintenance and operations portion of the tax rate will increase. Additional revenue will be generated from new construction and increased valuations and will be used for increased operating cost. Further information on the changes in the tax rate, including adjustments for tax abatements and tax increment financing districts, can be found in the General Fund section of this document.

Sales & Property Reduction Taxes

Over the past five years, sales tax revenues have increased an average of 16.58% per year. This continued increase is indicative of a growing local economy, resulting from continued population growth within the city limits and the surrounding areas, as well as increased commercial development. The city has always taken a very conservative approach to budgeting sales tax. The Fiscal Year 2024 budget assumed a 7% increase in sales tax revenue and actual collections were 4.15% of the prior year budgeted amount. The budget for Fiscal Year 2025 assumes a conservative 5% increase due to increased inflation, prior year collections and a slowing economy.

Permits & Inspections

This revenue category is expected to end the year at approximately 96% of the original budget. The slowing economy has impacted both residential and commercial building. However, residential permits began increasing during the summer months.

While the City of Forney has continued to experience growth in both residential and commercial projects, staff acknowledges that this growth is dependent on the health of the economy. Although there are several planned developments underway, the city has adopted a very conservative approach in projecting revenue for Fiscal Year 2025. This budget includes moderate increases in some items with holding revenue flat in the remainder of the permits and inspections category.

Other Revenue Sources

Fire Protection fees are now included in the tax revenue category and are charged to the Kaufman County Emergency Services District #6 (ESD #6) and the Town of Talty. The ESD #6 agreement was restructured in FY 2024 to better reflect the cost of services provided to the ESD. Under the new agreement ESD#6 reimburses the city based on the percentage of calls answered in the ESD service area during the previous fiscal year. This budget includes a $5,000,000 reimbursement to help offset the operating cost of the Forney Fire Department.

Court Fines and Miscellaneous Revenues are expected to remain flat. Donations & Grants are expected to increase with the addition of revenue from the Forney Independent School District dispatch service agreement, and Interest Income is expected to increase based on rising interest rates for available funds.

GENERAL FUND EXPENSES

The Fiscal Year 2025 budget includes an increase in expenditures of 18.03%. This increase is primarily the result of 16.5 additional full-time equivalent positions as well as increased salary and benefits related costs. Each new position will also require other expenses as they are outfitted and equipped for their department.

Employee

Compensation

Personnel costs account for 71% of the General Fund’s expenses. The Fiscal Year 2025 budget includes a 4% cost of living adjustment and up to 3% merit increases for all employees not on a step plan. It also includes new step plans and additional certification and education incentives for sworn police and fire personnel.

Health Insurance Premiums

The City competitively bids employee health insurance in October however, our insurance broker is expecting the cost to increase due to claims experience. Therefore, this budget includes a 13% increase.

Texas Municipal Retirement System

The Texas Municipal Retirement System contribution rate for 2025 will increase to 14.47% from 14.24% in January of 2025. With the longer tenure of employees, increased salaries, and a significant number of new employees, the City’s General Fund contribution to TMRS will increase by $451,354 to $3,102,704 for the upcoming fiscal year.

New Positions

The Fiscal Year 2025 budget includes 16.5 new full-time positions in the General Fund. Details on the new positions can be found in the Full Time Equivalent section on the following pages.

Contingency & Reserves

A $300,000 line-item contingency is included to offset unexpected costs. There will not be a transfer to the emergency reserve fund in Fiscal Year 2025 as the fund balance would adequately cover more than 25% of general fund expenditures.

CAPITAL PURCHASES FUND

The Capital Purchases Fund is used to make one-time purchases for General Fund Departments. It is primarily funded through a transfer from the General Fund of unrestricted fund balance. Segregating these purchases in this manner helps to ensure that fund balance is not used for recurring operating expenses and assists in the tracking of fixed assets. The following purchases are scheduled for Fiscal Year 2025:

ENGINEERING

• Inspector Vehicle - $50,000

POLICE

• Patrol Vehicles (4) - $416,000

• CID Vehicles (7) - $481,000

• Various Equipment to include a new Dispatch recording system - $537,926

FIRE

• Fire Station #3 Generator - $15,000

• Administrative Vehicle Replacement - $50,000

• Escrow-Fire Engine Replacement - $500,000

PARKS

• Field Maintainer for Community Park - $22,000

• Zero Turn Mower (2) - $28,000

ANIMAL CONTROL

• License plate reader - $6,650

INFORMATION TECHNOLOGY

• Server/Storage Upgrades - $330,965

FACILITIES MAINTENANCE

• Custodian Van - $43,000

• City Hall Generator - $45,000

• City Hall Annex Generator - $45,000

NEIGHBORHOOD SERVICES

• Rental Property Inspector Truck - $57,000

• Code Enforcement Officer Truck - $57,000

BUILDING INSPECTIONS

• Replacement Trucks (2) - $114,000

• Commercial Building Inspector Truck - $57,000

The total transfer from the General Fund for Fiscal Year 2025 is proposed at $2,005,541 An additional $850,000 of unallocated fund balance within the Capital Purchases Fund will be added to the general fund transfer to cover all costs

UTILITY FUND

The Utility Fund is an enterprise fund that accounts for the water, sewer, and refuse services that are provided to the City’s residents. Revenues are derived from charges for water consumption, wastewater collection, and refuse services.

UTILITY FUND REVENUE

Fiscal Year 2024 total Utility Fund revenue is expected to end the year 12.1% above the original budget. The increase is attributable to residential and commercial growth as well as existing industrial and wholesale contracts.

Total revenue for Fiscal Year 2025 is projected to be $34,859,002. This is an increase of 21.83%.

Utility Rates

The North Texas Municipal Water District (NTMWD) is increasing the cost of water purchases by $0.16 per 1,000 gallons or 4.3% for Fiscal Year 2025. This budget proposes passing the cost increase on to all water customers including both residential and commercial.

Additionally, NTMWD is increasing the cost of wastewater treatment and transmission, and this cost will be passed on to customers through a 21.5% increase in both residential and commercial sewer rates.

The contract with Community Waste Disposal allows for a rate increase of 5% Fiscal Year 2025 that will be passed on to all customers.

Utility Expenses

Operating expenses in the Utility Fund are projected to increase 10.72% with most of this increase related to the increasing cost of providing water and wastewater services.

The cost of purchasing water for Fiscal Year 2025 will increase by 13 2%. The NTMWD will be increasing the rate to purchase water by $0.16 per 1,000 gallons. Also, the city has exceeded the 2024 contract minimum by 200,966,000 gallons resulting in additional cost for Fiscal Year 2025. The new contract minimum of 3,067,751,000 gallons for 2025 will result in annual charges of $11,810,841.

The cost of sewer services is divided between the Utility Fund and the Interceptor Fund. Maintenance and operation of the interceptors is charged to the Utility Fund and the debt owed for construction of the interceptor lines is charged to the Interceptor Fund. Total costs for sewer services to the city will be increasing 28.34% due to increased flow estimates.

Employee Compensation

Personnel costs account for 13.7% of the Utility Fund’s expenses. The Fiscal Year 2025 budget includes a 4% cost of living adjustment and up to 3% merit increases for all employees.

Health Insurance Premiums

The City competitively bids employee health insurance in October however, our insurance broker is expecting the cost to increase due to claims experience. Therefore, this budget includes a 13% increase.

Texas Municipal Retirement System

The Texas Municipal Retirement System contribution rate for 2025 will increase to 14.47% from 14.24% in January of 2025. With the longer tenure of employees, increased salaries, and a significant number of new employees, the City’s Utility Fund contribution to TMRS will increase by $26,896 for the upcoming fiscal year.

New Positions

The Fiscal Year 2025 budget includes funding for 18.5 new positions. Two are funded in the Utility Fund. Details on the new positions can be found in the Full Time Equivalent section on the following pages.

Capital Purchases

The 2025 Utility Fund budget includes $695,000 in capital purchases.

• Valve Trailer - $85,000

• Hydro Excavator - $510,000

• Mini Excavator - $100,000

Contingency & Reserves

A $50,000 line-item contingency is included to offset unexpected costs. As with the General Fund Operating Reserve, there will not be a transfer to the emergency reserve fund in Fiscal Year 2025 as the fund balance would adequately cover more than 25% of utility fund expenditures.

CAPITAL IMPROVEMENT FUNDS

The Capital Improvement Funds account for the design and construction of City facilities, roads and drainage, parks, and water and sewer systems. Unlike the operating budget, the capital improvement budgets do not conclude at the end of each fiscal year, as many CIP projects remain in progress over several years.

Capital Improvement Projects are funded from several different sources. Based on the funding sources, projects are put into one of two different funds: the General Capital Improvement fund, or the Utility Capital Improvement Fund.

General Capital Improvement Fund

The projects in the General Capital Improvement Fund can be funded from bond proceeds, developer contributions, transfers from the General Fund or other funds not classified as water sewer related, and donations or grants.

Funding sources for Fiscal Year 2025 projects are as follows:

$2,037,000 transfer from the General Fund

o $450,000 Additional tennis courts

o $199,000 Heritage Hill Playground

o $45,000 Municipal Court Upgrades

o $120,000 Animal Shelter Upgrades

o $270,000 Fire Station #1 Upgrades

o $45,000 Public Works Crew Leader Building

o $150,000 Public Works Building Upgrades

o $350,000 Public Works and Fire Bay Building

o $65,000 Wi-Fi at Community Park

o $25,000 Community Garden

o $18,000 Community Park Pavilion Flooring

$1,200,000 Payment in lieu of parkland dedication

o $1,200,000 Community Park Trail Extension

Utility Capital Improvement Fund

The projects in the Utility Capital Improvement Fund can be funded from bond proceeds, developer contributions, the Utility Fund, Water and Sewer Impact Funds, and grants. A transfer of $300,000 from the Utility Fund is budgeted for the engineering design of a water line relocation along US Highway 80.

DEBT SERVICE FUNDS

The City issues debt to support capital improvements. This debt is either tax supported and accounted for in the Debt Service Fund, or it is utility revenue supported and accounted for in the Utility Debt Service Fund. The combined total debt payments for Fiscal Year 2025 will be $3,933,815.

General Debt Service Fund

Revenues required to pay the City’s outstanding tax supported debt are restricted to debt payments. Revenues in this fund are collected through the debt service portion of the property tax rate.

The debt service portion of the tax rate is $0.076731 and will generate $3,629,321 in revenue for bond payments. Of this total, $0.049 (63.9%) results from voter approved general obligation debt.

Utility Debt Service Fund

Revenues required to pay the City’s outstanding revenue supported debt are transferred from the Utility Fund, the Water Impact Fund, and the Sewer Impact Fund. The exact amount required to cover the bond payments is transferred in each year and the fund maintains a zero-fund balance. The total required debt payment for Fiscal Year 2025 is $304,494.

ECONOMIC DEVELOPMENT CORPORATION FUND

The Economic Development Corporation (EDC) Fund is a special revenue fund that receives revenue from type 4B sales tax. Expenditures are restricted to activities that support and promote economic and community development.

Economic Development Revenue

Economic Development Corporation revenues are expected to finish Fiscal Year 2024 close to original projections

Fiscal Year 2025 revenues are expected to decrease by approximately 46.09% The decrease is due to a potential restructuring of the sales tax allocation and the creation of a Crime Control Prevention District (CCPD). The current allocation to the Forney Economic Development Corporation will be decreased 50% and the remaining 50% will be pledged to the new CCPD. This change is dependent on voter approval and will only take effect following a positive election outcome.

Economic Development Corporation Expense

Expenses for Fiscal Year 2025 are budgeted at a 30 3% decrease from the prior year to account for the potential loss in funding due to the anticipated Crime Control Prevention District.

CONCLUSION

The Fiscal Year 2025 budget is a balanced budget and provides an operating basis for the next year. It provides for strategic planning and investment in our most valuable asset, our workforce. At the same time, we are maintaining the long-term fiscal viability of the community by promoting cost saving measures and supporting quality development. While the budget process is always a challenge, we have produced a budget that is both balanced and sufficient to meet the need of the upcoming fiscal year.

On behalf of myself and the staff, I want to express my appreciation to the City Council for your diligent efforts throughout the year in providing guidance, direction and support for this budget. I feel this budget accurately represents the goals of the city which are designed to provide the highest quality of services to our citizens with the resources available.

Respectfully Submitted,

Deborah Woodham, Director of Finance

CITY ORGANIZATION CHART

FULL TIME EQUIVALENTS

STAFFING LEVELS ARE BUDGETED TO INCREASE BY 18.5 DURING FISCAL YEAR 2025. The impact to the total budget is approximately $1,700,000 in Salary & Benefits.

ENGINEERING

Capital Improvements Program Manager

Right of Way Inspector

POLICE

Lieutenant

CID Narcotics Detective (2)

Property/Evidence Technician

Records Technician

Detention Supervisor

FIRE

Battalion Chief (3)

PARKS & RECREATION

Administrative Assistant – Part-time to Full-time

Youth Sports Coordinator (2)

COMMUNITY DEVELOPMENT

Code Enforcement Officer

Rental Property Inspector

Commercial Building Inspector

PUBLIC WORKS

Fleet Maintenance Technician

Senior Custodian

The CIP Manager position will be filled, and a Right-of-Way Inspector will be added.

Municipal Judges are contracted by the City Council and are not considered City employees.

The Police Department will add a Lieutenant and two additional CID Detectives to sworn personnel. A property and evidence technician, a records technician, and a detention supervisor will be added to the non-sworn personnel.

The Fire Department will add three Battalion Chiefs and will reclassify the Administrative Assistant to an Administrative Coordinator.

For Fiscal Year 2025, the part-time Administrative Assistant will transition to full-time, two Maintenance Technicians will be reclassified as Maintenance Technician II and two Youth Sports Coordinators will be added for youth soccer

Neighborhood Services will add a Code Enforcement Officer.

A Rental Property Inspector and a Commercial Building Inspector will be added during FY 2025.

The General Fund will add sixteen and one-half full-time equivalents in Fiscal Year 2025, for a total of 232. Not all these positions are 100% funded by the General Fund. Any positions that divide their time between multiple functions are adjusted via the annual operating transfers.

Public Works staffing will include an additional Fleet Coordinator and a Senior Custodian for Fiscal Year 2025.

During Fiscal Year 2024, a Customer Service Representative was transitioned from part-time to full-time.

The Utility Fund will add 2 new full-time equivalents in Fiscal Year 2025, for a total of 51. Not all positions are 100% funded by the Utility Fund. Any positions that divide their time between multiple functions are adjusted via the annual operating transfers.

SUMMARY OF ALL FUNDS

The city budget is a planning document for the use of financial resources during the fiscal year. The City of Forney is a complex organization, providing a wide range of services to its residents, customers, and visitors. City resources annually exceed $75 million. As with any large organization that provides a mixture of services, planning and management of financial resources are vital to the City. With increasing financial requirements of the School District, State and Federal governments on our citizens, it becomes even more important for the City to adequately plan and manage the use of its financial resources.

GENERAL BUDGET INFORMATION, PLAN, & PROCESS

FUND ACCOUNTING

In accordance with Generally Accepted Accounting Principles (GAAP), the accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity.

Government resources are allocated to and accounted for in individual funds based on the purpose for which they are to be spent and the means by which spending activities are controlled.

A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.

Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance related legal and contractual provisions. It divides our reporting responsibility into several functional types as well as classifications. A brief explanation will facilitate your usage of this document. The minimum number of funds is maintained consistent with legal and managerial requirements.

Governmental fund types are used to account for the city’s general government activities and include the General, Debt Service, Capital Project and Governmental Restricted Funds. Proprietary type funds are used to account for operations that provide services to other City departments or that are operated in a manner similar to private business and include both Enterprise and Internal Service Funds. Currently, there are no Internal Service Funds established and in operation. Additional information on Fund types is available in the Organization of Funds section.

BASIS OF ACCOUNTING

The basis of accounting is the method by which revenues and expenditures or expenses are recognized. The accounting treatment applied to a fund is determined by its measurement

focus. All governmental funds are accounted for using a current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when they become susceptible to accrual (i.e. both measurable and available). Expenditures are recorded when the related fund liability is incurred, if measurable, except for un-matured interest on general long-term debt which is recognized when due, and compensated absences which are recognized when the obligations are payable from currently available financial resources. All proprietary fund types are accounted for on a flow of economic resources measurement focus and use the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when they are incurred.

BASIS OF BUDGETING

Annual budgets are adopted on a basis consistent with Generally Accepted Accounting Principles (GAAP) with the exception of Capital Projects Funds, which adopt project length budgets. Governmental type fund budgets are prepared on a modified accrual basis. Governmental revenues are budgeted when they are measurable and available and expenditures are budgeted in the period in which the liability is incurred. All proprietary fund types are budgeted using a flow of economic resources measurement focus and use the accrual basis of accounting. Revenues are budgeted when they are earned and measurable and expenses are budgeted in the period in which the liability was incurred. The City departs form GAAP in the treatment of depreciation and encumbrances. Depreciation of fixed assets is not recognized in proprietary fund budgets. All annual appropriations lapse at fiscal year end. Under the City’s budgetary process, outstanding encumbrances at year end are reported as reservations of fund balances since they do not constitute expenditures and liabilities and the commitments will be re-appropriated and honored in the subsequent fiscal year.

ACCOUNTING CODE STRUCTURE

Our Accounting Code Structure is designed to function with a 10-digit code, which is further divided into four sections. A Fund is a specific purpose classification, with a self-balancing set of accounts. A Department is an organizational or functional unit and may cross fund lines. Activity/Object denotes a distinguishable service performed by an organizational component and is the final detail identification within the Account Number. Departments and divisions are not specified on the Revenue side; revenues are grouped by type instead of Activity and object is the final detail identification.

THE BUDGET PROCESS

The City of Forney’s Home Rule Charter provides for the submission of the budget to the City Council by the City Manager by August 15th. The City’s Fiscal Year runs from October 1 to September 30.

•Budget Preparation Begins

January

•Department Directors begin developing budgets

February

March

April

May

June

July

August

•Directors meet with Finance for review

•Budgets due to Finance

•Finance compiles information for City Manager review

•City Manager budget review meetings

•Council Budget Review Meetings

•Budget Preparations & Meetings Continue

•Certified Values Received

•Proposed budget due to City Council

•No New Revenue and Voter Approval rates received from Kaufman County

•Public Hearings on budget and tax rate

•Notices Published

September

•Budget and Tax Levy voted dates set

•Additional Public Hearings

•Adopt budget and tax rate

The following information provides a brief overview of the steps taken to prepare the City’s annual budget, including the budget calendar used by City Staff. Please keep in mind that this is a simplified version of a complex process that is a combined effort of members of each of the City’s departments and requires an extensive period to complete. Both revenues and expenditures are subject to change until the meeting when the City Council officially adopts the budget. Likewise, the budget calendar serves as an approximate timeline and the events may not always occur at the exact time indicated.

The annual budget is prepared under the direction of the City Manager. Each department director formulates a base budget for each of the departments included in their division. Base budgets include costs related to all existing personnel, services, and functions. Directors also prepare supplemental requests that provide a separate set of expenditures required to provide a new service, increase staffing levels, or purchase new equipment. Once base and supplemental requests are prepared, the directors submit their budgets to the Finance department.

The Finance department compiles the information submitted, along with the revenue estimates, for review by the City Manager. Meetings are then held with the department directors to review and revise. The proposed budget document is prepared and then submitted to the City Council by August 15th. Shortly thereafter, a budget workshop is held for the Staff and City Council to review and discuss the proposed budget. Tax rate calculations and all related notice publications and public hearings, if necessary, occur throughout August and into September. A Public Hearing on the Budget is held in early September and revisions continue. The final budget is reviewed by the City Council and adopted in late September.

LEGAL LEVEL OF BUDGET CONTROL

The legal level for expenditure budget control is the Fund level. Each Department Director is responsible for the budget in their respective departments. The Directors are given latitude to transfer budget funds within their departments, except for the personnel services category. Transfers affecting the personnel services category or outside of the department require the approval of the City Manager. Additions to the budget that are not countered by a reduction elsewhere require amendment of the budget by City Council. Article VII of the City's Charter governs the preparation and submission of the budget and the Schedules and Attachments in this budget meet or exceed its requirements. Formal budgetary integration is employed as a management control device during the year for the General Fund and Enterprise Funds.

Formal budgetary integration is not employed for the Debt Service and Capital Projects Funds because effective budgetary control is alternatively achieved through bond indenture provisions and legally binding construction contracts, respectively.

AMENDMENT OF APPROVED BUDGET

The amendment of a departmental budget, which affects the total budget, requires approval by City Council. The City budgets a contingency amount in the operating funds. These contingency amounts are available to be used by the City Manager for any emergency, unforeseen expense or opportunity that might arise.

FUND BALANCE & RESERVE POLICIES

In accordance with the requirements of Governmental Accounting Standards Board (GASB), the City describes fund balance as: (1) Restricted; (2) Committed; (3) Assigned; and (4)

Unassigned. The Charter requires that we maintain under 7% of General Fund budgeted expenditures as fund balance. In addition, the City has reserved unassigned fund balance at 90 days of current year budgeted expenditures for both the General and Water/Sewer Funds. In other operating funds, the City shall strive to maintain a positive retained earnings position to provide sufficient reserves for emergencies and revenue shortfalls.

Except for special revenue funds, Fund Balance shall be used only for emergencies, nonrecurring expenditures, or major capital purchases that cannot be accommodated through current year savings.

ORGANIZATION OF FUNDS

The City has the following Fund Types and Funds:

Governmental Fund Types

General Fund - Used to account for tax-supported or generic activity that is not specifically accounted for elsewhere. These are funds through which most governmental functions are typically financed.

Hotel Occupancy Tax Fund - Used to account for the accumulation of resources from the Hotel Tax assessment levied by the City. These monies are to be spent to promote the development or progress of the City within the guidelines set forth on disposition of revenues collected under the authority of the Texas Hotel Occupancy Act (Article 1269; Vernon’s Civil Statutes).

Economic Development Fund - Used to account for funds received from the Section 4B ½ cent sales tax dedicated to certain economic and infrastructure projects.

Special Revenue Funds – Used to account for funds that are legally designated for specific purposes, and for those that have restrictions designated by City Council.

Proprietary Funds

Utility Fund - Used to account for activity surrounding the provision of water and wastewater service to the City residences. These funds derive revenues from fees charged for goods or services.

Capital Improvement Funds

General Capital Improvement Projects Fund - Used to account for major capital construction and/or acquisition projects that normally effect the general operation of the City.

Utility Capital Improvement Fund - Used to account for major capital construction and/or acquisition projects that effect the utility operation of the City.

Debt Service Funds

General Debt Service Fund - Used to pay interest and extinguish debt of the outstanding General Obligation Issues of the City.

Utility Debt Service Fund - Used to pay interest and extinguish debt of the outstanding Revenue Bond Issues of the City.

FINANCIAL POLICIES

Broad policy decisions regarding long-range debt management for the City of Forney that have emerged and that will be followed are summarized below:

o Borrowing must not overload future taxpayers to the point where they will not be able to pay.

o Borrowing must be confined to capital improvements or projects which cannot be financed from current revenues.

o Long-term debt should not provide for current operating expense.

o Borrowing for each object or purpose should be related to a period of probable usefulness of the project and should in no instance be repaid in a time greater than the period of probable usefulness of the project.

► The long-range policies of the City of Forney regarding financial management will be to exercise a discipline which allows us to retain a sound financial condition; strive to achieve the best possible rating on bonds; provide future generations with the ability to borrow capital for construction of facilities without severe financial burden; and give recognition to the community’s needs and ability to pay. These goals are accomplished in the following manner:

o Prudent budgeting and effective budget control. Budget replacement of capital equipment as the need arises. (Office machines, automobiles, heavy equipment, etc.)

o Pay-as-you-go financing of some capital improvements where feasible.

o Scheduling bond issues so that an equal principal amount is retired each year over the life of the issue producing a total debt service schedule with a declining balance each year.

o Providing an adequate reserve fund to meet requirements under bond covenants.

o Planning for capital improvements on a five-year plan which is updated annually.

o Passing on the cost of extending utilities and improvements in subdivisions rather than burden the public.

o Provide working capital in all funds sufficient to meet current operating needs.

o Financial accounting and reporting in accordance with the method prescribed by the National Committee on Government Accounting of the Municipal Finance Officers Association and making such reports available to bond rating agencies and other financially interested organizations.

o Maintaining a fund balance sufficient to provide interim financing for necessary projects and meet unanticipated contingencies such as lawsuits, tax roll tie-ups, and severe seasonal fluctuation in sales of the city owned utilities.

CITY OF FORNEY CHARTER

The following are financial polices as established by the City of Forney Charter, Article VII

Section 7.01 Fiscal Year

The fiscal year of the City shall begin on the first day of October and end on the last day of September of the next succeeding year. Such fiscal year shall also constitute the budget and accounting year.

Section 7.02 Submission of Budget and Budget Message

On or before the first day of the eleventh month of the fiscal year, the City Manager shall submit to the Council a budget for ensuing fiscal year and an accompanying message.

Section 7.03 Budget Message

The City Manager’s message shall explain the budget both in fiscal terms and in terms of the work programs. It shall outline the proposed financial policies of the City for the ensuing fiscal year, describe the important features of the budget, indicate any major changes from the current year in financial policies, expenditures, and revenues together with the reasons for such changes, summarize the City’s debt position and include such other material as the City Manager deems desirable.

Section 7.04 Budget a Public Record

The budget and all supporting schedules shall be filed with the City Secretary when submitted to the City Council and shall be open to public inspection by anyone interested.

Section 7.05 Public Hearing on Budget

At the Council Meeting when the budget is submitted, the Council shall name the date and place of a public hearing and shall have published in the official newspaper of the City the time and place, which will be not less than ten days nor more than thirty days after the date of notice. At this hearing, interested citizens may express their opinions concerning items of expenditures, giving their reasons for wishing to increase or decrease any items of expenditure.

Section 7.06 Proceeding on Adoption of Budget

After public hearing, the council shall analyze the budget, making any additions or deletions which they feel appropriate, and shall, at least ten days prior to the beginning of the next fiscal year, adopt the budget by a favorable majority vote of the full membership of the Council. Should the City Council take no final action on or prior to such day, the current budget shall be in force on a month-to-month basis until a new budget is adopted.

Section 7.07 Budget, Appropriation and Amount to be Raised by Taxation

On final adoption, the budget shall be in effect for the budget year. Final adoption of the budget by the council shall constitute the official appropriation as proposed by expenditures for the current year and shall continue the basis of official levy of the property tax as the amount of tax to be assessed and collected for the corresponding tax year. Estimated

expenditures will in no case exceed proposed revenue plus cash on hand. Unused appropriation may be transferred to any item required for the same general purpose.

Section 7.08 Contingent Appropriation

Provision shall be made in the annual budget and in the appropriation ordinance for a contingent appropriation in an amount not more than seven percent of the total general fund expenditures, to be used in case of unforeseen items of expenditures. The contingent appropriation shall apply to current operating expenses and shall not include any reserve funds of the City. Such contingent appropriation shall be under the control of the City Manager and distributed by him only after prior approval by the City Council. The proceeds of the contingent appropriation shall be disbursed only by transfer to other departmental appropriation, the spending of which shall be charged to the department or activities for which the appropriations are made.

Section 7.09 Amending the Budget

Under conditions which may arise, and which could not reasonably have been foreseen in the normal process of planning the budget to provide for any additional expense in which the general welfare to the citizenry is involved. These amendments shall be by ordinance and shall become an attachment to the original budget.

Section 7.10 Certification; Copies Made Available

A copy of the budget as finally adopted shall be filed with the City Secretary and such other places required by State law or as the City Council may designate. The final budget shall be printed, or otherwise reproduced and sufficient copies shall be made available for the use of all offices, agencies and for the use of interested persons and civic organizations.

Section 7.11 Capital Program

The City Manager shall submit a five-year capital program as an attachment to the annual budget. The program submitted shall include:

(a) A clear general summary of its contents.

(b) A list of all capital improvements which are proposed to be undertaken during the five fiscal years succeeding the budget year, with appropriate supporting information as to the necessity for such improvements.

(c) Cost estimates, method of financing and recommended time scheduled for each improvement.

(d) The estimated annual cost of operating and maintaining the facilities to be constructed or acquired.

The above information may be revised and extended each year regarding capital improvements still pending or in process of construction or acquisition.

Section 7.12 Defect Shall Not Invalidate the Tax Levy

Errors or defects in the form or preparation of the budget or the failure to perform any procedural requirements shall not nullify the tax levy or tax rate.

Section 7.13 Lapse of Appropriations

Every appropriation, except an appropriation for a capital expenditure, shall lapse at the close of the fiscal year to the extent that it has not been expended or encumbered. An appropriation for a capital expenditure shall continue in force until the purpose for which it was made has been accomplished or abandoned. The purpose of any such appropriation shall be deemed abandoned if three years pass without any disbursement from or encumbrance of the appropriation. Any funds not expended, disbursed, or encumbered shall be deemed excess funds.

Section 7.14 Borrowing

1. The City shall have the right and power, except as prohibited by law or by this Charter, to borrow money by whatever method it may deem to be in the public interest.

2. Tax Obligations

Bond General

a) The City shall have the power to borrow money on the credit of the City and to issue general obligation bonds for permanent public improvements or any other public purpose not prohibited by law and this Charter, and to issue refunding bonds to refund outstanding bonds previously issued. All such bonds or certificates of obligation shall be issued in conformity with the laws of the State of Texas and shall be used only for purposes for which they were issued.

b) No tax obligation bonds shall be issued without an election. The City Council shall prescribe the procedure for calling and holding such elections, shall define the voting precincts and shall provide for the return and canvass of the ballots cast at such elections. If at such elections a majority of the vote shall be in favor of creating such a debt or refunding outstanding valid bonds of the City, it shall be lawful for the City Council to issue bonds as proposed in the ordinance submitting same. However, if a majority of the vote polled shall be against the creation of such debt or refunding such bonds, the City Council shall be without authority to issue the bonds. In all cases when the City Council shall order an election for the issuance of bonds of the City, it shall at the same time submit the question of whether or not a tax shall be levied upon the property of the City for the purpose of paying the interest on the bonds and to create a sinking fund for their redemption.

3. Revenue Bonds The City shall have the power to borrow money for the purpose of constructing, purchasing, improving, extending or repairing of public utilities, recreational facilities or any other self-liquidating municipal function not prohibited by the State of Texas. With an affirmative vote of at least five of the elected members of the City Council, it shall have the power to issue revenue bonds and to evidence the obligation created thereby. Such bonds shall be a charge upon and payable from the properties, or interest therein pledged or the income therein gained from, or both. The holders of the revenue bonds shall never have the right to demand payment thereof out of monies raised or to be raised by taxation. All such bonds shall be issued in conformity with the laws of the State of Texas and shall be used only for the purpose for which they were issued.

4. Emergency Funding In any budget year, the City Council may by an affirmative vote of five (5) City Council Members pass a resolution authorizing the borrowing of money. Notes may be issued which are repayable not later than the end of the current fiscal year.

Section 7.15 Purchasing

1. The City Council may by ordinance give the City Manager general authority to contract for expenditures without further approval of the Council, for all budgeted items not exceeding limits set by the Council. All contracts for expenditures involving more than the set limits must be expressly approved in advance by the Council. All contracts or purchases involving more than the limits set by the Council shall be let to the lowest bidder whose submittal is among those responsive to the needs of the City after there has been opportunity for competitive bidding as provided by law or ordinance. The City Council, or City Manager in such cases as he is authorized to contract for the City, shall have right to reject any and all bids.

2. Emergency contracts as authorized by law and this Charter may be negotiated by the City Council or City Manager if given authority by the Council, without competitive bidding. Such emergency shall be declared by the City Council.

Section 7.16 Administration of Budget

1. No payment shall be made, or obligation incurred against any allotment or appropriation except in accordance with appropriations duly made, unless the City Manager or his designee first certifies that there is sufficient unencumbered balance in such allotment or appropriation and the sufficient funds there from are or will be available to cover the claim or meet the obligation when it becomes due and payable.

2. Any authorization of payment or incurring of obligation in violation of the provisions of this Charter shall be void and any payment so made illegal. Such action shall be cause for removal of any officer who knowingly authorized or made such payment or incurred such payment or obligation and shall also be liable to the City for any amount so paid.

3. This prohibition shall not be construed to prevent the making or authorizing of payments or making of contracts for capital improvements to be financed wholly or partly by the issuance of bonds, time warrants, certificates of indebtedness or certificates of obligation, or prevent the making of any contract or lease providing for payments beyond the end of the fiscal year, providing that such action is made or approved by ordinance.

4. The City Manager shall submit to the council each month a report concerning the revenues and expenditures of the City in such form as requested by the City Council.

Section 7.17 Depository

All monies received by any person, department, or agency of the city for or in connection with the affairs of the City shall be deposited promptly in the City Depository or depositories. The City Depositories shall be designated by the City Council in accordance with such regulations and subject to the requirements as to security for deposit and interest thereon as may be established by ordinance and law. Procedures for withdrawal of money or the disbursement of funds from the city depositories shall be prescribed by ordinance.

Section 7.18 Independent Audit

At the close of each fiscal year, and at such other times as may be deemed necessary, the City Council shall call for an independent audit to be made of all accounts of the City by a certified public accountant. The certified public accountant selected shall have no personal interest, directly or indirectly, in the financial affairs of the City or of its officers. The report of audit with the auditor’s recommendations will be made to the City Council. Upon completion of the audit, the summary shall be published immediately in the official newspaper of the City and copies of the audit placed on file in the City Secretary’s office as a public record.

Section 7.19 Power to Tax

1. The City shall have the power to levy, assess and collect taxes of every character and type for any municipal purpose not prohibited by the Constitution and laws of the State of Texas as now written or hereafter amended.

2. The City shall have the power to grant tax exemptions in accordance with the laws of the State of Texas.

Section 7.20 Taxes; When Due and Payable

1. All taxes due in the City of Forney, Texas shall be payable to the designated agent or agency of the City or at such location or locations as may be designated by the City Council and may be paid at any time after the tax rolls for the year have been completed and approved. Taxes for each year shall be paid before February 1 of the next succeeding year, and all such taxes not paid prior to that date shall be deemed delinquent and shall be subject to penalty and interest as the City Council shall provide by ordinance. The City Council may provide discounts for the payment of taxes prior to January 1 in amounts not to exceed those established by the State of Texas.

2. Failure to levy and assess taxes through omission in preparing the appraisal rolls shall not relieve the person, firm or corporation so omitted from obligation to pay such current or past due taxes as shown to be payable by recheck of the rolls and receipts for the years in question, omitting penalty and interest.

Section 7.21 Tax Liens, Liabilities and Suits

1. All taxable property located in the City on January 1 of each year shall stand charged from that date with a special lien in favor of the City for the taxes due. All persons purchasing any such property on or after January 1 in any year shall take the property subject to the liens provided above. In addition to the liens herein provided on January 1 of any year, the owner of the property subject to taxation by the City shall be personally liable for the taxes due for that year.

2. The City shall have the power to sue for and recover personal judgment for taxes without foreclosure, or to foreclose its lien or liens, or to recover both personal judgment and foreclosure. In any such suit where it appears that the description of any property in the City appraisal rolls is insufficient to identify such property, the City shall have the right to plead a good description of the property to be assessed, to prove the same, and to have its judgment foreclosing the tax lien or for personal judgment against the owners for such taxes.

GENERAL FUND

The General Fund accounts for all financial transactions not required to be accounted for in another fund. All tax revenues and other revenues not required by law or other City Council action to be accounted for in another fund are accounted for here.

Property taxes provide one of the largest sources of revenue for the City and determining the tax rate is a significant component of the annual budget process. Therefore, discussion of the General Fund cannot be separated from discussion of the tax rate and associated revenue.

ANALYSIS OF PROPERTY VALUATIONS & TAX RATE

PROPERTY VALUATION

The Kaufman County Appraisal District (KCAD) establishes and certifies the value of each property within the City of Forney and provides this information to both the city and the County Tax Assessor’s Office. The total certified value for Fiscal Year 2025 (Tax Year 2024) is $5,579,259,363. This is an increase of $675,826,563 or 14%.

However, the Kaufman Country Appraisal District does not adjust the certified taxable value for the Tax Increment Reinvestment Zone (TIRZ). To provide an accurate revenue estimate, the City subtracts 85% of the value of the properties included in the TIRZ. Total TIRZ value for Fiscal Year 2025 is $999,242,403 and 85% of that yields $849,356,043. Therefore, property tax revenue estimates are based on a value of $4,729,903,320. This is an increase of $438,983,189 or 10.2% from the previous year’s adjusted taxable value.

TAX RATE

The total tax rate is made up of two portions: Maintenance & Operations (M&O) and Debt Service.

The Maintenance & Operations (M&O) portion of the tax rate provides funding for all general fund operations. This portion of the tax rate is flexible and can be adjusted to a higher or lower rate based on the needs of the community. The M&O rate also generates reserve funds for future capital expenses and allows the City to maintain a 90day operating reserve. The proposed Fiscal Year 2025 Maintenance & Operations rate will increase $0.04655 (14.17%) to $0.328509. This rate will result in $15,538,158 in General Fund revenue; an increase of $3,439,566 from the previous year’s General Fund revenue.

DEBT SERVICE TAX RATE

The Debt Service (DS) portion of the tax rate covers the City’s bond payments and other outstanding debt. This portion of the tax rate is not flexible and is set by a calculation based on the required fiscal year payments of the City’s debt. The Fiscal Year 2025 debt service rate is $0.076731. This is a decrease of $0.00784 (‐10.22%) from the Fiscal Year 2024 rate, resulting in $3,629,322 in revenue to be used for debt payments.

DEBT SERVICE TAX RATE

The Debt Service tax rate is calculated by dividing the annual required debt payment by the adjusted taxable value and multiplying by 100. (Total annual debt payment) ÷ (Adjusted Taxable Value) x 100 = Debt Service Tax Rate ((3,629,322) ÷ 4,729,903,320) x 100 = $0.076731

TOTAL TAX RATE

The total tax rate for Fiscal Year 2025 is proposed at $0.405240. Tax revenue estimates are calculated at a 100% collection rate and are expected to result in a total of $19,167,480. This is an increase of $3,439,842 from Fiscal Year 2024 and is the result of an increase in assessed valuation and new taxable value. New taxable value added to the tax roll contributed 28 81% of the revenue increase.

The total tax rate is increasing for Fiscal Year 2025 by $0.03871. There is a slight decrease in the debt service rate of $0.00784 and an increase in the maintenance and operations rate of $0.04655. The revenue raised from the increased tax rate will be used for additional police, fire, code enforcement and inspections personnel to address the needs of a growing community.

PROPERTY VALUATIONS & TAX RATE SUMMARY

• Property values have increased 133% in the past 5 years, due to significant new development and the annexation of the Luminant power plant during Fiscal Year 2023

o The Fiscal Year 2025 property value increase is 13.8% - of that increase 35% is the result of new value added.

• Total Tax Rate has decreased $0.13 in the past 5 years.

o Maintenance & Operations tax rate has decreased $0.05.

 The M&O tax rate provides funding for enhanced existing services, new services, and cash funded capital improvement.

• Debt Service tax rate has decreased $0.084.

The proposed tax rate of $0.405240 is lower than the no new revenue rate of $0.424379 calculated by the Kaufman County Tax Office.

GENERAL FUND STATEMENT

GENERAL FUND REVENUE

Tax revenue is the General Fund’s largest source of income and makes up 87% of the revenue collected. Tax revenue includes property tax, sales taxes, fire protection and franchise taxes. The General Fund also collects revenue from permits and inspections, court fines, park fees, donations, grants, and interest earnings.

Tax Revenue - $35,428,650

Property taxes are 37.5% and sales tax is 33% of tax revenue collections. Fire protection has increased from 7.6% to 12.5% of total tax revenue.

Property Taxes - $15,382,777

The Kaufman County Appraisal District (KCAD) establishes the value of each property within the City of Forney. The certified taxable value for 2025 is $5,579,259,363. However, the KCAD does not adjust certified taxable value for property in the Tax Increment Reinvestment Zone (TIRZ). As explained in the property tax analysis, the City subtracts these amounts in order to provide an accurate revenue estimate. This results in property tax revenue budgets being based on a value of $4,729,903,320. The General Fund property tax revenue estimate is calculated by dividing the taxable value by 100 and multiplying by the maintenance and operations tax rate. The maintenance and operations tax rate for 2025 is set at $0.328509, an increase of 0.04655 (14.17%) from the prior year’s rate. This rate will result in an increase of $3,439,842 from the Fiscal Year 2024 budget. The increase is the result of increased property values as well as new property added to the tax roll.

Property Tax Reduction - $4,494,473

In May of 1994, Forney citizens approved an additional 1.00% sales tax for the purpose of creating and funding the Forney Economic Development Corporation (FEDC) and property tax reduction. Half of the approved 1.00% funds the FEDC and the other half is retained by the City to offset property taxes. Therefore, property reduction tax is equal to 25% of total sales tax collections and is a reduction of $0.095 on the property tax rate.

Property Tax Penalty - $25,000

Collection of penalties from ad valorem taxes due from previous years.

Delinquent Property Tax - $50,000

Collection of ad valorem taxes due from previous years.

Fire Protection - $5,112,455

The City has an agreement with the Town of Talty whereby the Forney Fire Department provides emergency and fire protection to the Town of Talty. The agreed upon fee is $0.03 per $100 of total property valuation. The expected revenue from the Town of Talty for Fiscal Year 2025 is $112,455.

A similar agreement is in place with the Kaufman County Emergency Services District #6 (ESD#6) for fire protection. The agreement was restructured in FY 2024 to better reflect the cost of services provided to ESD#6. Under the new agreement ESD#6 reimburses the city based on the percentage of calls answered in the ESD service area during the previous fiscal year. This budget includes a $5,000,000 reimbursement to help offset the operating cost of the Forney Fire Department.

Sales Tax - $8,988,945

Sales tax is levied on taxable commodities and services purchased within the Forney city limits at the point of sale. The sales tax rate in the City of Forney is 8.25%. Over the past five years, sales tax revenues have increased an average of 16.58% per year. This continued increase is indicative of a growing local economy, resulting from continued population growth within the city limits and the surrounding area, as well as increased commercial development.

The Fiscal Year 2024 budget assumed a 7% increase in sales tax revenue over Fiscal Year 2023, and actual collections are trending about 1% under the budgeted amount. The Fiscal Year 2025 budget remains conservative with a projected 5% increase over the Fiscal Year 2024 budget.

Mixed Beverage Sales Tax - $75,000

This is the combination of the State of Texas Mixed Beverage Gross Receipt and Mixed Beverage Sales Tax. These are taxes imposed on the gross receipts of an alcohol permittee from the sale, preparation, or service of mixed beverages or service of ice or nonalcoholic beverages that are sold, prepared or served for the purpose of being mixed with an alcoholic beverage and consumed on the premises. The gross receipt tax is charged at a rate of 6.7% to the permittee and can not be passed on to the customer. The sales tax is charged at a rate of 8.25% and is passed on to the customer. Both of these taxes are collected by the state and disbursed to the City at a rate of 10.7% of total collections. Estimates for mixed beverage sales taxes are based on prior years collections and has increased in recent years with new development bringing in more restaurants and establishments that prepare mixed beverages.

Franchise Tax - $1,300,000

This is a tax charged to utility and public service companies that require the use of City right of way to run transmission lines in order to provide their services. These fees vary by company or service and are established by the City Council when the use of right of way is requested by the service provider. Generally, this fee is a percentage of the revenues collected by the service providers from their use of the City right of way.

Sales Revenue - $7,500

Payment Processing Fees - $7,500

The City added a payment processing fee in Fiscal Year 2021. Credit card companies charge an average of 3% per transaction to process credit card payments and the city has absorbed these fees for a number of years. The City now passes along the processing fee by collecting a 3% surcharge on each debit and credit card transaction.

Court Fines - $203,850

Animal Control Revenue - $10,000

Fines are collected for the violation of animal control ordinances and fees are assessed for the adoption of animals held at the animal shelter.

Municipal Court Fines - $175,000

The majority of the City’s Municipal Court fines are collected from traffic and code violations. While the City retains the largest portion of these fines, based on the offense committed and other factors, portions of the fines are distributed to the state, the county and other agencies. Some of the fines collected by the Municipal Court have restrictions set on the use of those revenues and are accounted for in special revenue funds.

Revenue categories for Permits & Inspections are relatively self-explanatory. This revenue category as a whole is expected to finish 2024 at approximately 96% of the original budget, which indicates a substantial slowing of growth as compared to prior years.

Revenue estimates for 2024 were conservative, and took into account the possibility that growth would slow. The Finance department approaches permit and inspections revenue with the understanding that this revenue is directly related to growth and the health of the economy and will not continue at prior year levels. The Fiscal Year 2025 proposed budget reflects the slowing growth and economic factors.

FISD Dispatch Share – $87,216

During Fiscal Year 2023 the Police Department entered into an agreement with the Forney Independent School District (FISD) to provide dispatch services for the FISD Police Department.

Parks and Recreation - $584,700

Parks and Recreation collects fees for private use of facilities, classes, user fees, tournament fees and events put on by the Parks or Special Events departments. All parks revenue categories are budgeted based on averages from prior years, unless upcoming events indicate a change in revenue. Park fees now include the addition of the sports pass for all youth participating in programs offered by the Parks and Recreation Department. This fee is used to offset the cost of programs that serve not only Forney citizens but many residents in the surrounding area. The city will also be adding youth soccer for Fiscal Year 2025.

Miscellaneous Income - $80,000

Revenues collected under Miscellaneous Income include all items that do not fall into any other category, insurance reimbursements, other reimbursement, and participation from other agencies on joint purchases.

Transfers from Other Funds - $1,513,451

The Utility Fund Operating Transfer reimburses the General Fund for expenditures incurred on behalf of the utility related functions of the City. This includes salary and benefits for all employees that are partially funded from both funds.

The Building Security Fund transfer is used to offset the cost of Police Officers functioning as Municipal Court Bailiff.

The operating transfer from the Economic Development Corporation covers services provided by the city’s Legal Services, Finance, Human Resources, and Information Technology departments. The transfer also includes a fee for office space at city hall.

GENERAL FUND EXPENSES

The General Fund accounts for all expenses not required to be accounted for in other funds. This includes the expenses for services such as Police, Fire, Parks, Streets, Community Development, City Council and all other administrative services.

Salary & Benefits accounts for 71.6% of total General Fund expenses. This includes 232 of the total 286 city employees. Services & Supplies makes up the second largest expense category at 12.7% and accounts for all the supplies and professional services utilized in the general functions of the city. Maintenance & Repair includes costs associated with maintaining equipment and facilities as well as drainage and roadways within the city limits. Parks & Recreation includes the youth and adult sports leagues. Miscellaneous expenses include the General Fund line-item contingency of $300,000. Capital outlay for the General Fund is accounted for in the Capital Purchases Fund.

General Fund Expenses are expected to increase 18.03% for Fiscal Year 2025. Approximately 90% of the increase in operating expenses is the addition of 16.5 new full-time equivalents. Other items impacting budget are covered in the department summaries below.

GENERAL FUND DEPARTMENT SUMMARIES

CITY COUNCIL

The City Council is the legislative body for the city, functioning under the Home Rule Charter adopted November 4, 1997. The department provides funding related to the administration of the legislative function.

ENGINEERING

The Engineering Department is responsible for ensuring that capital and operation projects follow City and NCTCOG design standards. In addition, the department acts as the flood plain administrator to guarantee the National Flood Insurance Program is secured.

There is an increase in this department for the addition of two positions and the related benefit expenses.

LEGAL SERVICES

The City Attorney is appointed by and answerable to the City Council, as representatives of the City of Forney. The increase in this budget is for personnel cost for the two employees.

CITY MANAGER

The City Manager’s Office is responsible for the overall administration and coordination of all City departments and functions, assuring that the City Council policies are implemented, and legal requirements are met. The department also serves as the primary contact between the City Council and City departments and is responsible for advising the City Council regarding policy decisions.

CITY SECRETARY

The City Secretary department provides administrative support to the legislative function of the city. The department oversees preparation of the City Council agendas and minutes and enrolls laws adopted by the City Council. The department is also responsible for election administration, records retention, processing requests for public information and coordinating the appointment process for Boards & Commissions.

COMMUNICATIONS & MARKETING

This department was created during Fiscal Year 2022 to develop internal and external communications and assist managing citizen participation initiatives. This department also oversees media relations, the City’s website, social media, newsletters, and video content.

MUNICIPAL COURT

The Municipal Court department has jurisdiction over all fine-only offenses committed within the Forney city limits. These offenses include Class C misdemeanors, traffic offenses, and City code violations. The court collects fines, conducts trials, and issues warrants of arrest. The Municipal Court Judge also arraigns prisoners and performs other magistrate duties.

FINANCE

The Finance department is responsible for safeguarding the City’s financial resources by maintaining central accounting records and bank accounts, disbursing all City obligations, annual budget and audit preparations, financial forecasting and overseeing the City’s investment policy.

POLICE

The Police department protects the lives and property of the citizens through the enforcement of state and local laws and the use of established crime prevention techniques. The department is staffed with certified peace officers and trained civilian employees who work in the areas of patrol, criminal investigation, emergency dispatch, and department administration. The Police department is adding two narcotics detectives, one lieutenant, one records technician, a property/evidence technician, and a detention supervisor for Fiscal Year 2025.

ANIMAL CONTROL

The Animal Control department works to unite owners with their lost pets and to promote the adoption of unclaimed, unwanted, stray, and abandoned pets within the Forney city limits.

This increase in Animal Control is due to the increasing cost of supplies and professional veterinary services.

FIRE

The Fire department consists of full-time paid professionals. The department responds to incidents involving fires, rescues, and emergency medical needs as well as fulfilling the

requirements of fire prevention/education, building inspections, fire investigations, and various other public service and safety needs within our community. The Fire department responds to an area of approximately 80 square miles that consists of the City of Forney, the Town of Talty, and Kaufman County Emergency Services District #6. This department will be adding three Battalion Chiefs to manage the three fire stations.

PARKS & RECREATION

The Parks & Recreation department is responsible for providing well maintained facilities that foster recreational and athletic activities in a safe, clean, and comfortable environment. The department provides routine maintenance, repairs, and improvements to the parks system which currently includes seventeen park sites with a variety of amenities.

This department will be reclassifying one position and moving the part-time Administrative Assistant to a full-time position.

STREETS

The Streets department is responsible for the maintenance of over 98 miles of streets, 35 miles of storm drainage and more than 1,000 street signs within the City limits. The department is also responsible for mowing and tree trimming in the City rights of way and medians.

Maintenance & Repair budgets have been increased as the Public Works department will be improving current streets and drainage.

FACILITIES MAINTENANCE

The Facilities Maintenance department accounts for the costs to maintain city facilities including electrical, plumbing, and HVAC repair and installation. The department also accounts for the purchase of paper and cleaning supplies for all facilities along with the personnel that support the department.

The largest increase in the Facilities Department is in the Services & Supplies category. Much of the increase is due to rising utility cost as well as the increased cost of cleaning supplies.

FLEET SERVICES

The Fleet Services department accounts for the cost of supporting and maintaining the city's vehicle fleet. The department consolidates all previous department allocations for fuel and maintenance for vehicles from UTV to Medium Duty trucks. Fleet maintenance will also manage the purchase and standardization of all future vehicles to the city’s fleet.

The largest increase in the department budget reflects the uncertain cost of fuel as well as increased maintenance costs for vehicle purchases authorized in Fiscal Year 2025.

NEIGHBORHOOD SERVICES

The Neighborhood Service department is responsible for ensuring a clean and healthy environment for the community by enforcing city codes such as high grass, junked vehicles, illegal signs, unsightly matter on private premises, and zoning regulations. This budget includes an additional code enforcement officer as well as rental property inspector.

BUILDING INSPECTIONS

The Building Inspections department ensures that new or remodeled structures conform to adopted building codes and standards. The department reviews building plans, issues permits and performs inspections to ensure compliance with building codes and local ordinances. This budget includes a new position for commercial property inspections.

PLANNING

The Planning department is responsible for ensuring that the physical development and land use of the community is accomplished according to the codes, ordinances, and plans adopted by the Planning & Zoning Commission and the City Council.

HUMAN RESOURCES

The Human Resources department oversees employment operation of the city in an effort to maximize both individual needs and organization objectives. The department is responsible for the recruitment and screening of the City’s employment applicants, administration of the city pay plan, benefits management, employee relations, and employee training and development.

The Information Technology department maintains the City’s computer networks and systems by evaluating the end user needs, providing technical support and maintaining standards and uniformity in hardware and software installation. The department works closely with outside vendors to maintain several specialty computer programs required by various city departments.

RESTRICTED GOVERNMENTAL FUNDS

The Operating Reserve Fund is money that has been set aside in case of a catastrophic or emergency event. The required amount is calculated in each year’s budget process and transfers are established based on only the regular operating expense, meaning that all major non-recurring purchases are not included in the calculation. The goal is to have approximately three months operating costs in reserve so the city would be able to maintain uninterrupted service for at least that amount of time.

For the past few years, audited figures have shown that the balance in the General Fund Operating Reserve, when combined with reserves in other areas, exceeds the 25% preference. Transfers to the operating reserve are no longer necessary and allow additional funding of capital projects and purchases.

GENERAL FUND OPERATING RESERVE

The Police Special Services Fund collects revenues from the seized and forfeited funds awarded to the City by the court, and by the sale of seized vehicles awarded to the City. These funds can be spent on equipment and training for the Police Department. The fund also receives an annual payment from LEOSE, Law Enforcement Officer Standards and Education, which can only be used for education and training for the Police Department.

POLICE SPECIAL SERVICES FUND

Hotel Occupancy Tax is revenue collected from hotels and motels located within the Forney city limits. The amount paid to the city is set by ordinance at 7% of the room rate charged by the hotel or motel, excluding all other services provided (meals, laundry, etc.).

These funds may be used for both advertising and operational expenditures, provided the primary purpose of the event is to attract out of town visitors.

A transfer from the Hotel Occupancy Tax Fund will be used to fund special events hosted by the City of Forney.

HOTEL OCCUPANCY TAX FUND

The Capital Purchases Fund provides for General Fund capital purchases and is primarily funded by a transfer of unrestricted fund balance.

The city defines capital purchases as any equipment (including software) with a price that exceeds $5,000 and has a useful life of over 3 years.

This fund also simplifies the tracking of fixed assets for city staff and auditors and allows for a quick reference for annual capital purchase spending.

CAPITAL PURCHASES FUND

The following items are proposed for purchase in Fiscal Year 2025:

ENGINEERING

• Inspector Vehicle - $50,000

POLICE

• Patrol Vehicles (4) - $416,000

• CID Vehicle (5) - $481,000

• Priority Dispatch Software - $116,759

• Tyler Technologies- Towing and Accident Module - $15,900

• NICE Recorder Redaction and Quality Assurance - $405,267

FIRE

• Replacement Admin Vehicle - $50,000

• Generator- Fire Station #3 - $15,000

• Escrow-Fire Engine Replacement - $500,000

PARKS

• Mowers (2)- $28,000

• Field Maintainer for Community Park - $22,000

ANIMAL CONTROL

• License Plate Reader - $6,650

COMMUNITY DEVELOPMENT

• Code/Inspector Vehicles (5) - $285,000

INFORMATION TECHNOLOGY

• Service/Storage Infrastructure Replacement - $330,965

FACILITIES

• Senior Custodian Vehicle - $43,000

• Generators –City Hall, City Hall Annex - $90,000

Impact Fees are charges of assessments paid by new development to generate revenue for funding or recouping the costs of capital improvements necessitated by and attributable to the new development. These revenues may not be used for any type of repair, maintenance, modernization, or expansion of existing infrastructure to better serve existing development.

ROADWAY IMPACT FUND

The Municipal Court Building Security Fund revenues are collected from a $3.00 fee charged to any defendant convicted of a misdemeanor offense in Municipal Court. Money deposited into the Building Security Fund is restricted to use for security personnel, services, and items related to the security of court facilities.

Specifically:

► The purchase or repair of x-ray machines as conveying systems

► Handheld metal detectors

► Walkthrough metal detectors

► Identification cards and systems

► Electronic locking and surveillance equipment

► Bailiffs, deputy sheriffs, deputy constables, or contract security personnel during times when they are providing appropriate security services

► Signage

► Confiscated weapon inventory and tracking systems

► Locks, chains, alarms, or similar security devices

► The purchase or repairs of bullet proof glass

► Continuing education on security issues for court personnel and security personnel

BUILDING SECURITY FUND

The Municipal Court Technology Fund revenues are collected from a $4.00 fee charged to any defendant convicted of a misdemeanor offense in a municipal court. Money deposited into the Technology Fund is restricted to the purchase or maintenance of the following:

► Computer Systems

► Computer Networks

► Computer Hardware

► Computer Software

► Imaging Systems

► Electronic Kiosks

► Electronic Ticket Writers

► Docket Management Systems

TECHNOLOGY FUND

The Municipal Court Juvenile Case Manager Fund receives revenue from a $5.00 fee charged to any defendant convicted of a fine-only misdemeanor offense issued prior to January 1, 2020. This fund, passed by ordinance, may only be used to finance the salary and benefits of a Juvenile Case Manager.

Effective January 1, 2020, the Local Truancy Prevention and Diversion Fund, formerly JCM, of $5.00 is combined in the local consolidated fee, passed by legislature 2019, charged to any defendant convicted of a fine-only misdemeanor offense issued on or after January 1, 2020. Funds may only be used to finance the salary, benefits, training, travel expenses, office supplies, and other necessary expenses relating to the position of juvenile case manager. Money may not be used to supplement the income of an employee whose primary role is not juvenile case manager.

JUVENILE CASE MANAGER FUND

The Special Events Fund provides for the tracking of revenues and expenses related to the City’s Special Events Program. The Special Events Coordinator is a Parks & Recreation department employee and plans the events throughout the year.

SPECIAL EVENTS FUND

In 2004, The City Council approved the creation of the Fox Hollow Public Improvement District No. 1 (PID) to finance the maintenance, repair, and improvement of public improvements within the boundaries of the PID. All properties will be assessed at a uniform rate. The assessment rate for 2025 is proposed at 0.12 per $100 of appraised value.

UTILITY FUND

The Utility Fund is an enterprise fund that accounts for the water, sewer, and refuse services that are provided to the City’s residents. All activities to maintain these services are accounted for in this fund, including but not limited to operations, maintenance, billing and collections, administration, and financing.

UTILITY FUND STATEMENT

UTILITY FUND REVENUE

Sales revenue accounts for 99% of the Utility Fund’s revenue. Sales revenue is comprised of sewer collection and treatment fees, charges for in-city water, wholesale water sales, all other water and sewer related fees, and refuse and recycling fees. The interest and penalty category accounts for the majority of the remaining 1% and is comprised of penalties charged on utility accounts and interest collected on funds held in checking accounts and investments.

UTILITY RATES

The Fiscal Year 2025 Budget includes a 4.3% increase in all residential and commercial water rates, a 21.5% increase in all residential and commercial sewer rates, and a 5% increase in all residential garbage rates.

Sales Revenue - $34,529,002

Sewer Pre-Treatment - $50,125

The North Texas Municipal Water District provides sewer pre-treatment services for industrial use. The budget is provided to the city by the North Texas Municipal Water District. Estimates are based on actual volumes being treated from the period from August to July of the preceding year. The city is billed for this service and the expense is reflected in the Utility Billing department. The charge is then passed on to Smurfit Kappa and Luminant Energy and reflected in this revenue account.

Industrial Sewer Sales - $1,279,445

Industrial Sewer accounts for only two users: Smurfit Kappa and Luminant Energy. The City Council modified the industrial rate for Smurfit Kappa during Fiscal Year 2024 and initiated a rate study to determine appropriate rates moving forward. Rates for Fiscal Year 2025 were presented to City Council on August 6, 2024, and are incorporated in this budget. Luminant Energy pays for sewer based on regular commercial rates and will be subject to the 21.5% increase for Fiscal Year 2025. The increase in industrial sewer is directly related to the new rates for Smurfit Kappa.

Sewer Sales -

$7,410,000

The City’s sanitary sewer is delivered to the North Texas Municipal Water District for treatment via the interceptor systems. Residential and senior monthly charges are calculated using the average water usage of the three months with the lowest usage during the four-month period of November through February. Commercial sewer is calculated using the same base rate and tiered scale as residential but is based on actual month to month water usage.

Sewer Sales

With the substantial growth that has continued into and throughout Fiscal Year 2024, it is anticipated that sewer revenues will see an increase from the addition of new connections. A conservative estimate of 5% is included to account for this growth.

It must be considered that while this growth increases revenues, it also increases cost. More connections to the City’s sewer system increase the rate of flow, which impacts the immediate cost of moving wastewater. These additional connections also lead to a long-term need for more sewer capacity, and this requires the current infrastructure to be expanded and upgraded.

Many of the areas currently experiencing rapid development are on the City’s sewer system, but purchase water from one of the three utility districts that overlap the city limits. These connections have an additional cost increase as the utility districts charge the city an administration fee for billing city sewer on their water bills.

Wholesale Sewer Sales -

$3,110,110

The city provides wholesale sewer services to four housing developments located adjacent to the city limits- Devonshire, Vintage Meadows, Lakewood Trails, and Windmill Farms. These sewer contracts are structured similar to the city’s agreements with our wholesale water customers. The Sewer Districts are responsible for a minimum annual amount based on actual usage from previous years, with a possible adjustment at the conclusion of the year.

Sewer Discharge Sales - $75,000

Luminant Energy uses water to produce electricity, and the water is metered, discharged, and then treated. The city is paid per gallon for the additional expense resulting from treating this water.

Industrial Water Sales - $1,842,797

Industrial Water, like Industrial Sewer, currently only has two users: Smurfit Kappa and Luminant Energy. Smurfit Kappa’s water rates will be adjusted according to the rates adopted by City Council at the August 6, 2024, meeting. The increase shown in industrial water is directly related to the increasing consumption from Smurfit Kappa as well as the 4.3% adjustment to commercial rates paid by Luminant. However, Luminant Energy relies heavily on reclaimed water, and their total potable water consumption is relatively low.

Water Sales – $8,051,510

Water Sales

This represents water sales generated from approximately 8,050 residential and just over 400 commercial water customers inside the city limits. The amount charged for water service is a base rate plus a tiered scale for any usage over 2,000 gallons. The City’s water is purchased from the North Texas Municipal Water District (NTMWD) for resale to our customers.

North Texas Municipal Water District will be increasing their water rates 4.3% for the upcoming fiscal year. This budget proposes passing the increase on to all water customers.

Water District Water Sales - $8,847,765

The City contracts with four water districts for the provision of water on a take or pay basis. This allows the City to plan for a minimum revenue stream on which it can rely to purchase the supply for such contracts. Contracts are based on a water consumption period that runs from August to July. This allows the city to bill adjustments for any overages and notify the water districts of rates for the upcoming year prior to the fiscal year end. The revenue budgeted for the next fiscal year is the minimum amount the contract will produce and is determined on a formula basis contained in the contracts. On average, the water districts account for approximately 60% of the City’s take-or-pay contract minimum with the North Texas Municipal Water District.

Reclaimed Water Sales - $1,975,000

The city purchases reclaimed water from the City of Garland and in turn sells it to Luminant Energy at a mark-up of $0.10 per 1,000 gallons. This type of water cannot be utilized as a potable source but is an excellent alternative for this type of industrial application. The arrangement is a straight-forward demand purchase, meaning that less demand from our end user results in less reclaimed water purchased from the City of Garland.

Meter Sales - $160,000

This fee is charged for each new meter set connecting to the City’s water system and is based on the size of the meter being purchased.

Transfer Fees - $250

This fee is charged for transferring existing utility services from one location within the city limits to another.

Connection Fees - $50,000

The connection fee is a charge of $25.00 applied to each new service.

Fire Hydrant Meter Rental Fee - $15,000

This fee is retained by the city when a contractor returns a fire hydrant meter used on a construction project within the city limits.

Payment Processing Fee - $250,000

The City added a payment processing fee in Fiscal Year 2021. Credit card companies charge an average of 3% per transaction to process credit card payments and the city passes the cost to the customer.

Refuse and Recycling Sales - $1,410,000

The City contracts refuse and recycling collection with Community Waste Disposal (CWD) for residential and senior utility customers. Commercial services are not provided by the City and must be contracted directly with CWD. The current garbage contract expires in February of 2026. This revenue is increasing due to the 5% increase passed along to customers as well as an increase in residential development.

Interest and Penalty $255,000

Interest Income -$30,000

Interest rates have begun to rise and remain at a level high enough to produce additional revenue and this is reflected in the Fiscal Year 2025 budget.

Penalty Income - $295,000

Penalties are charged for late payments and disconnection of services including late fees, administrative fees and returned check, and after-hours fees.

Miscellaneous Income - $5,000

UTILITY FUND EXPENSES

The Utility Fund accounts for expenses associated with maintenance and repair of a water distribution system that includes 146 miles of water lines and associated pump stations and water storage tanks, a sewer collection system that includes 146 miles of sanitary sewer line and associated sewer lift stations, salary and benefits of fifty-one employees, and the purchase of water, and sewer collection and treatment services from the North Texas Municipal Water District (NTMWD).

The Salary & Benefits expense in the Fiscal Year 2025 budget will increase by 12.64%. The increase is due to two additional positions as well as the proposed 4% COLA and 3% merit proposed for all employees as well as increasing insurance cost.

UTILITY OPERATING TRANSFER - $1,388,851

Each year the city budgets a transfer from the Utility Fund to the General Fund to offset expenses paid on behalf of the Utility Fund.

Salary & Benefits – This portion of the transfer increased as a result of adding positions to the Public Works Administration Department.

Finance - 25% of the costs of the city’s annual audit and 25% of other professional services utilized by the Finance department for continuing disclosure, arbitrage, and investments.

Facilities - This allows for the repair and maintenance of water and sewer facilities.

Legal Services - $37,500 will be transferred to cover legal expenses on behalf of the Utility Fund.

Information Technology – These are costs associated with hardware and software used by or on behalf of the Utility Fund.

Human Resources – 15% of the city’s benefits broker and EMS Service Benefit cost.

UTILITY FUND DEPARTMENT SUMMARIES

UTILITY BILLING

The Utility Billing department is responsible for the billing and collection of fees for water, sewer, and refuse service. The department establishes new accounts, installs new meters, reads meters, maintains utility account records, collects payments, and addresses billing inquiries.

This department accounts for all the expenses associated with the purchase of water and sewer treatment and transmission services from the North Texas Municipal Water District (NTMWD).

The cost of purchasing water for Fiscal Year 2025 will increase by 13.2%. The NTMWD will be increasing the rate per 1,000 gallons by 4.3%. Additionally, the City has exceeded the 2024 contract minimum of 2,866,785,000 by 200,966,000 gallons.

The new contract minimum of 3,067,751,000 gallons for 2025 will result in annual charges of $11,810,841.

Annual Water Take or Pay Minimum

The cost of sewer services is divided between the Utility Fund and the Interceptor Fund. Maintenance and operation of the interceptors is charged to the Utility Fund and the debt owed for construction of the interceptor lines is charged to the Interceptor Fund. Total costs for sewer services to the city will be increasing by 28.34% due to increased flow estimates.

Regular residential and commercial sewer customers of the city will see a 21.5% increase in their sewer rates in Fiscal Year 2025. Wholesale and Industrial Sewer customers will see increases based on the terms of their individual contracts.

PUBLIC WORKS ADMINISTRATION

The Public Works Administration department is responsible for the coordination, management, and oversight of water, sewer, and streets maintenance. The department also provides coordination with all public works construction activities.

The increase in the department is due to the addition of a senior custodian as well as a fleet services coordinator and the cost of training and equipping them for their positions. The budget also includes a proposed 4% COLA and 3% merit for all employees as well as increasing insurance cost.

WATER

The Water department is responsible for the repair, maintenance, and rehabilitation of 146 miles of water lines within the water distribution system as well as the associated pump stations and water storage tanks.

Maintenance & Repair costs are increasing as the Water department develops new maintenance plans for the city’s water system.

The $595,000 in budgeted capital purchases include a valve trailer and a hydro-excavator.

SEWER

The Sewer department is responsible for the repair, maintenance, and rehabilitation of 146 miles of sewer line as well as the sewer lift stations within the sewer collection system.

Maintenance & Repair costs are increasing as the Sewer department develops new maintenance plans for the city’s sewer system.

The $100,000 in budgeted capital purchases include a mini excavator.

RESTRICTED UTILITY FUNDS

The Operating Reserve Fund is money that has been set aside in case of a catastrophic or emergency event. The required amount is calculated in each year’s budget process and transfers are established based on only the regular operating expense, meaning that all major non-recurring purchases are not included in the calculation. The goal is to have approximately three months operating costs in reserve allowing the city to maintain uninterrupted service for at least that amount of time.

For the past few years, audited figures have shown that the balance in the Utility Operating Reserve, when combined with reserves in other areas, exceeds the 25% preference so a transfer is not included in this budget.

UTILITY OPERATING RESERVE

Impact Fees are charges or assessments paid by new development in order to generate revenue for funding or recouping the cost of capital improvements necessitated by and attributable to the new development. These revenues may not be used for any type of repair, maintenance, modernization, or expansion of existing infrastructure to serve existing development.

WATER IMPACT FUND

SEWER IMPACT FUND

Payments on the Interceptors are divided between the Utility Fund and the Interceptor Funds. The Utility Fund pays the maintenance and operations costs, and the Interceptor Fund pays the North Texas Municipal Water District for the debt issued to construct the interceptors.

For Fiscal Year 2025, the interceptor payments will be divided as follows:

• Buffalo Creek Interceptor – 60% Interceptor Fund, 40% Utility Fund

• Mustang Creek Interceptor – 66% Interceptor Fund, 34% Utility Fund

• Forney Interceptor – 100% Utility Fund

INTERCEPTOR FUND

DEBT SERVICE FUNDS

COMBINED DEBT

The City’s combined debt totals $21,815,979. This is a reduction of $4,262,085 from the prior year total debt.

Of the total debt, $21,511,485 is tax supported and accounted for in the General Debt Service Fund and $304,494 is utility revenue supported and accounted for in the Utility Debt Service Fund.

LEGAL DEBT MARGINS FOR GENERAL OBLIGATIONS

All taxable property within the City is subject to the assessment, levy, and collection by the City of a continuing, direct annual ad valorem tax that is sufficient to provide for the payment of principal and of interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the city, and provides for a maximum ad valorem tax rate of $2.50 per $100 taxable assessed valuation for all City purposes. The Home Rule Charter of the City adopts the constitutionally authorized maximum tax rate of $2.50 per $100 taxable assessed valuation. Administratively, the Attorney General of the State of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for all general obligation debt service, as calculated at the time of issuance and based on a 90% collection rate.

GENERAL DEBT SERVICE

The primary source of revenue for the General Debt Service Fund is the ad valorem property tax. The proposed ad valorem tax rate of $0.405240 is divided into two rates. Approximately 19% ($0.076731) of the tax revenue is used to pay principal and interest on the City’s outstanding general obligation debt. The remaining 81% ($0.328509) of the revenue generated by the tax rate is used to pay for maintenance and operating costs incurred in the General Fund.

The Debt Service (DS) portion of the tax rate covers the City’s bond payments and other outstanding debt. This portion of the tax rate is not flexible and is set by a calculation based on the required fiscal year payments of the City’s debt. Fiscal Year 2025 debt service rate is $0.076731. This is a decrease of $0.00784 (-9.27%) from the Fiscal Year 2024 rate, resulting in $3,629,322 in revenue to be used for debt payments.

The Debt Service tax rate is calculated by subtracting any revenue paid from other sources from the annual required debt payment and then dividing that result by the adjusted taxable value and multiplying by 100. (Total annual debt payment) – (Non-tax revenue) ÷ (Adjusted Taxable Value) x 100 = Debt Service Tax Rate ((3,629,322) ÷ 4,729,903,320) x 100 = $0.076731

GENERAL DEBT SERVICE FUND STATEMENT

GENERAL DEBT SERVICE PAYMENT SCHEDULES

2012 Certificates of Obligation

The eight current outstanding tax supported debt issues as of Fiscal Year 2025 total $21,511,485 with $19,245,000 in remaining principal payments and $2,266,485 in interest.

Original Issue Amount: $1,030,000

Original Date of Issue: November 6, 2012 Maturity Date: February 15, 2032

Use of Bond Proceeds

"Proceeds from the sale of the Certificates will be used for the purpose of paying contractual obligations incurred for (i) the acquisition of Mulberry Park: and (ii) paying legal, fiscal and engineering fees in connection with such project."

Total Project Cost: $1,030,000

2007 Bond Allocation: $1,030,000

Completion Date: March 2013

All proceeds from the 2012 Certificates of Obligation have been spent.

Mulberry Park Purchase

2014 General Obligation Refunding

Interest savings from this refunding will be $213,278.

Use of Bond Proceeds

Original Issue Tax Supported Amount: $2,148,109 ($3,440,000 total issue)

Original Date of Issue: November 4, 2014

Maturity Date: February 15, 2025

"Proceeds from the sale of the Bonds will be used (i) to refund a portion of the City's outstanding debt (the Refunded Obligations) as described on Schedule I [in the Official Statement} and (ii) to pay the costs of issuance associated with the sale of the Bonds... "

Tax and Waterworks and Sewer System Surplus Revenue Certificates of Obligation, Series 2005A

Principal Amount Refunded: $2,148,109

Interest Savings: $213,278

Proceeds from the 2005A Certificates of Obligation funded: - Eastside Drainage Project

All proceeds from the 2014 General Obligation Refunding have been spent.

2014 Certificates of Obligation

Original Issue Amount: $4,945,000

Original Date of Issue: November 4, 2014

Maturity Date: February 15, 2034

Use of Bond Proceeds

"Proceeds from the sale of the Certificates will be used for (i) the construction of public works, to wit: (a) constructing and equipping a new fire station and (b) constructing and equipping a new animal shelter, and (2) cost of issuance associated with the sale of the Certificates."

Fire Station #2

Total Project Cost (Budget): $4,102,209

2014 Certificate of Obligation Allocation: $3,013,994

Estimated Project Completion Date: February 2017

Animal Shelter

Total Project Cost: $2,138,899

2014 Certificate of Obligation Allocation: $2,000,000

Estimated Project Completion Date: April 2017

All proceeds from the 2014 Certificates of Obligation have been spent.

2015 General Obligation Refunding

Use of Bond Proceeds

Original Issue Amount: $8,585,000

Original Date of Issue: June 1, 2015

Maturity Date: September 30, 2027

Interest savings from this refunding will be $1,230,068.

"Proceeds from the sale of the Bonds will be used (i) to refund certain outstanding obligations of the City described on Schedule I {in the Official Statement}... for debt savings; and (ii) to pay the costs associated with the issuance of the Bonds."

General Obligation Bonds, Series 2007

Principal Amount Refunded: $8,955,000

Interest Savings: $1,230,068

All proceeds from the 2015 General Obligation Refunding have been spent.

2016 Certificates of Obligation

Redbud Roadway Reconstruction

Total Project Cost (Budget): $2,833,079

2016 Certificate of Obligation Allocation: $2,500,000

Estimated Project Completion Date: July 2018

Original Issue Amount: $2,500,000

Original Date of Issue: August 2, 2016

Maturity Date: February 15, 2034

Use of Bond Proceeds

"Proceeds from the sale of the Certificates will be used for (1) street improvements, including drainage, curbs, gutters, utility line relocation, street lighting, and /or the acquisition of land and rights-of-way therefor, and (2) the cost of issuance associated with the sale of the Certificates."

All proceeds from the 2016 Certificates of Obligation Refunding have been spent.

2017 Subordinate Lien Pass Through Toll Revenue and Limited Tax Refunding Bonds

Original Issue Amount: $11,465,000

Original Date of Issue: August 15, 2017

Maturity Date: August 15, 2031

Interest savings from this refunding will be $1,228,114.

Use of Bond Proceeds

"Proceeds from the sale of the Bonds will be used (i) to refund a portion of the 2008 Bonds (as shown in Schedule I) (the

“Refunded Bonds”) and (ii) for payment of professional services of attorneys, financial advisors, and other professionals in connection with the issuance of the Bonds.”

Pass-Through Toll Revenue and Limited Tax Bonds, Series 2008

Principal Amount Refunded: $12,170,000

Interest Savings: $1,228,114

All proceeds from the 2017 Subordinate Lien Pass Through Toll Revenue and Limited Tax Refunding Bonds have been spent

2020 General Obligation Refunding

Original Issue Amount: $5,705,000

Original Issue Date: November 19, 2020

Maturity Date: February 15, 2032

Interest savings from this refunding will be $1,061,209.

Use of Bond Proceeds

"Proceeds from the sale of the Bonds will be used (i) to refund a portion of the City's outstanding debt (the Refunded Obligations) as described on Schedule I {in the Official Statement}... and (ii) to pay the costs of issuance associated with the sale of the Bonds..."

Tax & Waterworks & Sewer System Rev. CO, Series 2011 (Tax Supported)

Principal Amount Refunded: $2,385,000

Interest Savings: $610,053

Tax & Waterworks & Sewer System Rev. CO, Series 2011 (W&S Supported)

Principal Amount Refunded: $1,765,000

Interest Savings: $451,156

General Obligation Refunding Bonds, Series 2011

Principal Amount Refunded: $1,380,000

Interest Savings: $185,394

All proceeds from the 2016 General Obligation Refunding have been spent

UTILITY DEBT SERVICE

The primary source of revenue for the Utility Debt Service Fund is revenue from fees charged for water and sewer services. Other funding for the utility debt payments includes water and sewer impact fees.

UTILITY DEBT SERVICE FUND STATEMENT

The Utility Debt Service Fund maintains a zero fund balance. The exact amounts necessary to cover debt payments are transferred in at the beginning of each Fiscal Year.

UTILITY DEBT SERVICE PAYMENT SCHEDULES

The two current outstanding water sewer debt issues as of Fiscal Year 2025 total $304,494 with $300,000 in remaining principal and $4,494 in interest.

2014 General Obligation Refunding

Interest savings from this refunding will be $126,027.

Use of Bond Proceeds

Original Issue Amount: $1,291,891

($3,440,000 total issue)

Original Issue Date: November 4, 2014

Maturity Date: February 15, 2025

"Proceeds from the sale of the Bonds will be used (i) to refund a portion of the City's outstanding debt (the Refunded Obligations) as described on Schedule I [in the Official Statement} and (ii) to pay the costs of issuance associated with the sale of the Bonds.. "

Tax and Waterworks and Sewer System Surplus Revenue Certificates of Obligation, Series 2005A

Principal Amount Refunded: $1,291,891

Interest Savings: $126,027

Proceeds from the 2005A Certificates of Obligation funded:

- Trinity & Main Street Sewer

- Pacific Sewer Connection & Lift Station Elimination

- Trinity Sewer Connection & Lift Station Elimination

- Knox Sewer Connection & Lift Station Elimination

- Replace Sewer Line North of HWY 80 between FM 740 & FM 548

- Buffalo Creek Sewer Connection & Lift Station Elimination

- Broad Street Water Line

- Elevated Water Storage

All proceeds from the 2014 General Obligation Refunding have been spent.

2014A General Obligation Refunding

Interest savings from this refunding will be $204,207.

Use of Bond Proceeds

Original Issue Amount: $1,350,000

Original Date of Issue: November 4, 2014

Maturity Date: February 15, 2025

"Proceeds from the sale of the Taxable Bonds will be used (i) to refund a portion of the City's outstanding debt (the "Refunded Obligations") as described on Schedule II {in the Official Statement} and (ii) to pay the costs of issuance associated with the sale of the Taxable Bonds..."

Tax and Waterworks and Sewer System Surplus Revenue Certificates of Obligation, Series 2005B

Principal Amount Refunded: $1,285,000

Interest Savings: $204,207

Proceeds from the 2005B Certificates of Obligation funded: - A portion of Pump Station #2

Bond Issuance

Total Cost: $65,000

All proceeds from the 2014A General Obligation Refunding have been spent.

CAPITAL IMPROVEMENT PROGRAM

Unlike the City’s operating budget, the capital improvement budget does not conclude at the end of each fiscal year. Many of the larger projects remain in progress for multiple years. As economic conditions and the needs of the Forney community change, it is often necessary to reprioritize which projects receive funding. Capital improvements are defined as facilities and infrastructure that have a life expectancy of three or more years and are owned and operated by or on behalf of a political subdivision. Generally, CIP Projects are relatively expensive and non-recurring, have a multiyear useful life, and result in fixed assets. This includes construction and acquisition of new buildings, construction and reconstruction of streets, water and sanitary sewer improvements, drainage improvements, and land purchases. Occasionally, studies and master plans that will impact land use, facilities, and infrastructure are accounted for as part of the CIP.

The purchase and replacement of vehicles and equipment are not included with capital projects but are fixed assets. Information on General Fund fixed assets can be found in the Capital Purchases Fund. Capital purchases for the Utility Fund and the Economic Development Corporation Fund can be found within each of those funds.

PLANNING PROCESS

Factors considered in the evaluation of capital projects:

• Community Economic Effects

• Fiscal Impacts

• Whether an urgent need or opportunity is present

• Alignment with City Council Strategic Plan

• Implications of deferring the project

• Amount of disruption and inconvenience

• Environmental, aesthetic, and social effects

• Health and safety effects

• Feasibility, including public support and project readiness

• Advantages that would accrue from relation to other capital projects

Capital Projects are requested by the Department Directors as part of the annual budget process. Requests are submitted and then reviewed by the City Manager’s Office and finance staff. Projects approved by the City Manager are then presented to the City Council along with the annual operating budget for final approval. The Capital Project Five Year Plan is also reviewed and updated at that time.

Occasionally, the need arises to add a new project outside of the annual budget process. When this occurs, the project is presented to the City Council through the regular budget amendment process.

The Capital Improvement Program is comprised of five funds:

• General Fund Capital Improvement Fund

• Utility Capital Improvement Fund

• Tax Increment Reinvestment Zone (TIRZ) Fund

• EDC Capital Improvement Fund - in the Economic Development Corporation section.

• Fox Hollow Public Improvement District

The City of Forney separates capital improvement projects into several categories within these funds:

GENERAL CAPITAL IMPROVEMENTS

o Roads, Signalization, Drainage

o Parks & Recreation

o Technology

o Facilities

o Combination Projects – These are capital improvements to the City’s roadway, water and/or sewer systems that are performed together in order to reduce cost and time spent on the project.

UTILITY CAPITAL IMPROVEMENTS

o Water

o Sewer

o Combination

COMPLETED PROJECTS

The following capital projects were completed during Fiscal Year 2023.

• CR 212 Participation - $2,130,598

• Technology Infrastructure - $786,540

• Parks Master Plan Update - $71,895

PROJECTS PROPOSED FOR FY 2025

This budget proposes several capital improvement projects for FY 2025 in both the General CIP Fund and the Utility CIP Fund.

• Additional Tennis Courts - $450,000

• Heritage Hill Playground - $199,000

• Municipal Court Upgrades - $45,000

• Animal Shelter Upgrades - $120,000

• Fire Station #1 Upgrades - $270,000

• Public Works Crew Leader Building - $45,000

• Public Works Building Upgrades - $150,000

• PW and Fire Bay Building - $350,000

• Wi-Fi at Community Park - $65,000

• Community Garden - $25,000

• US 80 Water Line Relocation Design - $300,000

• Community Park Pavilion Flooring - $18,000

• Community Park Trail Extension - $1,200,000

NEW PROJECTS

GENERAL CAPITAL IMPROVEMENT FUND

Fiscal Year 2025

The General Fund transfer to the Capital Improvement Program for the upcoming year will be $2,037,000 to cover the cost of new projects for 2025. The Community Park Trail Extension will be funded through payments in lieu of parkland dedication.

UTILITY CAPITAL IMPROVEMENT FUND

Fiscal Year 2025

The Utility CIP Fund also has a significant fund balance made up of various sources. There are also restricted funds held in the fund balance in this fund.

• Utility Fund - All funds transferred from the General Fund are unrestricted.

• Interest - Unless otherwise specified, interest earnings are unrestricted.

• Impact Fees – Revenue from impact fees collected for water and sewer improvements are restricted to use on projects listed on the most recent water and sewer impact studies.

• Developer Contributions - These are generally restricted to use on specific developments and most agreements result in any excess funds being returned to the developer.

TAX INCREMENT REINVESTMENT ZONE FUND

The Tax Increment Reinvestment Zone (TIRZ) was established in December 2008 by City Council and included approximately 1,730 acres of land. The TIRZ was created as an economic development tool that uses the tax generated by new valuations to help finance the cost of improvements needed to promote development within the TIRZ. The City contributes 85% of the taxes collected in the TIRZ (less taxes collected on the base value) to the TIRZ fund. The City entered an interlocal agreement with Kaufman County to participate in the TIRZ by contributing 50% of the County maintenance and operations tax rate (less taxes collected on the base value) to the TIRZ fund.

In September of 2019, the city included an additional 209 acres in the zone. In June of 2020, the city included another 240 acres. The city contributes 85% of the taxes collected in both additions to the TIRZ fund; however, Kaufman County only participates in the original 1,730 acres of the TIRZ.

VILLAGES OF FOX HOLLOW PUBLIC IMPROVEMENT DISTRICT

In 2008, the City Council authorized the creation of the Villages of Fox Hollow Public Improvement District No. 1 (PID) to finance the cost of certain public improvements for the benefit of property in the PID. Only properties within the boundary of the PID include a special assessment to be used for the reimbursement of public improvements.

ECONOMIC DEVELOPMENT CORPORATION

The Forney Economic Development Corporation (FEDC) is funded by local sales tax. The FEDC works to attract desirable new business and support existing businesses through business retention efforts. This is accomplished by working closely with the City of Forney through the City Manager’s Office alongside the other City departments, community organizations, and private sector entities.

The Economic Development Corporation maintains two funds:

► Economic Development Corporation Operating Fund

► Economic Development Corporation Capital Improvement Fund

EDC FUND REVENUE

Sales tax revenue makes up 96% of the Economic Development Corporation’s revenue. The remaining 4% is categorized as Miscellaneous and includes revenue from downtown property leases and sales of EDC owned properties.

Tax Revenue - $2,247,236

In May of 1994, Forney citizens approved an additional 1.00% sales tax for the purpose of creating and funding the Forney Economic Development Corporation (EDC) and property tax reduction. Half of the approved 1.00% funded the FEDC and the other half is retained by the City to offset property taxes. However, the Forney citizens will consider restructuring the sales tax allocation in November to include the creation of a Crime Control Prevention District (CCPD). The current allocation to the Forney Economic Development Corporation will be decreased 50% and the remaining 50% will be pledged to the new CCPD. This change is dependent on voter approval and will only take effect following a positive election outcome.

Over the past five years, sales tax revenues have increased an average of 16.58% per year. This continued increase is indicative of a growing local economy, resulting from continued population growth within the city limits and the surrounding area, as well as increased commercial development.

Sales Tax Revenue

The Fiscal Year 2024 budget assumed a 7% increase in sales tax revenue over Fiscal Year 2023, and actual collections are trending slightly less than the budgeted amount. The Fiscal Year 2025 budget remains conservative with a projected 5% increase over the FY 2024 budgeted amount.

Interest & Penalty - $15,000

Interest is collected on checking accounts and investments.

Miscellaneous - $75,000

Miscellaneous Income for the EDC includes lease income, sale of properties, and minor, onetime payments made for small events or training courses hosted by the Forney Economic Development Corporation.

EDC USE OF FUNDS

Salary & Benefits accounts for 16% of the Economic Development Department spending. As with all other city staff, a cost-of-living adjustment of 4% and a possible merit increase of 3% are included in the 2025 budget. Health insurance costs are budgeted at a 13% increase.

Services & Supplies account for 12% of the total EDC expenses. This includes sales tax abatement agreements, the expenses associated with daily activities of the office and with trade shows and promotions.

Maintenance & Repair expenses account for 72% of the EDC’s spending and the category is composed of expenses associated with FEDC owned properties and programs that encourage and assist in local business development.

The Economic Development Corporation issued debt in Fiscal Year 2013 for the purpose of improving the downtown area. While the EDC debt was previously represented as being accounted for in a separate fund, in actual practice this debt is accounted for In the EDC operating fund as a separate department.

ECONOMIC DEVELOPMENT DEBT SERVICE

2013 Sales Tax Revenue Bonds

Original Issue Amount: $2,000,000

Original Date of Issue: September 19, 2013

Maturity Date: August 15, 2032

Use of Bond Proceeds

“Proceeds from the sale of the Bonds will be used (i) for the acquisition, improvement and equipment of land, buildings and facilities to lease or sell to businesses in downtown Forney and beautification improvements in downtown Forney, (ii) for funding a debt service reserve fund, and (iii) to pay the costs of professional services including the costs of issuance of the Bonds.”

211 South Bois D’ Arc Renovation –Groovy’s Boutique

Total Project Cost: $171,312

2013 Bond Allocation: $147,312

Completion Date: December 2014

215 South Bois D’ Arc Renovation

Total Project Cost: $217,859

2013 Bond Allocation: $175,859

Completion Date: February 2015

106 East Main Street Renovation

Total Project Cost: $231,032

2013 Bond Allocation: $231,033

Completion Date: December 2015

215 South Bois D’ Arc Finish Out

Total Project Cost: $247,615

2013 Bond Allocation: $247,615

Completion Date: March 2016