Mayor Jeff Cheney compared the process of putting together the budget, which was unanimously approved by Frisco City Council on Sept. 15, to the economic downturn the nation experienced more than a dozen years ago.
“We’re definitely taking a conservative outlook [this year] just to be prepared if we do see a decline in commercial values and/or sales tax as a result of COVID-19,” Cheney said. “We’ve been through the cycles of 2008 [and] 2009 as far as being able to manage a budget during uncertain financial times.”
Frisco’s annual budget outlines how residents’ tax dollars and other city revenue sources are allocated. The budget provides funding for city necessities like the Frisco Police Department, Frisco Fire Department and maintenance of roads, water lines and sewers, as well as amenities such as the Frisco Public Library and operation of city parks.
This year’s budget also includes a 3% raise for city employees and long-range plans for future projects and infrastructure related to Frisco’s continued growth.
Property tax rate
As part of Frisco’s conservative financial approach, council kept the property tax rate steady for FY 2020-21. While the property tax rate is consistent with Frisco’s 2019-20 tax rate, the city expects to raise more revenue for maintenance and operations as compared to the current year. Part of that extra revenue is due to the 1.21% increase in the average taxable value of homestead properties citywide.“Our citizens will still visibly see the same levels of service that they’re used to and that they expect,” Cheney said. “We may defer some decisions as far as capital purchases or those types of things. But we’re still moving forward with all of our anticipated large capital projects such as roads, infrastructure and so forth.”
Staff said the average city tax bill for homeowners is expected to be around $1,800, an increase of about $22 for the year. However, the 10% homestead exemption is still in place, and homeowners age 65 and up will again have the opportunity to claim an $80,000 senior homestead exemption.
Assistant City Manager Nell Lange said part of the reason Frisco has been able to maintain its “relatively low property tax rate” is because the city has a steady stream of sales tax revenue.
Strong sales tax base
Cheney explained Frisco’s diverse sales tax base eases the tax burden placed on homeowners.
“We have a lot of people from other communities that come to Frisco to shop or dine or enjoy our experiences,” Cheney said. “That’s why tourism has been a big component of our local economy.”
With uncertainty as to when tourism-related businesses will return to pre-coronavirus levels, Chief Financial Officer Anita Cothran said staff budgeted only a 1% increase in city sales tax revenue for FY 2020-21. Last year’s budget included a 2% projected increase in sales tax revenue.
“Our best indicators are just following the trends from the prior year,” Cothran said. “I think the [trends for the] rest of the calendar year will probably be no different [than last year]. I think it’ll be flat. Hopefully, it’ll be up a little.”
Even though sales tax revenue has been down in four of the last five months compared to the same months in 2019, Tony Felker, Frisco Chamber of Commerce president and CEO, said he believes the economic downturn the city has seen during the pandemic will be a “small blip” for Frisco.
“For Frisco, retail works very well as being a core part of its economy, both from the city’s perspective and the overall business community,” he said. “At the same time, Frisco is also remaining committed to being diversified in different areas and not having all of our eggs just in the retail/sales tax basket.”
Sales tax in the budget
Cothran said a portion of sales tax revenue is responsible for the entire funding of the Frisco Community Development Corp. and the Frisco Economic Development Corp. Cheney explained that the former has helped the city build parks and venues that Frisco citizens enjoy, while the latter has contributed to the city’s growth.
“Our economic development corporation actually brings jobs here to our community,” he said, noting that he expects this to continue. “We think that’s going to be a very busy market for us here over the next couple of years.”
Frisco EDC President Ron Patterson said budgets throughout the city are always conservative, but this year, there is “an extra layer” to those estimates.
“Our conservative estimates are usually [at one level], and we’ve reduced that somewhat,” he said. “We’re not counting on any extra revenue.
“We’ve dialed all that back, but even doing that, we feel comfortable that we’ll be able to continue to operate and move forward.”
Adding public safety positions
Earlier this year, the U.S. Census Bureau named Frisco the fastest-growing large city in the nation over the last decade. Along with that growth, the city added more than 60 new employees as recently as the FY 2017-18 budget. Last year, Frisco limited new employee additions to just four, and this year, the city plans to bring on seven new public safety positions as part of the new budget. Those include a deputy chief of operations for the fire department and six positions for FPD, three of which are being funded entirely through grants, city staff said.
“We’ve always said as a city that public safety is our No. 1 priority,” Cheney said. “This budget reflects that. It’s still funding our police and fire at the levels that we have in the past to continue to give them the resources they need to keep this community safe.”
