Budget

From left, Mayor Wyman Williams and council members Jean Klaus and Stephanie Muller listen to the presentation of the proposed city budget for the 2019-20 fiscal year last Thursday.

The proposed budget for the City of Commerce for the 2019-20 fiscal year was presented to the City Council at a special called meeting last Thursday.

With the proposed tax rate, two public hearings are required to allow for community input before the budget is approved for the next fiscal year, which beings on Oct. 1. 

Commerce City Manager Darrek Ferrell presented the budget to the council during the meeting. According to Ferrell, the city receives 37 percent of its revenue from property taxes, 18 percent from sales taxes and 45 percent from other sources. The proposed budget is accounting for increases in both property and sales tax collections.

More money is being allocated to the city’s Public Utilities Funds to repair and improve current water and wastewater facilities.

In total, the city is budgeting to receive $12,875,845 in revenues and is expecting to spend $13,298,139. This does not make the budget structurally balanced, which means more money is being brought in than being spent, but it is statutorily balanced, as there is more than enough money in the general fund left over to run the city if all revenue sources stopped for multiple months.

Also, no individual funds are in the red. The airport fund was running at a $5,000-plus deficit, but a decrease in expenses has brought the balance above zero.

For the proposed budget, police and fire are receiving the most money by far, with $1,541,717 and $1,076,276 being spent for police and fire, respectively.

Ferrell presented a new model for employee compensation. Instead of giving a flat raise across all departments as was done last year, the city has adopted a “step and grade” system.

A salary analysis was completed to better understand what salaries would be competitive and how to structure raises based on years of service and other factors. The step and grade system has categorized  employees who may have similar job types but work in different departments. From there, each grade has several clearly defined steps that show how much an employee will receive from year to year. The move is touted as a way to remain competitive salary-wise and also give employees a clear path going forward.

The salary increases from the previous year differ between each grade, and are anywhere from three to 22 percent, with an average salary increase of 10 percent, much higher than the two percent flat increase from last year.

However, the city’s costs of insurance is also increasing by five percent. The city will continue to fund all of the benefit costs for employees.

The Commerce Journal caught up with Ferrell and City Accounting Supervisor Jamie Campbell this week to discuss the new step and grade system. Campbell said she started looking into options in March, saying that it was time to find a new system to provide competitive pay.

“I created a Standard Occupation Classification system to group up similar job types,” Campbell said. “It was tailored to this region to see what we would have to pay to stay competitive with our salaries.”

Campbell says that in the new system, there nine different pay grades for full-time employees and five for part-timers. Each grade has 15 steps. Campbell stressed that employees will still get raises after reaching step 15, as cost of living allocations can be adjusted to match with inflation.

In total, Campbell said that with the new system, the city is spending $151,375 more in employee compensation compared to last year’s budget to pay for the city’s 96 employees.

“We hope to retain some really good people with the new step and grade system,” Campbell said.

The proposed tax rate is remaining the same, staying at $0.82 per $100 of property value, as it has been for the past few years. This comes with an increase in appraised property values, as appraised values are 8.6 percent higher than last fiscal year. The city is budgeting for $2,096,472 in property tax revenues, which is a 96 percent collection rate. The city easily eclipsed 96 percent in collections this year a few months ago.

Since the proposed tax rate will bring in more money than the previous year, a pair of public hearings are required by law to let the community voice their opinion. The hearings are scheduled for Aug. 20 and Sept. 10. Both meetings will take place at 6 p.m. at City Hall.

The average value of a home in Commerce is $99,524, which is an increase from $90,594 last year. However, the city estimates that a home would have to be valued at $208,432 to pay for the services rendered to it through property taxes. Even though that gap is large, it is still a two percent increase in value-to-service ratio over the last fiscal year.

Sales tax revenues are expected to come in at $1 million, believed to be the first time the city has budgeted for that high of an amount. Sales taxes eclipsed $1 million in revenue for the first time in the city’s history during the 2017-18 fiscal year, and are projected to reach that number again before the end of the current fiscal year.

Also at the meeting the council passed an ordinance to approve a conditional use permit for a microblading permanent makeup business at 1205 Alamo Street. The council also went into executive session for roughly two and a half hours to deliberate a matter regarding City Manager Ferrell, but did not take any action after reconvening at the end of the meeting.

The next meeting of the Commerce City Council is scheduled for Aug. 20 at 6 p.m.

The proposed budget and new step and grade pay system can be viewed online at the city’s website at commercetx.org/open-data/