Cedar Hill reports FY 2024 shortfalls in sales and property taxes; moves ARPA dollars to reserves

Assistant City Manager Allison Reingdown presented the city's unaudited fiscal year 2024 financial report to the Cedar Hill City Council at its Feb. 25 briefing, saying revenues came in below budget in two major categories but the city closed the year with reserves according to plan.

Reingdown told the council the city's property tax receipts were about $570,000 under budget and that "we ended the year under budget by $750,000 or about 5%" on sales taxes. She said those shortfalls were offset in part by stronger-than-expected permit and license revenue and higher interest income.

The report is unaudited and the independent audit will be presented at the council's March 25 meeting after review by the audit committee. Reingdown said the city budgeted conservatively for FY25 and that staff monitored revenues and expenditures monthly during FY24.

Why it matters: the two largest operating revenue sources were lower than projected, forcing midyear expenditure adjustments and prompting the council and staff to prioritize fiscal caution going into the next budget cycle. Reingdown said the city closed out its ARPA allocations and transferred roughly $5.7 million into the reserve fund for future capital projects; the general fund's fund balance ended the year at the budgeted 27%.

Key details from the briefing: - Property tax: about $570,000 under budget. Reingdown attributed the shortfall to a slightly lower certified collection rate from the county tax office and to larger-than-usual refunds paid this year as litigation and appraisal district settlements were resolved. - Sales tax: staff had expected a 10% shortfall last summer but said the trend improved; the final shortfall was about $750,000 (roughly 5% under budget). Reingdown said sales tax is volatile and the city had budgeted it conservatively. - Permits and licenses: stronger than budgeted, by about $727,000, which helped offset lower sales tax receipts. - Ambulance billing: a nationwide service disruption with the prior billing provider, Change Healthcare, contributed to lower charges-for-services revenue. Reingdown said the city's estimated ambulance-billing revenue loss for FY24 was "a little under $600,000." A new provider began collecting Oct. 1 and is currently collecting at a higher monthly pace, which Reingdown said should produce some recovery going forward. - ARPA and reserves: the council had previously authorized spending of ARPA funds; staff reported closing out the ARPA allocations for accounting purposes and transferring about $5.7 million into a reserve used for future capital projects. Reingdown said this transfer appears on the non-departmental line and that the transfer was not originally in the adopted budget but had been discussed with council midyear.

Council members asked for continued monthly monitoring of sales tax and for periodic updates on collections tied to property tax delinquencies and refunds. Reingdown said the city will present the audited financial statements and audit committee findings at the March 25 meeting.

Ending: The city manager and finance staff urged caution in near-term spending decisions and recommended continuing close monitoring of volatile revenue sources as Cedar Hill moves into FY25 budget planning.