The Levelland City Council held their first budget work session for the year last week with revenue for the general fund being the main focus for the meeting.
City Manager James Fisher led the meeting providing preliminary numbers courtesy of Finance Director Cynthia Sanchez and Assistant City Manager Justin Balderas.
Fisher explained that the budget has to be filed with the city secretary at least 30 days before the adoption of the property tax rate. With the budget calendar set for the City, the goal is to adopt a budget along with a tax rate in September. The budget also runs Oct. 1 through Sept. 30.
Prior to beginning the work session, Fisher emphasized the numbers are preliminary as the City will continue to work numbers as they are received from the state.
Beginning with sales tax collections, the City budget for FY24-25 is at roughly $3.6 million. Fisher stated that staff feels they are on track to meet that number.
For FY25-26, the projected number was about $3.72 million which is 3.05% increase. Balderas added that the number was suggested after conducting some analysis from an economic standpoint. Looking at the last 10 years, he analyzed the total sales tax collection of the community. This also included the low points during the pandemic and the high points coming out of it.
“Coming out of the pandemic in FY22-23, we had a substantial increase of 9.67%,” said Balderas. “In FY23-24, we had a slight dip. It might show a negative number, but we are still collecting on average higher than what our average would have been.”
With the close out of FY2425, Balderas used the standard grade of the projection of next year which should exceed at that 3.05% rate.
Balderas also provided additional increased projections based on increased construction coming to the community including quick service restaurants and commercial investments that have occurred within Levelland.
“I do not feel confident exceeding anything above a 5% projection,” said Balderas. “I am confident that we will be a little above the 3.05% even with just our wastewater treatment plant. There’s going to be a large construction team coming to the community.
“They are a big advocate of purchasing local and that is just one major project. We have quite a few others that will be more than likely kicking off in this next fiscal year that could exceed these projections. Again, I want to bring a good conservative well thought out percentage of increase that way we are not making strategic plans with revenues that we wait on.”
Tentatively, Circle K, Whataburger, Take 5 and 7 Brew are set to break ground between August and September. Questions were asked if their completed construction later in the year would affect sales tax collections by any margin. Both Fisher and Balderas explained that it does take a considerable amount of time to see a tangible increase from the time a new business is opened and begins operations.
Balderas noted that the community has been doing well when it comes to local spending. He stated that the city is over 65% of local dollars spent in town. This means that people that earn a dollar in Levelland spend the dollar in Levelland.
“Sixty cents of $1 is spent here, “ explained Balderas. “The other portion is spent on ecommerce, but it’s a true testament of how much we do support our local businesses here in Levelland.”
While 5% could be obtainable in sales tax collections, Balderas pointed out that going higher would create a lot of stress during the down seasons such as the summer when residents take vacations and spend their dollars elsewhere.
Looking at the building permits line item, the City is projecting about $25,000. Currently, the City is sitting at about $56,000 because of the new businesses coming to Levelland have paid their fees.
Fisher is hopeful that as the businesses get underway, others will see the opportunity in Levelland and can bring in some additional economic development.
Looking at sales tax to reduce Ad Valorem tax, Fisher explained that impacts the tax rate. The projected amount is set at $323,000 which is slightly higher than the current year’s projected rate of $286,890.
The street maintenance sales tax line item includes a projected total of $646,000 compared to the current year’s projection of $573,780. This line item includes the annual seal coat in addition to some administrative items, according to Fisher.
For police security, the line item is set at zero due to some recent changes. Levelland Police Chief Erica O’Bryon explained that the amount of overtime cash is now being offered to officers to take security jobs which transitions those offers to a W-9 employee. O’Bryon added that the department consulted City Attorney Slater Elza and developed a solid off-duty policy.
“They understand that’s a risk and liability that they’re accepting. It reduces that risk and liability of the city,” said O’Bryon. “There is not going to be anything coming revenue wise on that.”
Fire services to the county were discussed. Traditionally, the City has set the projected total around $125,000. This year, the amount has surpassed that projected total with $146,475.
The current contract between the City and Hockley County ends in September. Fisher noted that he spoke with Hockley County Judge Sharla Baldridge regarding the contract. From their discussions, both individuals plan to present the same contract for renewal to the Council and County Commissioners for another two-year agreement.
Fisher explained that the biggest challenge in fire service has been mutual aid for out-ofcounty calls. Mutual aid has a specific time limit before it can kick in, and there are times when responding personnel will be at a call for five minutes or several hours.
“That is something we have to work through on a case-bycase basis,” said Fisher. “[LFD] Chief Faulkner and I have talked about this. We do not want anyone to be hesitant about calling us for help if they need help. Money is not the issue. Our job is to respond to our neighbors when they need us and we’ve been blessed by our neighbors coming to our aid.”
For the interfund transfers-in line, Fisher informed the Council that ARPA funding that was finalized from last year is being worked on to make sure the obligated funds are represented correctly.
Addressing FEMA returns, Levelland and Hockley County Emergency Management Coordinator Cole Kirkland is continuing to follow up with the organization. Fisher explained that Kirkland is talking with FEMA about various items they have decided to not cover.
Fisher did emphasize that staff was aware there was a possibility of not having everything covered by FEMA. Working through those items that are still outstanding, those updates will be provided to the Council.
Taking a brief look at the Cemetery Fund, Fisher explained that it has been a common practice for the City to pay roughly $.03 out of the property tax to fund it.
An option provided to the Council was an adjusted amount for this coming year as the amount put in every year was to accommodate future expansion of the city cemetery located along Ave. H.
With at least 10 years’ worth of space according to Fisher and adequate space at the cemetery located along Highway 114, the biggest expense foreseen is providing a new maintenance office for staff at the cemetery.
“The current facility they are in really does not have heating or cooling and they are all crammed in there,” explained Fisher. “We need to look at probably taking care of that in this coming year to build.
Mayor Breann Buxkemper asked if there is an ideal location for the building. Fisher stated that the current building is in the middle of the cemetery and suggested possibly moving it further out to provide more space.
Shifting their focus to the Enterprise Fund. The City received a letter from the City of Lubbock with the intention to begin water treatment plant improvements. As Levelland is contracted with the City of Lubbock, the City is responsible for covering 5.98% of costs of the improvements. Originally signed in 1990, the contract has the City of Lubbock treating the water the City of Levelland receives from the CRWM (Canadian River Municipal Water Authority). With the improvements the City will be looking at re-occurring payments of about $214,000 until 2035.
Last year, the City did not adjust their water improvement fee, but adjusted rates to see how they were going to affect the City. Thankful for the rain, Fisher explained that with the rain received the City has not been able to accurately get accurate water consumption figures.
“We did our final adjustment in the wastewater improvement fee at $21 but we are going to have to look at adjusting that to take care of the $7,000,000 overage at our wastewater plant. We are going to have to adjust there,” said Fisher. “If we continue to move forward with doing an animal services facility which to me is probably the most critical thing in front of us that we have to do, we’ll have to make some adjustments to the debt service rate or something like that.”
“Our water, wastewater funds are getting hit hard by the wastewater treatment plant. We know it needs to be replaced. We know we’ve got to do this. None of us have anticipated overrun and we’re working as staff to figure out the most minimal way to make adjustments.”
Fisher emphasized the importance of not depleting the funds to avoid being in a position where other items need to be addressed.
Councilman Michael Stueart added that any adjustments made cannot be made on the back of employees. The Council and staff agreed with Stueart.
Fisher stated his concerns about the construction of the plant is the cost staying within the projected figures.
“I think all of us in the back of our minds know something’s going to come up that we did not anticipate or is going to come in higher than anticipated,” said Fisher. We’re going to have to figure out how to take care of that… we’ve got two choices, to move forward or go backwards and I don’t think any of us want to move our city backwards.
“We’re going to crunch numbers as staff and give you all the absolute best recommendation we can of what needs to be adjusted. I cannot say this enough, I’ve told people that there will be increases. I don’t know what those are. I’m trying to make them as minimal as possible. Nobody is getting wealthy off any adjustments that we make.”
The group wrapped up their discussion with potential options regarding health insurance for employees. Currently accepting RFP’s (Request for Proposals) projected figures see a 30% to 40% increase. With a projected 3% COLA (Cost of Living Adjustment) in the budget discussion, the Council hopes to find a reasonable option to help city employees feel that the raise is not solely going into insurance costs.