CWS Council considers certificates of obligation, approves budget, tax rate
When the Cottonwood Shores City Council meets at 6 p.m. Thursday, Oct. 6, they will have all thier financial ducks in a row to consider issuing $1.5 million in certificates of obligation for a new water plant.
Anticipating action on Dec. 1, the council will meet with Bill Blitch of Blitch Associates, Inc., a financial advisory firm, working primarily in the utility industry, assisting in funding bond sales .
No citizens came to address the council on Thursday, Sept. 29. Members are hoping that is because they understand the council's financial strategy to pay for water plant replacement.
The only items on the agenda were approval of the budget the Fiscal Year 2016-2017 and the tax rate to support it, a rate voters could legally oppose, if they did not understand the council's analysis.
Prospects are favorable for the approval of a $1.395 million loan from the Texas Water Development Board (TWDB) for the water plant project. That would be offset by a $275,000 Community Development Block Grant (CDBG), federal money sought through the Texas Department of Agriculture.
The council adopted a combined General and Utility Fund budget of $1,653,446 for the fiscal year that began Oct. 1. Utility Fund revenue is anticipated to be $975,340 against expenditures of $717,867. Whereas General Fund expenditures of $935,579 should vary the same $257,473 against anticipated revenue of $678,106.
The tax rate will remain the same: $0.5438 per $100 valuation. For this year, $0.4041 per $100 will be dedicated to maintenance and operation (M&O) and $0.1397, for the interest and sinking fund (I&S).
Cottonwood Shores will be paying off some debt in the coming year and, on the books, that means debt service demands will go down; down enough that the rate adopted could be contested.
“But the next year (with the added water plant debt), it is going up in spades,” said Orr. “So, rather than go down this year and up drastically next year we hope to balance over the next several years.”
A hope discussed in budget meetings and hearings since June is that same rate will serve for as many as four years, with the largest possible overall savings to taxpayers in the long run. Mayor Orr, takes a practical view of financial prognostication, however.
“The present Council commitment is to hold the tax rates for 2016 – 2017 and 2017-2018 constant,” said Orr. “This will get us through the largest of the potential variations due to I&S, and besides, we can’t forecast capital needs three years in advance well enough to commit to hold a tax rate for more than two years.”
At the bottom line, the current rate will yield, $333,720 from ad valorem taxes. That is $17,227 or 5.7 percent more than in 2015-2016. Of that amount, $8,088 will come from new property added to the tax roll.
