A preliminary budget review in the form of a comprehensive budget letter was provided to the Levelland City Council during their regular meeting Monday which has also been made available to the public on their website.
City Manager James Fisher walked the Council through the information as well as thanked City Staff for the work on providing the in-depth outlook.
A consolidation of the Adopted Annual Budget expenditures, comprising all funds, totals around $26,540,000. The budget can be broken down as follows: The General Fund is projected at $11 million; The Cemetery Fund is projected at $400,000; The debt service is projected at $600,000; The special revenue funds are projected at $370,000; The capital financing funds are projected at zero; The enterprise or utility funds (water, wastewater and sanitation) are projected at $7.5 million; The Wastewater Improvement Fund is projected at $3.07 million; The Water Improvement Fund is set at $240,000; The Levelland Community Development Corporation (LCDC) is projected at $960,000; and The Levelland Economic Development Corporation (LEDC) is projected at $2.4 million.
The letter states the economic outlook for Levelland’s fiscal year 2025-2026 Budget is favorable, supported by investment in capital projects, stable agricultural output following a year of strong rainfall, and targeted utility system improvements. The City’s fiscal management ensured an A+ Standard and Poor (S&P) Global Ratings for both its 2025A Tax and Waterworks-and-Sewer System Revenue Certificates of Obligation ($3 million) and its 2025B Tax and Waterworks-and-Sewer System Revenue Certificates of Obligation ($7.2 million).
The information provided added that Levelland continues to see healthy growth in its ad valorem (property tax) tax base allowing the city to pay for the increasing costs of city services. Certified taxable property values rose by $42,069,380 or about 4.7% from 2024 to $925,396,111. Average market property values for single-family residential homes have also increased by 8.9% or $13,849 from 2024 to $168,371.
The projected General Fund budget is $10,739,423. Of this, 36.8% is funded by ad valorem taxes, 33.4% by sales taxes, 9.4% by utility franchise fees, and 4.8% by transfer-ins. The remaining 15.6% comes from other revenue sources. The General Fund budget increases the Maintenance and Operating (M&O) rate to $0.5085 per $100 assessed value from $0.498729 and increases the Interest and Sinking (I&S) rate to $0.0465 per $100 assessed value from $0.036271.
The largest budget expenditure ($6,692,404 or 61.86%) in the general fund category is personnel salaries and benefits.
Key personnel budget changes include: A 3% Cost-of-Living Adjustment (COLA) for all employees Targeted salary adjustments in the fire department to remain competitive to recruit and retain Targeted salary adjustments in the police department to remain competitive to recruit and retain Review of certification pay Reduced certain risk pool premiums through the Texas Municipal League (TML) Intergovernmental Risk Pool Healthcare cost increases due to market conditions Hiring of staff members to begin succession planning The general funded programs include: general government, public safety, public works, parks and community along with development and planning.
For general government, $725,800 is invested into personnel while $567,600 is in the other category. The other category consists of all expenditures not including personnel costs. The total for the program is roughly $1.29 million.
For public safety, $4,466,191 is invested in personnel while $1,317,829 is in the other category for a rough total of $5.78 million.
For parks and community, $619,422 is invested into personnel while 1,052,849 is in the other category for a rough total of $1.67 million.
For development and planning, $161,524 is invested into personnel while $87,500 is in the other category for a total of $249,024.
The projected total for the upcoming budget is around $10.5 million.
In regards to debt service, the adopted budget expenditure for debt service is $600,299. As the City continues to grow and invest in public facilities, debt obligations have increased to meet major project needs that enhance service delivery and public safety. To meet these obligations the interest and sinking (I&S) portion of tax rate increase from $0.036271 per $100 to $0.0465.
This rate increase ensures that debt for the following is addressed: $3 million Certificate of Obligation for constructing a new animal shelter.
$7 million Certificate of Obligation to meet the increased cost of the City’s wastewater treatment plant.
Wastewater improvement fees cover 75% of the cost with property tax covering the other 25% of the debt cost.
Fisher explained that the capital investments are essential to meet regulatory standards, accommodate community growth, and maintain core public services.
As for an overview of utility funds, the City provides water, wastewater, and sanitation services. The utility funds expenditure budget is $7,382,806 of which $1,940,000 is the cost of purchases of water. Fisher highlighted that this year, utilities focus on rate stability and capital investment to meet both current needs and long-term infrastructure renewal.
To meet increasing infrastructure and service delivery costs: Water improvement fees will increase from $1 to $5 a month, reflecting the cost increases from the City of Lubbock’s treatment of water received from Canadian River Municipal Water Authority (CRMWA), for capital projects, and emergency projects within the water system.
Wastewater improvement fees will rise from $21.62 to $28 per month, funding increased debt service on the wastewater treatment plant construction, for capital projects, and emergency projects within the wastewater system.
Despite the following adjustments, Levelland’s total utility costs are below the average total utility costs in the region.
Fisher stated the proposed rate changes serve a critical role in covering the cost of water and wastewater services that enable the continual investment in infrastructure necessary for the reliability of utility systems for current and future generations.
He added that the City remains committed to affordability while ensuring the sustainability of its systems for future generations. $16.22 less than average for 7,000 gallons consumed water, $11.51 greater than average for 7,000 sewer gallons, and $2.14 greater than average for residential refuse.
Moreover, according to the Texas Municipal League (TML) Utility Study, the City charges $7.33 less than the average rate charged by cities from a population of 10,000-15,000 and $20.84 less than the average city water rate for 5,000 gallons of water consumed. The City does charge $4.61 more than cities from a population of 10,000-15,000 for wastewater but $0.89 less than the average for sewer rates of 5,000 gallons of wastewater.
It was emphasized that by addressing critical utility needs now, the City can reduce the likelihood of expensive emergency repairs, reduce regular maintenance costs, and avoid steeper rate increases in the future.
Also, the improvements place Levelland in a strategic position to accommodate growth, maintain competitive rates, and provide residents and businesses with more manageable service at a lower overall cost over time.
The fiscal year 2025-2026 Budget includes issuance of revenue-backed, Certificate of Obligation (CO) of about $9.85 million for wastewater projects. These bonds are structured with a 20-year term and an estimated annual debt service of $491,000, funded 75% from utility rate revenue and 25% from interest and sinking (I&S) taxes. Proceeds from the issuance will primarily address a funding shortfall resulting from the difference between the 2022 Wastewater Treatment Plant Construction Series and the increased wastewater treatment plant cost.
Existing utility obligations include:
Series 2022 – Wastewater Treatment Plant Construction CO
The issuance funds the replacement of a 40-year-old wastewater treatment plant, enhancing operational efficiency and improving capacity.
Remaining Principal: $17,445,000 Remaining Interest: $9,405,844 Remaining Principal and Interest: $26,850,844 Term: Fiscal year 2041-2042 Annual Principal: $675,000 Annual Interest: $904,119 Annual Debt Service: $1,579,119
Series 2025 – Smart Meters
CO The budget letter stated the issuance supports replacing aging and outdated water meters with modern smart meters enabling accurate water consumption, improved leak detection, and facilitating water consumption forecasting.
Remaining Principal: $5,285,000 Remaining Interest: $2,500,434 Remaining Principal and Interest: $7,785,434 Term: Fiscal year 2039-2040 Annual Principal: $145,000 Annual Interest: $370,684 Annual Debt Service: $515,684
Preliminary budget items including the letter can be found on the City of Levelland website at: http://www.ci.levelland.tx.us/. The budget items will be located on the ‘government tab’ under ‘financial transparency.’