La Grange Proposes $19 Million Budget for Next Year

The La Grange City Manager Jack Thompson presented the proposed budget for next year to the City Council Monday night, Aug. 10.

The proposed budget came in at just under $19 million. Of that amount, $6.68 million will go to the General Fund, which pays for public safety, streets, parks and general governmental services, mostly from property and sales taxes.

The utility fund amounts to about $11.9 million. It includes electric, water, sewer and garbage services, which are funded by utility bills. The remaining $364,683 will pay for debt service on the City’s 2020 certificate of obligation.

This year, City staff proposed a three percent cost of living raise to all City employees.

Thompson said about 62 percent of the total budget goes toward payroll and benefits to employees.

“For a city, that’s not uncommon,” he said. “We’re a people business, so we run on a lot of personnel.”

The proposed budget for next year increased by about $1 million over the current budget. If approved, some of that increased expense other than salaries come from new equipment for the street department to handle road repairs.

“We’re proposing an F-350 crew cab and hot mix trailer so we can start doing hot mix repairs,” Thompson said.

The proposed budget also includes a compactor machine for the street department. In addition, budget includes a camera system for the City’s stormwater drains. In the utility fund, one of the larger expenses involves a rehabilitation of the ground storage tank at Will B.

During the discussion, Thompson told the Council that next year’s budget includes $81,500 to extend electric and sewer service to new facilities that the Texas Czech Heritage and Cultural Center (TCHCC) plans to build on its campus at the Fairgrounds.

“They’re expanding, and in the past, they have always had the City pay for it,” Thompson said. “That’s something that we’re going to have to discuss in the future, how we want to do that.”

The City signed an agreement with TCHCC when the organization decided to plant roots in La Grange back in 1997. At that time, the City provided land for TCHCC to build upon and agreed to extend utilities there at no cost. Since that time, Thompson said, whenever TCHCC constructs a new building, the City has connected utilities at no cost to the organization.

“Our attorney believes that’s something we’re not really on the hook for,” he said. “But its something we’ve set precedents on.

“That’s your own decision on how you want to proceed with that,” Thompson told the Council.

Councilman Dylan Schlotterbeck said he reviewed the agreement and was surprised to learn that it specified only $1 million for insurance.

Thompson said the City’s insurance carrier has evaluated the property and the City has increased coverage over the years.

“Do they pay for the insurance?” Councilman Ken Taylor asked.

“We pay for the structural insurance. They pay for the personal property,” Thompson said.

“Is that normal that we’re paying for the insurance?” asked Councilwoman Bonnie Busch.

“No,” Thompson said. “Again, this is something that we’ve inherited. So it’s something that’s all up to y’all.”

“I agree with you, but you can’t just go say, ‘Hey, we’re changing this,’” said Councilman Bryan Kerr.

Taylor said the City needs to meet with TCHCC to discuss changes to the arrangement.

“At least bring them to the table and say, ‘Look, I hear you about the past, but going forward, money is tight for you as well as us. Our customers are paying for your benefit – insurance, utility upgrades,’” Taylor said.

Thompson said he would leave the TCHCC expenses in next year’s budget unless Council instructs him to remove them. They did not do so at Monday’s meeting.

On another matter, Taylor warned about the budget relying too much on revenues from the City’s “MuniGas” business enterprise. Many years ago, the City established the Municipal Gas Acquisition and Supply Corporation, known as MuniGas, which has since expanded to several affiliates. The City-sponsored corporation provides wholesale natural gas to participating public entities and municipalities.

Traditionally, the City has dedicated profits from the enterprise to the capital improvement fund, which pays for large, one-time expenses such as major equipment purchases.

Thompson said the proposed budget includes a $1.6 million transfer from the capital improvement fund to the general fund.

Taylor questioned whether the money will be spent only on capital improvement projects. Thompson said that the money would be “predominately” spend on capital improvement projects but he said “a little spills over” into other areas.

“My real concern is on the gas money,” Taylor said. “If I remember right, it was to go to (capital improvement) projects because you didn’t want to put it in salaries and all those kinds of things. Someday, if you don’t have the gas money, your back is against the wall. How do you pay the bills if you don’t have the gas money? We’ve been very, very blessed and we continue to be blessed, but you have to be careful.”

Taylor compared the MuniGas profits to the 287(g) grant money that the Sheriff’s Office and local police departments are getting from the federal government for participation in immigration enforcement. The Sheriff’s Office, in particular, has wanted to use some of that money to boost salaries for its personnel.

“It’s kind of like the Sheriff’s Office getting all the money from the (federal) government,” Taylor said. “We’re going down that trail, too. One day, that money is going to dry up. And then what in the world do they do when it dries up? Because you can’t afford to pay the salaries that you’re paying with quote-unquote ‘free money’ that’s coming from Washington, D.C., from our back pocket. So that’s my concern. How do we manage (capital improvement) money – gas money – so we don’t get ourselves in a jam down the road?”

Thompson said the property taxes account for only about 10 percent of the City’s revenues.

“We looked at the cities of Sealy, Bellville, Columbus, Giddings, Smithville, Schulenburg, Bastrop and Brenham to see what percentage of their revenue is brought in by property taxes,” Thompson said. “The average is 30 percent. The lowest was about 20 percent. And the highest was 45 percent. So for us, even if we had 20 percent of our revenue, that’s $1.2 million. That really changes the game for us.

“But the way the state sets it up, there’s no real way for us to catch up,” Thompson added. “So we’re always going to be in that spot. The only way to counter that low number is through industrial attraction, attracting business. And I’m not talking about smokestacks. But you’re either got to get a really large user that’s going to beef up how much money you bring it, or you get a lot more sales tax.”

Thompson said projections indicate a “flat” year for sales tax revenue.

The Council will vote to propose a property tax rate at a special meeting on Aug. 17. On Aug. 24, they’ll hold a public hearing on the proposed budget.

A public hearing on the tax rate will take place Sept. 14. They plan to officially adopt the budget at a meeting on Sept. 28.