Mayor Craig Morgan writes a monthly column for the Round Rock Leader.
Each year, the City of Round Rock puts together an annual budget that allows us to take care of our day-to-day needs — from library staffing to street maintenance — while also focusing on the road ahead with transportation projects, facility improvements and public safety. We develop long-term plans for major infrastructure like roads and water, as well as quality of life amenities like parks and recreation and library services.
This year’s budget discussions will no doubt include these same themes, but our conversation will be underscored by the COVID-19 pandemic. The past few months have felt like years at times, and some of our plans for the future have had unexpected obstacles placed in their path.
That said, let’s be honest — as City leaders, we are always dealing with change. Changing economic landscapes and new legislation are familiar territory for us. A pandemic is an unexpected challenge, to say the least, but we’ve created a solid foundation through many years of long-term planning and visioning.
Before the COVID-19 pandemic, Round Rock had seen recent business recruiting successes, an uptick in sales tax revenue overall and from Dell as well as healthy fund reserves. Round Rock has historically used sales tax to fund the largest portion of our General Fund, which pays for basic services like public safety and parks. Knowing that sales tax is a volatile funding source, we have for years been working toward a more balanced approach to funding these basic services. Currently, the General Fund is comprised of 43 percent sales tax revenue, 35 percent property tax revenue, 22 percent other taxes and fees. By 2023, we project a balance of sales tax and property tax at 40 percent.
Although our past financial planning puts us in a solid position, we have already sharpened our pencils to brace for the impacts of the past few months on our budget. Sales tax, hotel/motel occupancy tax and other revenues are expected to take a significant hit this year due to the actions taken by local and state officials to limit interaction among people to prevent the spread of COVID-19. Our revised total sales tax projected for FY 2020 resulting from revenue losses from COVID-19 is $67.06 million, compared to the original adopted budget of $74.39 million. Our staff proactively worked to cut approximately $8.9 million out of department budgets for the current fiscal year in lieu of across the board reductions, and we made sweeping cuts to travel, training, non-essential overtime and other spending through a budget amendment passed by City Council last month. This gives us a balanced budget through the end of the year that tightens the purse strings while still allowing us to focus on our priorities, without having to dip into our contingency and debt reserves.
We know our local businesses need us more than ever, and it’s important to keep in mind that “Shopping the Rock” helps us fund improvements to our community that make this city such a great place to call home. The sales tax rate in Round Rock is 8.25 percent, with the state of Texas collecting 6.25 percent and the City 2 percent. Of the City’s share, half of those funds go to basic local government services like police, fire protection, parks and the library, one quarter of the funds help reduce property taxes, and the remaining portion funds economic development, primarily construction of major transportation improvements. More than $582 million in transportation projects alone have come to fruition due to this important funding source.
We are still waiting to see exactly how hard our local economy has been hit these last few months, but we maintain a focus on our strategic planning to make decisions that will continue to move us forward in the direction we need to go. The City will continue to focus on community needs and our strategic goals while working within the confines of our current financial conditions. We will do everything we can to ensure that our community continues to be one of the best places to live in the country, and by working together, we will get through this.