Year in Review, Part 2

In the middle of the year, the budget discussions heated up for FY 2016, which began Oct 1, 2015. The city budget increased 23.3%, yet there was minimal discussion on the drivers for such a large increase.

A metric for assessing budget growth is that the annual budget should not grow more than population growth + inflation.  That number is 7% for Georgetown! It is thus clear that the budget growth is out of control at 23%. City officials repeatedly reported on the population growth in Georgetown as justification for the budget growth, but, its clear that population growth is NOT the primary driver for the budget growth of 23%. The assessed valuation of property in Georgetown was approximately 10% greater than for the previous year. This means that the revenue from property taxes to the city increases more than 8% due to the increased valuation (frozen property values for the elderly, etc. do not go up). Yet, the city had to increase the budget by 23%.

The Georgetown population in 2010 was 47,995. It was 59,102 in 2014. That is an increase of 11,107 people in four years which is a 23 percent increase. These are the latest U.S. Census Bureau numbers.

The budget in 2012 was $178.3M. It is proposed to be $284.7M in 2016. This is a $106.4M increase--a 60 percent increase--in just four years.

So this growth clearly is NOT a one-year bump in the budget. A significant unsustainable trend has been established.

This budget growth is being driven by increased debt created by the council and by the voters, even though there are substantial bonds funds still unspent from previous bond elections. Examining the growth of the debt from 2005 to 2015, the latest figures available, the debt has grown from $72.7M to $185.9M. That equates to almost a 10 percent annual growth rate in the debt over the past 10 years. Clearly, this is not a short term problem!

Georgetown solidified its control over the EMS by executing an agreement with Williamson County to provide EMS to the county jail inmates 24/7. Just another mechanism to push Williamson county EMS completely out of the city.

They are in the process of taking over EMS responsibility within the Extra-Territorial Jurisdiction (ETJ), which further pushes the county away from Georgetown.

Recall that recently, the city enacted an ordinance requiring licensing of all ambulances operating within the city. Of course the city has a list of requirements the operators must meet as well as fees to be paid.

The city's solar contractor, SunEdison imploded financially with its stock price falling from $34/share to $2+/share. This drop in share price has raised the question as to whether the company can continue as a viable operation. SunEdison has $11B in debt and its market cap is approximately $1.6B and there has been turmoil in the management ranks.

Georgetown participates in the Texas Municipal Retirement System(TMRS) to provide for the retirement of city employees when they become eligible. As previously discussed, TMRS assumes a 7% growth rate in investment returns when calculating the unfunded liability that the taxpayers are liable for. New pension accounting rules that have gone into effect require a more realistic growth rate for investments and as a result, the unfunded liability will increase.

The latest investment return reported by TMRS for the period ending September 30, 2015 is -1.71%. Of course the stock market has continued to decline since then, so the investment return for 2015 is likely nonexistent.

Another method used to assess the health of a pension fund is to calculate the cash flow. Cash Flow is employee contributions plus city contributions minus benefits paid minus investment expenses. That number should be positive for a healthy pension fund. TMRS reports Cash Flow of $-631,354,701 for the period ending September 30, 2015. In order to generate the cash to cover the shortfall, funds generally have to sell assets--this is not a good thing in a down market!

The Airport Concerned Citizens (ACC) continued their battle against the city of Georgetown and the Texas Department of Transportation to stop the capacity expansion of the airport. The airport has applied for a grant from TxDOT for a new refueling and storage capability that increases the fuel storage by 60%. The cost of such improvements are usually split with TxDOT, which gets the funds from the FAA, with TxDOT paying 90% and the city paying 10%. An email showing the funding sources the city has used for past airport projects was made available.

The Georgetown Transportation Advisory Board and Governing Body held a Public Hearing for a new fuel farm at the airport on Friday, October 9. Approximately sixty citizens were in attendance. There were twenty nine speakers of which twenty eight were adamantly opposed to increasing the airport capacity and they viewed the movement and sixty percent capacity increase in the fuel farm as the "camel's nose under the tent" for additional increases in take-off and landings and ground engine tests. One speaker was neutral on the fuel farm. He was concerned about the wait line for aviation gasoline and the starting and stopping of the aircraft engines as the line moved forward to the filling station. He viewed this as a hazardous operation which the proposed plan does not address. 93 percent of the speakers lived in neighborhoods around the airport.

The Board chairman told the audience at the beginning that the Board would not ask any questions, comment on any testimony, or engage the citizens in any manner. Par for the course!

It appears that the City is not listening to its constituents.

It has been reported that the City needs two more ambulances for the city within the next 18 months. Also, two new firehouses are required to be constructed over the next 18 months. Most likely one will be built in conjunction with ESD 8 on Williams Drive near Four T Ranch Road and the other one will likely be built in the Southeast quadrant of Georgetown. Details about specific locations will be provided as they become available.

So it appears the City Council is again ready to borrow more money to expand city services. This is in addition to the 23% increase in the city budget for FY 2016. Since the city never funds capital projects out of current revenue, expect more bonds to be issued increasing the long term debt burden.

Why is the City Fighting Reinstatement of Officer Hoskins-Brown? The Williamson County Sun and the Austin American-Statesman newspapers (29 Oct. 2015) have covered this saga and reported that the evidence supporting the firing (twice) was not credible. A hearing examiner found that Officer Hoskins-Brown had indeed taken her boyfriend's prescription drug, for which she also had a valid prescription, but that the charges of ingesting mescaline and lying were not provable under the law. The police chief had placed Officer Hoskins-Brown on indefinite suspension, effectively fired, on June 13, 2013. The hearing examiner ordered Officer Hoskins-Brown reinstated after serving a 15 day suspension on November 1, 2013 with back pay and benefits.

The following day, the chief fired Hoskins-Brown for a second time on the grounds that she could no longer perform her duties because the county and district attorneys found her to be untruthful and refused to accept any cases she filed. Since the second firing was not for disciplinary reasons, the city said her firing was not subject to appeal. A trial court agreed with the city, but the Court of Appeals has ruled that the trial court does have jurisdiction and referred the case to the trial court for further proceedings. The Appeals Court ordered the city to pay the legal fees for the appeal.

Since the Appeals Court ruling, both the District and County Attorneys have publicly recanted their prior statements about Officer Hoskins-Browns credibility as a witness.

The city has now appealed the Court of Appeals ruling to the Texas Supreme Court. Why is the city doing this?

Are they trying to "save face" over a really bad decision?

How much money is this costing the city? Do they really have a Dallas based high-dollar law firm pursuing this effort? How much does the law firm charge? $500+ per hour?

It seems the City Council needs a remedial course on being prudent with the taxpayers money.

The city has completed the takeover of the Chisholm Trail water district, which is touted as a "good thing", but only time will tell whether it makes economic sense.  It is clear that this is another example of an expanding city government with control over more Williamson County residents.