With sales tax revenue down and the expected cost of infrastructure projects up, the city of Jersey Village is facing a potential $1 million budget shortfall by fiscal year 2025-26, according to May 15 budget projections.

Current situation

FY 2023-24 is slated to end with $1.5 million less in revenue than budgeted for, according to May 15 city budget workshop presentation materials. In response to the projected revenue gap, the city implemented a hiring freeze, which will cover all but $235,000 when added to savings on expenses such as capital improvements.

According to City Manager Austin Bleess’ presentation, the revenue gap arose due to:
  • Sales tax being 9% lower than the amount budgeted
  • City fines being down
  • Decreases to the Medicare cost share from the state
  • Slowing new business growth
What’s next

According to Bleess’ presentation, the FY 2024-25 budget will feature:
  • An estimated $400,000 less in sales tax revenue
  • A property tax revenue increase of about $0.045 due to voter-approved debt service
  • A 1.91% increase to property values
  • About $11.6 million in expenses for potential infrastructure projects
  • A first-year expense of $100,000 to hire a communications employee
  • An expense of $19,000 to add lifts to the city pool in accordance with Americans with Disabilities Act compliance
Over the next 10 years, the city will need to complete $20 million-$45 million in capital improvement projects, per the Capital Improvement Plan adopted by City Council in March. Since council adopted the plan, project costs turned out to be more expensive than originally estimated, Bleess said.

“There's some [projects] that you can get by with maybe ... pushing it around a year or two, but you're not going to be able to push them off by five to 10 years,” Bleess said.

Water and sewer rates will increase by 10%, according to the presentation, but preliminary projections place the utility fund cash balance at less than $1 million for FY 2024-25, according to Bleess’ presentation. By FY 2027-28, the utility fund balance would reach a shortfall of about $6 million.

To reduce the impact to the FY 2024-25 budget, council discussed options such as:
  • Extending the capital improvement plan to a 15-year schedule
  • Increasing water and sewer rates by 1% each for an additional $55,000 in revenue
In case you missed it

City Council adopted its FY 2023-24 budget in August, as previously reported by Community Impact. The city budgeted for $29.65 million in expenses and $22.82 million in revenue, resulting in an estimated shortfall of around $6.83 million.