City of Conroe, Texas�FY 24-25 Proposed Budget� �Council Budget Workshop�August 1, 2024�

Budget Overview

• The Budget Process—Status Update
• January 31 – Budget Kickoff Meeting
• February 1 to March 8 – Departments compiled budget submittals
• March 11-22 – Finance Department reviewed submittals
• May 29– Executive Management team met to discuss Supplemental Budget Requests
• June 18 – Executive Management team review Supplemental Budget Requests
• June 18 to July 11 – Additional budget review and proposed budget compiled
• August 1 – Proposed budget submitted to Council
• August 1 - 2 – Council Budget Workshop

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Budget Overview

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• The Budget Process—Status Update
• July 25 – Chief Appraiser certifies the appraisal tax roll
• August 8 – Tax Assessor/Collector calculates the No-New-Revenue and Voter-Approval tax rates
• August 8 – Consider the tax rate & schedule public hearing
• August 22 – Public hearing on the budget
• September 12 – Public hearing on tax rate
• September 12 – Council adopts new operating & CIP budget
• October 1 – New fiscal year begins

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Budget Overview

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• Total Revenues (Gross)
• $329,409,438
• 1.3% increase from FY 23-24 Budget
• -6.9% decrease from FY 23-24 Estimate

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• Total Revenues (Net of Interfund Transfers)
• $265,430,485
• -0.7% decrease from FY 23-24 Budget
• -8.1% decrease from FY 23-24 Estimate

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Budget Overview

• Total Expenditures (Gross)
• $342,186,311
• 0.4% increase from FY 23-24 Budget
• -1.3% decrease from FY 23-24 Estimate

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• Total Expenditures (Net of Interfund Transfers)
• $275,030,545
• 2.1% increase from FY 23-24 Budget
• 2.9% increase from FY 23-24 Estimate

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General Fund Overview

• Total Revenues (Gross)
• $129,911,478
• 3.3% increase from FY 23-24 Budget
• -1.3% decrease from FY 23-24 Estimate

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• Total Expenditures (Gross)
• $129,679,852
• 4.2% increase over FY 23-24 Budget
• -1.0% decrease from FY 23-24 Estimate

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General Fund Revenues

• Current Property Taxes
• Budget includes same tax rate. Overall rate as proposed: 42.72¢
• 30.22¢ for maintenance & operations (M&O)
• 12.5¢ for debt service (I&S)
• PRELIMINARY Assessed Valuation increase of 7.7% or $1,111,149,317 from $14,358,166,956 to $15,469,316,273
• Coming from new improvements & appraisals
• Additional revenues to the General Fund $3,290,735 at 30.22¢
• Raising or lowering the tax rate 1.0¢ adds or subtracts $1,515,993 in property tax revenues

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Tax Rate History (tax year)

Total Tax Rate 2024 (Proposed) $0.4272

Total Tax Rate 2011 $0.4200

Property Tax Rate Comparison

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General Fund Revenues

• Sales Taxes
• Decreased by -4.8% or $203,205 compared to last year’s monthly figure as of July 2024
• FY 24-25 proposed is below amended budget by -1.2% or $598,248
• FY 24-25 proposed based on current year estimate with a 2% decrease, adjusted for major audit adjustments

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General Fund Revenues

• Gross Receipts
• Proposed budget above amended budget by 8.9%, or $763,380
• FY 24-25 projected to be up 3% compared to FY 23-24 estimate
• Refuse Collection
• Proposed budget above amended budget by 12.5%, or $64,295
• FY 24-25 projected to be up 1% compared to FY 23-24 estimate

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General Fund Revenues

• Permits
• Current year estimate above budget by 12.2%, or $863,901
• FY 24-25 projected to be above FY 23-24 estimate by 0.5%

or $39,623

• Traffic and Criminal Fines
• Current year estimate above budget by 19.5%, or $225,346
• FY 24-25 projected to be the same as the FY 23-24 estimate of $1,382,398
• Parks & Recreation
• Current year estimate above budget by 8.5%, or $255,373
• FY 24-25 projected to be above FY 23-24 estimate by 2.1% or $67,208

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General Fund Revenues

• Other Significant Notes
• Planning & Zoning Fees
• Current year estimate above budget by 10.1%, or $119,439
• Next year’s revenue is proposed to remain flat at $1,296,594
• Intergovernmental Revenue
• Westwood Magnolia Improvement District Agreement budgeted at $2,279,051
• This is a increase of $23,375 or 1% from FY 23-24 budget.

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General Fund Revenues

• Overall
• FY 24-25 Proposed is 3.3%, or $4,138,247 higher than the FY 23-24 Budget
• FY 24-25 Proposed is -1.3%, or $-1,647,111 lower than the FY 23-24 Estimate

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General Fund Reserves

• Established at 168.6 days, or 46.2% ($59,900,231)
• Exceeds the required 90-day reserve threshold established in the City’s Financial Management Policy by 78.6 days

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General Fund Expenditures

• Current Year Outlook (FY 23-24)
• Estimated expenditures $130,966,856 or $6,558,173 over budget Expenditure distribution:

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Veterans Memorial Contribution

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Veterans Memorial Operating Cost

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General Fund Expenditures

• Base Budget (24-25)
• Departments given a target budget that was 5% less than the previous year, minus capital expenditures and one-time expenses

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• Supplemental requests
• Total of initial requests $34,136,281
• 24-25 Supplementals approved: $14,482,513

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General Fund Expenditures

• Finance
• Increase MCAD Budget Share
• Purchasing – Warehouse
• Increase to Operating Supplies Budget
• Warehouse Building Repairs and Maintenance
• Information Technology
• Microsoft Enterprise Agreements Renewal
• Contract Services Support Increases
• InfoTech Renewal and 2nd Payment for Yr 1
• Human Resources
• Deferred Compensation Plan Consultant
• Online Performance Management System

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General Fund Expenditures

• Police Support Services
• Increase Building Maintenance
• Increase Other Operating Supplies
• VERF Unit 1620 Upgrade
• Police Patrol
• Increase to Vehicle Repairs
• Police Officers (5)
• Increase to 12 VERF patrol car equipment packages
• Police Tahoe Upgrade (3)
• Oscar Johnson, Jr Community Center
• Utilities for New OJJCC
• Credit Card Fees

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General Fund Expenditures

• Aquatic Center
• Credit Card Fees

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• Parks Operations
• Janitorial Services
• Wearing Apparel
• Security Cameras
• Pressure Washer/Trailer Pkg.

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• Westside Recreation Center
• Credit Card Fees

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General Fund Expenditures

• Drainage Maintenance
• Drainage Improvements
• Street Maintenance
• Street Sweeper
• Asphalt Overlay Program
• Sand Spreader
• Pro Patch Truck
• Sign Maintenance
• V 5900 Line Striper
• Pre-Melter

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General Fund Expenditures

• Non-Departmental
• IT Replacement Fund Contribution
• VERF Contribution – General Fund and Fire Dept.
• Health, Dental & Vision Increase
• Water Mitigation Fund Contribution

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General Fund Expenditures

• Overall
• FY 24-25 Proposed is 4.2%, or $5,271,169 higher than the FY 23-24 Budget
• FY 24-25 Proposed is -1.0%, or -$1,287,004 lower than the FY 23-24 Estimate

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General Fund Multi-Year Projection

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Water & Sewer Operating Fund Overview

• Total Revenues (Gross)
• $69,406,016
• 6.2% increase over FY 23-24 Budget
• -7.5% decrease from FY 23-24 Estimate
• Total Expenditures (Gross)
• $75,790,640
• 2.7% increase over FY 23-24 Budget
• 0.4% increase over FY 23-24 Estimate

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Water & Sewer Operating Fund Revenues

• Water Charges
• Current trend for this fiscal year is $3,228,470 more than budget
• FY 24-25 projected decrease expected to be -10.5%, or -$2,273,489 less than current year estimate
• Sewer Charges
• Current trend for this fiscal year is $2,506,552 more than budget
• Next fiscal year anticipated to decrease -0.91%, or -$247,475 under current year estimate
• Water & Sewer Taps
• Current year estimate $214,461 more than budget
• Next fiscal year anticipated to decrease -7% or -$70,702 from current year estimate

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Water & Sewer Operating Fund Revenues

• Surface Water Conversion Fee (SWC)–SJRA Pass Through
• FY 23-24 Estimate is $17,736,285
• FY 24-25 Proposed is $16,072,979

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Water & Sewer Operating Fund Revenues

• Overall
• FY 24-25 Proposed is 6.2%, or $4,048,622, higher than the FY 23-24 Budget
• FY 24-25 Proposed is -7.5%, or -$5,613,314, lower than the FY 23-24 Estimate

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Water & Sewer Operating Fund Reserves

• Established at 187.2 days, or 51.3% ($38,871,951)
• Above the required 60-day reserve threshold established in the City’s Financial Management Policy by 127.2 days
• Above the additional 30-day budget contingency by 97.2 days

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Water & Sewer Operating Fund

• Current Year (FY 23-24)
• Estimated expenditures $75,516,816 or -$1,748,378 over budget
• Expenditure Distribution:

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Water & Sewer Operating Fund Expenditures

• Base Budget (24-25)
• Departments given a target budget that was 5% less than the previous year, minus capital expenditures and one-time expenses

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• Supplemental Requests
• Total of initial requests $8,458,819
• 24-25 Supplementals Proposed: $4,175,668

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Water & Sewer Operating Fund Expenditures

• Utility Billing
• Increased credit card fees for online payments
• Additional funds for meter expense
• Third-party Meter Installation and Repairs

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• Water Department
• Increase Vehicle Operations for Fuel Cost
• LSGCD Water Fee Increase
• 3-Man Crew, Truck, Trailer, and Excavator
• Water Plant Operator
• Water Infrastructure Repairs
• Increase Overtime Budget

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Water & Sewer Operating Fund Expenditures

• Conroe Central Wastewater Plant
• Increase To Polymer Cost

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• Southwest Wastewater Plant
• Media Replacement At Grand Central Odor Control

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• Sewer Department
• Increase Vehicle Operations for Fuel Cost
• Dump Truck Replacements (1835, 1601)
• Sewer Infrastructure Repairs
• Increase Overtime Budget

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Water & Sewer Operating Fund Expenditures

• Pump & Motor Maintenance
• Half Ton Crew Truck For Lift Station Maintenance
• Journeyman Electrician, Pump Mechanic, and Truck

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• Non-Departmental
• IT Replacement Fund Contribution
• VERF Contribution
• Health, Dental, and Vision Increase
• Water Mitigation Fund Contribution

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Water & Sewer Operating Fund Expenditures

• Overall
• FY 24-25 Proposed is 2.7%, or $2,022,202, higher than the FY 23-24 Budget
• FY 24-25 Proposed is 0.4%, or $273,824, higher than the FY 23-24 Estimate

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Water Mitigation Fund

• Water Mitigation Fund
• Created to offset debt issuances for Water Infrastructure
• Will receive transfer in from General Fund and Water & Sewer Operating Fund in FY 24-25
• Funds will be used to construct a Water Well in the North West Quadrant of the City

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Water & Sewer Operating Fund �Rate Study Results

• 2024 Water and Sewer Rate Study – Scenario #1
• Rates are based on current revenue and expense patterns (i.e., operating costs and the CIP fully debt funded), needed to maintain appropriate reserve levels, and 1.40x debt coverage ratio.
• Residential – No water and sewer rate increase in FY 24-25.
• Current Water Rate = $32.74 (10,000 gallons consumption)
• Current Sewer Rate = $81.07 (10,000 gallons consumption)
• Current Combined = $113.81 (not including SWC or LSG Fees)
• Lifeline Rate for over age 65 and/or disabled customers – same discount for water or sewer rates (not including SWC or LSG Fees)

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Water & Sewer Operating Fund �Rate Study Results

• 2024 Water and Sewer Rate Study – Scenario #1
• Commercial – 4% Water and sewer rate increase in FY 24-25.
• Current Water Rate = $307.75 (50,000 gallons consumption)
• Current Sewer Rate = $304.21 (50,000 gallons consumption)
• Current Combined = $611.96 (not including SWC or LSG Fees)
• Proposed Water Rate = $317.16
• Proposed Sewer Rate = $316.36
• Proposed Combined = $633.52 (not including SWC or LSG Fees)

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Water/Sewer Rate Comparison

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Water Base Rate Comparison

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Residential/Sprinkler Rate Comparison

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Lifeline Rates – Age 65 and/or disabled

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Commercial Rate Comparison

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Future Water & Sewer Rate Increases

• Based on 2024 Water & Sewer Rate Study
• Scenario #1

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Note: These rate increases are necessary to maintain a minimum reserve of 90 days and 1.40x coverage ratio for debt service payments.

10-Year Water & Sewer Rate Study

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Regional Bill Comparison�Residential 5,000 Gallons

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Regional Bill Comparison�Residential 10,000 Gallons

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Regional Bill Comparison�Commercial 50,000 Gallons

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Regional Bill Comparison�Commercial 100,000 Gallons

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Water & Sewer Operating Fund �Rate Study Results

• 2024 Water and Sewer Rate Study – Scenario #2
• Rates are based on current revenue and expense patterns (i.e., operating costs and the CIP partially cash funded), needed to maintain appropriate reserve levels, and 1.40x debt coverage ratio.
• Residential – 3.5% water and sewer rate increase in FY 24-25
• Current Water Rate = $32.74 (10,000 gallons consumption)
• Current Sewer Rate = $81.07 (10,000 gallons consumption)
• Current Combined = $113.81 (not including SWC or LSG Fees)
• Proposed Water Rate = $33.90
• Proposed Sewer Rate = $83.93
• Proposed Combined = $117.83 (not including SWC or LSG Fees)
• Lifeline Rate for over age 65 and/or disabled customers – same discount for water or sewer rates (not including SWC or LSG Fees)

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Water & Sewer Operating Fund �Rate Study Results

• 2024 Water and Sewer Rate Study – Scenario #2
• Commercial – 7.25% Water and sewer rate increase in FY 24-25
• Current Water Rate = $307.75 (50,000 gallons consumption)
• Current Sewer Rate = $304.21 (50,000 gallons consumption)
• Current Combined = $611.96 (not including SWC or LSG Fees)
• Proposed Water Rate = $327.25
• Proposed Sewer Rate = $326.29
• Proposed Combined = $653.54 (not including SWC or LSG Fees)

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Future Water & Sewer Rate Increases

• Based on 2024 Water & Sewer Rate Study
• Scenario #2

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Note: These rate increases are necessary to maintain a minimum reserve of 90 days and 1.40x coverage ratio for debt service payments.

10-Year Water & Sewer Rate Study

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Regional Bill Comparison�Residential 5,000 Gallons

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Regional Bill Comparison�Residential 10,000 Gallons

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Regional Bill Comparison�Commercial 50,000 Gallons

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Regional Bill Comparison�Commercial 100,000 Gallons

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General Obligation Debt Service Fund

• Revenues - Increasing by $1,464,969 from FY 23-24 Budget – includes new debt requirement for 2024B CO’s (Excludes Refunding Bonds and Premium on Bonds Issued)
• Sources of revenue:
• Property Taxes: $18,949,912
• CIDC payment of park debt: $440,891
• CIDC payment of OJJCC debt: $2,192,550
• TIRZ #3 payment of debt: $3,899,296
• Conroe MMD#1: $236,924
• Longmire Creek Estates PID (Infrastructure) Fund: $58,737
• Wedgewood Falls PID Fund (Infrastructure): $118,679
• Shadow Lakes PID Fund (Infrastructure): $168,452
• $19,425,000 – COs Proposed to be issued in 2024

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Water & Sewer Debt Service Fund

• Revenues – Increasing by $2,389,729 from FY 23-24 Budget
• Expenditures – Increasing by $2,772,297 from FY 23-24 Budget
• Main source of revenue: Water and Sewer Operating Fund (i.e., water and sewer rates)
• $54,215,000 – CIP Proposed to be issued in 2024

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Conroe Industrial Development Corporation (CIDC) Funds

• CIDC Revenue Clearing Fund
• Sales Taxes decreasing by $326,836 or -2.0%, from FY 23-24 Budget
• FY 24-25 proposed based on current year estimate with a 2% decrease, adjusted for major audit adjustments
• Total FY 24-25 revenues $16,819,540
• CIDC Debt Service Funds
• Total CIDC debt-related expenditures for FY 24-25 are $6,445,897
• CIDC General Fund
• $6,859,753 total budget
• $1,681,954 for economic incentives (at least 10% of revenues)
• $3,710,424 for transfers Water & Sewer Debt Service, GO Debt Service, Technology Replacement Fund, and Hotel 3^rd Lien

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CIDC Funds

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CIDC Fund Balance

Other Funds

• Self-Funded Insurance Fund
• Beginning Fund Balance $2,781,941
• FY 24-25 revenues $14,937,280
• FY 24-25 “expected” expenditures $14,716,072
• Claims $8,297,836
• Administration & Stop Loss $2,717,460
• FY 24-25 “maximum” expenditures $17,446,779 (i.e., additional $2,730,707)

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Other Funds

• Convention Center Debt Service Fund
• FY 24-25 revenue $835,300
• FY 24-25 expenditures $835,300
• FY 24-25 budgeted transfer from HOT Fund of $570,000 and GO Debt Service Fund of $265,300

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Other Funds

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• Hotel Occupancy Tax Fund
• Revenues budgeted at $3,903,638
• City portion = $3,044,943
• County portion = $858,695
• Expenses = $5,447,504
• Supplementals:
• IT Replacement Fund Contribution
• Construction Cost for Visitor Center
• Health, Dental & Vision Increase
• Fund Balance Decrease = -$1,498,871

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Other Funds

• Vehicle and Equipment Replacement Funds
• Total City Fleet: 426 (321 vehicles & 105 equipment)
• Two different types of fleet funds for accounting purposes:
• For government-type activities (GTA)
• For business-type activities (BTA) – water & sewer fund vehicle and equipment replacements
• Total GTA City Fleet: 345 (270 vehicles & 75 equipment)
• Total BTA City Fleet: 81 (51 vehicles & 30 equipment)

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Other Funds

• Vehicle and Equipment Replacement Fund
• For government-type activities (GTA)
• FY 24-25 annual contributions, Total $4,592,894
• General Fund - $2,132,500 ($225,000 for Police Department leases), $225,096 for Transportation vehicles, and $2,000,000 for the Fire Department
• Fleet Services Fund - $10,298
• FY 24-25 Expenditures $4,456,608

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Other Funds

• Water & Sewer Vehicle and Equipment Replacement Fund
• For business-type activities (BTA) – water & sewer fund vehicle and equipment replacements
• $475,953 needed to fund FY 24-25 & each future year
• FY 24-25 contributions $ 475,953 from Water & Sewer Operating Fund
• FY 24-25 Expenditures $937,240

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Other Funds

• Transportation Grants Funds
• Grant revenues budgeted when awarded
• Funds are established for each grant award year
• Federal Transit Administration - Section 5307, 5310, & 5339
• State Public Transportation Appropriations

• CDBG Entitlement Fund
• Revenues are budgeted at $629,892
• Expenditures budgeted at $637,680
• Based on the Community Development Block Grant (CDBG) program

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Other Funds

• Municipal Court Special Revenue Funds
• Separate funds account for municipal court fees that are restricted by State Law:
• Technology Fund
• Building Security Fund
• Local Youth Diversion Fund
• Efficiency Fee Fund
• Truancy Prevention Fund
• Jury Fund
• Time Payment Reimbursement Fee
• Total Revenues budgeted at $135,591
• Total Expenditures budgeted at $111,650

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Other Funds

• Fleet Services Fund
• Revenues (Service Charges) budgeted at $3,158,952
• Expenditures budgeted at $2,853,333
• Supplementals:
• Building Maintenance Account
• VERF Contribution
• Health, Dental & Vision Increase
• Fleet Services provides service to internal and external customers

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Other Funds

• Wedgewood Falls PID Fund
• Revenues budgeted at $185,000
• Expenditures budgeted at $131,039
• Transfer to GO Debt Service Fund of $118,679 for infrastructure debt payments
• Longmire Creek Estate PID Fund
• Revenues budgeted at $96,333
• Expenditures budgeted at $65,102
• Transfer to GO Debt Service Fund of $58,737 for infrastructure debt payments

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Other Funds

• Shadow Lakes PID Fund
• Revenues budgeted at $190,000
• Expenditures budgeted at $179,988
• Transfer to GO Debt Service Fund of $168,452 for infrastructure debt payments

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Other Funds

• Animal Shelter Reserve Fund
• Revenues budgeted at $70,910
• Expenditures budgeted at $13,250
• Includes City of Willis agreement revenues
• Technology Replacement Fund
• Revenues budgeted at $1,100,000
• Transfers in from General Fund ($975,279),Water and Sewer Operating ($113,383),CIDC General Fund ($6,299) and HOT Fund ($5,039)
• Expenditures budgeted at $2,387,888

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Questions?

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