Tuesday, August 28, 2018

McKinney Excess Fund Balances & You

The city of McKinney has a revenue hoarding problem that was mostly created by years and years of high city tax rates that did not adjust to higher appraisal values. 

Keep in mind that cities make their budgets based on conservative revenue numbers to play it safe in case real revenue is lower than projected. But, when more property tax revenue comes in than is expected mid-year (as is the case when our tax rates stay high and our appraisals go higher), what is done with the money and what should be done with the money? 

How much extra money is there that is over the required fund balances?



One very legitimate way to deal with the excess revenues that come in every year would be to earmark a very small portion to go back to the taxpayers who have been overcharged year after year. This can be accomplished by giving back some of the money in the form of much lower tax rates the next year. From past discussions, about $1.5M equals a 1 cent reduction in the tax rate. Half of that amount would give us an additional 1/2 cent reduction this year. 

If this is our tax money and we are able to participate in the budget and tax rate process through public hearings, shouldn't we be able to participate on some level in what happens to non-budgeted extra revenue too? 

In February of this year, McKinney decided to spend some excess fund cash to buy 190 acres of land near the airport. No public hearings were required because they were excess funds.
The total $22.5M* purchase price came from various non-budgeted sources:

  • $8M - from the General Fund 
  • $4.5M - from the Insurance/Risk Fund 
  • $7M - from the library lawsuit settlement 
  • $3M - from TIRZ 2 
 Please note that the airport money was taken out before this 18/19 fund balance summary came out. 

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