It took a fresh look by experienced advisers to solve Texarkana, Texas' budget woes without raising taxes this year, according to participants in the process.
A budget advisory committee comprising local business leaders and former elected officials had less than three weeks to analyze the proposed fiscal year 2018 budget and recommend changes.
The result was a set of fixes that used money already in the budget to cover a revenue shortfall, avoiding a proposed 4-cent property tax hike as well as a 30 percent water-rate increase meant to create an "environmental fund" to pay for certain infrastructure improvements.
The City Council accepted the committee's recommendations and, on Sept. 11, approved a budget amended to enact them. The city will use reserve funds to reinstate 11 jobs that had been frozen, and $6 million will come from the Texas side's water fund to shore up revenues.
The committee also advised changing the amount of money the city reserves in case of emergency. The council will vote Monday on changing from a percentage-based reserve to one that could cover city expenditures for 60 days, a move that would free up millions of dollars held in the general fund.
"These people (dove) into the budget. And (the City Council) put people on there that understand budget or how to run a business. Because, you know, a lot of people don't have a clue on that. When you're picked to the council, a lot of times you don't realize all the things that you'll be tasked to do. And if your strength is not that, I can understand why maybe they would want some advice from people that they trust," interim City Manager Shirley Jaster said.
Former Council Member Van Alexander, who chaired the budget advisory committee, agreed that the council needed help finding ways to avoid raising taxes.
"They had a lot of new council members who were kind of green and inexperienced with the process," he said. "I kind of knew where we needed to go, because I've been in those conferences and in those budget meetings for years. I automatically knew right there, we don't need a tax increase because we can cover the shortfall with this rainy day fund, so to speak."
A change in thinking toward using more of the revenues the city has already collected should make common sense to the average person, Jaster said.
"As a citizen, when you pay your water bill, that's money that's going to the city. When you pay your property tax, that's money going to the city. When you pay tax at a retail store, there's a small portion of that that goes to the city. So from their point of view, it's all city money. And that kind of was the shift: This is all city money. Why aren't we pooling it?" she said.
It remains to be seen where specifically in the Texas-side water fund the money will come from. But the transfer will not affect Texarkana Water Utilities' day-to-day operations or other cities such as Texarkana, Ark., that also have a stake in TWU, Jaster said.
"We have obligations and restrictions with our member cities. That is not what we're looking at. We're not trying to get into the daily operations, and we have no intention of any employee losing their job over this. These are funds that were earmarked for projects down the line," she said.
Engineers have identified needed Texas-side projects whose total cost is about $165 million, TWU Finance Director Jim Cornelius said. TWU staff have begun choosing which of those projects can be postponed.
"Basically, we're trying to find projects that will affect the Texas side only, so there would be no impact to Arkansas whatsoever," he said. "We'll adapt to having less funds. We'll just live within our means and do the best job we can for both Texarkanas. We'll continue to work as we were, but we'll just know that some projects are going to be postponed. Whatever we cancel, we're just going to add that back to the list as we can. As funds become available in the future, we will pull those back off and try to get them budgeted and try to get those taken care of."
Using city water departments as revenue resources is a common practice across Texas, and if TWU ever needs any of the money back, the City Council easily can make that happen, Alexander said.
"If ever a major project comes up that the water department is short a little buck or two, you write them a check back. There's nothing wrong with taking that excess money that's not going to be used and put it in the general fund," he said.
The city has balanced its budget with money from the water fund at least once before. In 2011, the City Council approved a budget that took $2.8 million from the water fund to cover a revenue shortfall brought on by declining property values. Jaster did not rule out doing so again in the future.
"I don't think it would be this ($6 million) amount at all, but there may be something to say that there will be revenue that will be taken from the Texas water funds that we have available to us. Other cities do this, and we're going to be looking to see how," she said.
Alexander said he is hopeful the budget advisory committee's recommendations will forestall any increase in the property tax rate for the foreseeable future.
"With these new income sources, I can't imagine it would ever have to go up for a while. I'm not going to say never, but these revenue streams, if they continue the way we project them and see them, we should be good a good while and be able to do what we can to get the projects done for our city and be efficient with our money, because if you're sitting on that much reserve, you're not utilizing the taxpayers' money as efficiently as you can," he said.
On Twitter: @RealKarlRichter