After the initial meeting on the morning of Aug. 12, the board of directors instructed Monique Sharp, assistant general manager for finance and administration, to reformulate the base budget—which was available to attendees in a 101-page packet—based on new calculations that assume no sales tax growth next year and only 1% increases in revaluating existing taxable property.
As of August, sales tax revenue is $1 million below projections, Sharp said. Meanwhile, last week Houston-based Occidental Petroleum Corp. moved a step closer to its acquisition of The Woodlands-based Anadarko. If that acquisition results in the company moving its headquarters out of The Woodlands, it could also affect sales tax in the future, she said.
“I have not seen anything yet where the headquarters will remain … here, and it’s where the headquarters are located that generates that sales tax,” Sharp said.
The amount of sales tax generated by Anadarko in The Woodlands is confidential information, so that was not discussed before the public, Sharp said.
The preliminary base budget for 2020 presented at the Aug. 12 meeting assumed the current property tax rate of $0.2273 per $100 valuation and a $1.2 million increase in revenue for a total overall budget of $130.2 million. The preliminary budget continues existing service levels, accommodates growth and continues capital projects, according to information presented at the meeting.
It also includes several increases in areas such as solid waste management—projected to increase by $1.6 million due to contractual changes—and streetscaping, which will increase by $1.1 million because the township is taking over costs previously borne by The Woodlands Development Corp.
Although the initial presentation projected $307,000 in undesignated fund revenue remaining after expenditures in the 2020 budget, discussions during the morning meeting led to the board requesting recalculations based on a new set of assumptions. When calculated with no projected sales tax revenue increase, the budget could see a shortfall of more than $400,000, Sharp said after the board returned from an executive session.
Sales tax, which makes up 43% of township revenue, was forecast at 0.4% growth this year and 1.5% next year, but as of August it has actually represented a 2.8% decrease from projections this year. The board agreed to recalculate 2020 projections based on no sales tax revenue growth from 2019 as well as the assumption that revaluation revenue in the next five years will be 1% annually, rather than the initial 2% projection.
"It's the revaluation that has the largest impact," Sharp said. "Revaluation is huge."
Although precise cuts were not discussed at the meeting, the board discussed the possibility of salary freezes, reducing the number of new full-time employee positions built into the base budget from four to one over the next five years, and other cost-saving measures.
"This is a bleak budget, we need to make some cuts,” Vice Chairman John McMullan said at one point during the meeting.
Trolley service, mounted patrol horses and fees throughout the service were also brought up as items to add to the discussion when the board tackles budget initiatives Aug. 13.